Private capital market still struggling, says report

KAMPALA - Uganda’s private capital market is struggling to find its footing, with investors and intermediaries pointing to weak governance, limited exit opportunities, and low local participation as persistent obstacles, according to a new report by Financial Sector Deepening Uganda (FSDU) and the East Africa Venture Capital and Private Equity Association (EAVCA).

The study, published in August 2025, found that while regulatory reforms and new funds are emerging, the flow of private equity and venture capital into Ugandan businesses remains stunted.

“Investor capital is often restricted by Limited Partners (LPs) defined mandates that specify sector, geography, and ticket size parameters,” the report notes.

LPs are the investors behind private equity or venture capital funds. They can be development finance institutions (DFIs), foundations, pension funds, sovereign wealth funds, family offices, or wealthy individuals. Because they supply the money, they set conditions on how it should be used.

“For as long as there's not sufficient local capital moving around in the system, we're always going to be in that race competing against other more advanced markets,” Leonard Businge, Country Coordinator, at EAVCA said during the report launch in Kampala.

The report found that one of the most pressing challenges is trust in company information. The report says that 67% of respondents cited inaccurate company representations in Uganda as a key barrier, while 56% noted identifying viable investment opportunities further compounded the difficulty.

Amanda Kabagambe, Managing Director, Bethel Advisors. (Credit: Ali Twaha)

“Whilst investors do dictate where capital flows, they're also leading us towards emerging pools of financing. We still have gaps in our market in terms of data and market intelligence, because you'll see a business trying to pitch to a London-based investor,” Amanda Kabagambe, Managing Director, Bethel Advisors, said.

Cristina Banuta, Programme Manager for Access to Finance, Agribusiness and Land at the European Union (EU), said it is important to implement partnership regulations to grow the private capital space.

The Deal Flow Facility (DFF), created with EU support and incubated by FSD Uganda, was established in 2021 to bridge the gap between companies seeking long-term capital and investors looking for credible opportunities.

The DFF provides technical assistance and a matchmaking platform, helping businesses strengthen governance and operations to become investor-ready.

Since its inception, the DFF has screened over 300 Ugandan SMEs, brought more than 60 to investor readiness, and facilitated four deals.

“The EU has very ambitious portfolio in terms of private sector development, which looks at banking financing frameworks but also alternative financing,” Banuta said.