Uwezo Fund Is a Bad Idea, Create Investment Wing For Proper Funding
The challenges of getting Funding on the Tech Scene in Kenya has been discussed at length and we are still doing series on the whole process. The likes of 88mph, The GrowthHub Africa, and Savannah Fund have done a great job, in ensuring that start-ups looking for funds would at least get something. But Kenya as a country needs to nurture many other local businesses. So it was great and sad at the same time to see the launch of Uwezo Fund. Sad in that, it demonstrated that what used to be called the Youth and Women Funds have failed miserably .Great in that …. Well… there is something for the Youth and the women still.
President Uhuru Kenyatta and Deputy President William Ruto last Sunday launched Kshs. 6 billion Fund. The fund, meant for both youth and women is known as Uwezo Fund. The idea is to have youth and women organize themselves into groups comprising of between 9 to 15 people and apply for funding to start a business. The group would ideally get between Ksh.50, 000 to Ksh.500, 000 and the funds will be disbursed at constituency level
All these are good, but I think as a country there are better ways to do this with a long term objective in mind. As I have already mentioned, we should all agree that Youth Fund, Women Fund and any other funds meant for the youth and women have failed. The problem is, Uwezo Fund is following the same footsteps and I don’t see much coming out of the whole initiative, 5 or ten years down the line.
The requirement that people have to form a group of nine to 15 people to access the fund, is highly flawed but great for the politics side of things. For the politicians the issue is to reach as many people as possible in short term and they never give a damn whether the initiative will be a success in the long run.
In the ideal world, where the success is the guiding principle the number of founders for a successful business should be two and not more than three. Majority of successful companies have 2 to 3 co-founders as per the article by Chan Chaiyochlarb “If you are going to launch a startup, how many friends would you need?”
When you look at the setup of two or three founders, you get people with different skills complimenting each other and helping in day to day running of the business. Beyond three, it starts to be a problem as in most cases, people spend the whole time arguing over simple things and the direction the business should take instead of working. Another problem is where young Kenyans in particular sit down, take the money and divide it among themselves and then scatter. Starting a business needs a shared vision, shared passion, shared drive, and getting more than three people with the same shared everything is quite a challenge. In the case of such funds, like Youth Fund ,the only shared thing among the members is the money or the drive to get a piece of the pie/money.
My friend Mr Ephraim Njenga captured it well on his Facebook Feed:
Youth fund failed and the government should establish why it failed first. You can’t keep on throwing good money at bad problems. By the way, why are these people always obsessed with groups? Businesses are founded by individuals who are the true vision bearers. A group is just a crowd of cowards that cannot drive any serious entrepreneurial agenda.
In my view the best way to go about it, is look for a few Businesses, or encourage a few individuals to start a business and then fund them in a big way. I am looking at a situation where the fund is used to grow like 100 Businesses to a successful conclusion. Safaricom for example was just a department of Telkom but see where it is now. Within ten years just one company, Safaricom, is able to employ thousands and thousands Kenyans. The obvious conclusion from Safaricom example is that, it is possible to build a world class business from scratch. The 100 businesses I am talking about can be from different industries…let say 10 Agriculture industry, 10 Mining industry, 10 Technology industry, 10 Construction industry….and the list continues. For instance, Uwezo Fund with 6 Billion, you are able to give each of the 100 companies 60 Million. That is enough to help each company to build the capacity and develop sound business structure. From there, the excuse we normally hear about the local firms lacking capacity will not be there especially when the Government is giving out the big tenders or contracts. At the moment the big Government contracts go to the likes of IBM , and the same goes to the companies like Safaricom. I am yet to confirm but I hear Nigeria did fund local businesses. And that is why they have the likes of Aliko Dangote whom I see everyone in Kenya now want to meet or be like.
I bet if the country decide to go in that direction, 100 companies in ten years would change the employment landscape in Kenya. It would be awful not to say that there is a high probability that not all of them would be successful, but if you can get around 50 companies growing to the level of Nakumatt, or better still Safaricom, that would be huge for the country.
For this to work the Government should form an investment wing whose work is to ensure the sound investment of the money. Call it the investment Authority or whatever other name and ensure that it has the professional outlook with mandate to make money for the Government. Not really to make money but to ensure that the Government money is well invested with real possibility of return on Investment. The work is to identify promising local firms from different industries and ensure that they are properly funded. Since Tribal Politics a problem, the firms can be identified based on each county. For example two companies per county. This will still be ok, because each county has different economic activities, meaning you end up with companies from different industries.