Entrepreneurship
Unlocking East Africa’ s Entrepreneurial Potential Through Smarter Capital Allocation
By Innocent Tibayeita
Introduction
East Africa’ s entrepreneurial promise needs a stronger financial backbone. Across East Africa, a quiet revolution is underway.
In towns and cities across Uganda, Kenya, Rwanda, and Tanzania, small and medium-sized enterprises( SMEs) are solving real problems- digitizing payments, processing local foods for export, linking rural farmers to global markets, and building resilient supply chains. These businesses represent more than innovation- they reflect East Africa’ s potential to redefine inclusive and sustainable development.
Yet for all their creativity, energy, and ambition, many of these enterprises face a common challenge: limited access to the kind of long-term capital that enables meaningful growth.
At the recent 2025 CFA Uganda Investment Readiness Conference- attended by CFA members, Limited Partners( LPs), bankers, DFIs, policymakers, and capital market players- this issue took center stage. My contribution on one of the key panels that attempted to decipher the dilemma of declining investment readiness was to widen the conversation beyond founders’ preparedness. I encouraged the room to ask an equally important question: How can we evolve our domestic capital systems to better support the entrepreneurial engines of our economies?
This article is an invitation to institutional capital stewards- pension funds, insurance companies, DFIs, investment authorities, and sovereign vehicles- to explore the critical role they can play in East Africa’ s growth story. It’ s not a critique. It’ s a conversation starter. A blueprint. A signal that now is the time to align national aspirations with financial strategy.
Local Capital Is Strong- But Can Be Even more Strategic
The Foundation Exists
East Africa’ s institutional capital base is growing and increasingly sophisticated. Uganda’ s National Social Security Fund( NSSF), for example, now manages more than UGX 22 trillion( US $ 5.5 billion) in assets. Kenya’ s pension sector crossed KES 1.8 trillion( US $ 13 billion) in 2024. Insurance companies, development banks, and asset managers are also expanding their portfolios.
Most of these funds are allocated to traditional asset classes- government bonds, public equities, fixed income, and real estate. These are prudent, secure instruments. They’ ve served the region well.
But as East Africa’ s entrepreneurial class matures and the need for catalytic capital intensifies, there is now an opportunity to complement traditional allocations with carefully structured alternative investments that target long-term private sector development.
SMEs Are a Cornerstone of the Economy
SMEs contribute upwards of 70 % to GDP in many East African countries. They are also the largest employers- creating jobs, driving innovation, and supporting regional value chains.
And yet, only a small fraction of these enterprises have access to growthoriented capital. Many are stuck in a cycle of underfunding, despite being profitable and scalable. What they need is patient, strategic capital- private equity, venture capital, mezzanine debt, or blended finance.
Local capital providers are uniquely positioned to fill this gap in a way that is both impactful and commercially rewarding.
Matching Capital To National Development Aspirations
Uganda’ s NDP IV- A National Call for Ambitious Growth
Uganda’ s Fourth National Development Plan( NDP IV), launched in 2025, sets out an ambitious growth agenda: a 10x expansion in GDP, a fully monetised economy, and transformation into an upper middle-income country by 2040. This isn’ t just about building roads and dams- it’ s about enabling entrepreneurs to lead the next phase of growth in agroprocessing, manufacturing, logistics, and ICT.
Such goals require more than government funding. They demand a proactive alignment between public policy and capital market innovation. Institutional investors, with their long-term mandates and deep pools of capital, are central to making this vision a reality.
There are similar trends across the region:
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