2016 2nd Kampala PE/VC Conference Report TABLE OF CONTENT EXECUTIVE SUMMARY ..................................................................................................................... 1 1. OPENING ADDRESSES .................................................................................................................... 2 1.1. Executive Director -UIA……………………………………………………………………………2 1.2. Acting Chairman – UIA Board of Directors .................................................................................. 3 1.3 The Chief Guest, Director Economic Affairs – MoFPED ............................................................... 3 2. KEYNOTE ADDRESS: - PROF. AUGUSTUS NUWAGABA, ........................................................... 4 3. FIRST PANEL DISCUSSION ............................................................................................................. 7 4. PRESENTATIONS DURING THE CONFERENCE ........................................................................... 8 4.1. Improving the Investment Climate in Uganda………………………………………………...8 4.2. Protecting your interests in PE Contracts……………………………………………………..8 4.3. Compliance and Risk management around PE/VC financing………………………………..9 4.4. Key issues in Outsourcing…………………………………………………………………....9 4.5. Facilitating the investment cycle…………………………………………………………….10 5. SECOND PANEL DISCUSSION ...................................................................................................... 12 6. PLENARY; QUESTION AND ANSWER SESSION ........................................................................ 13 7. EXPECTATIONS OF THE PE/VC FIRMS ....................................................................................... 15 8. LESSONS LEARNT ......................................................................................................................... 16 9. FEEDBACK AND SUGGESTIONS FOR IMPROVEMENT ............................................................ 16 10. APPENDICES .................................................................................................................................... i 10.1 Program ........................................................................................................................................ i 10.2 Evaluation.................................................................................................................................... ii 10.3 Organizing committee .................................................................................................................. ii 10.4 Sponsors ..................................................................................................................................... iii 10.5 Attendance list ............................................................................................................................ iii i List of Abbreviations AA African Alliance BOU Bank of Uganda CMA Capital Markets Authority EATIH East Africa Trade and Investment Hub FMCG Fast Moving Consumer Goods GDP Gross Domestic Product ICAU Investment Clubs Association of Uganda MOFPED Ministry of Finance, Planning and Economic Development NTV Nation Television PE Private Equity PWC Price Waterhouse Coopers SME Small and Medium Enterprises UIA Uganda Investment Authority UMA Uganda Manufacturers’ Association USE Uganda Stock Exchange USSIA Uganda Small Scale Industries Association VC Venture Capital XSML Extra Small Medium and Large ii EXECUTIVE SUMMARY The annual Alternative Finance Conference focusing on Private Equity (PE) and Venture Capital (VC) was held on the 21st June 2016 at the Serena Kampala Hotel. The intent like during the previous year’s conference was to enable SMEs to gain the knowledge, connections and tools needed to achieve success and raise the capital or funding they need to propel their business growth. The Conferences are held basing on research which shows that Private Equity is continuing to grow and mature across all markets. This is mainly attributed to positive macro- economic fundamentals, increasing political stability and the growth in the rising middle class income continues to fuel interest in sub Saharan African private equity and create a compelling investment case. Uganda attracts a small proportion of the region’s PE money, but interest has grown buoyed by oil and gas discoveries and a growing consumer class. This year the conference targeted 250 participants with a special focus on the owners of Medium Enterprises so as to match the absorption capacity of the amounts of money on offer by the PE firms which was missed in the 1st Conference organized in 2015. It was opened by the Director Economic Affairs in the Ministry of Finance Planning and Economic Development, Mr. Lawrence Kiiza, who represented the Minister. He recognized that SMEs find accessing affordable capital a challenge and decried the high interest rates which contribute to the high cost of doing business, and stressed the need to seek alternative sources of funding. The Conference whose theme was “Enhancing the growth of SMEs through alternative financing” featured inspirational and educational opportunities for everyone. Participants enjoyed a world-class lineup of speakers, stellar panel’s and workshops, interactive mentoring and coaching breakout sessions. Attendees had the chance to meet face-to-face with leading industry experts, fellow entrepreneurs, previous beneficiaries, renowned industry sponsors, investors and so much more. Participating entities – including small business owners, entrepreneurs, humanitarians, creative types, and the founders of high-growth start-ups – were offered the ability to raise capital from the known traditional methods of financing such as immediate friends and families, Banks, and other money vehicles. The effect of all this will be new business development so as to transform the economy of our country. 1 1. OPENING ADDRESSES 1.1 Executive Director – UIA In his welcoming remarks, Eng. Dr. Frank Sebbowa welcomed the stakeholders to the 2nd Private Equity conference and reiterated the growing importance of alternative financing other than banks, and that these sources are available and need to be brought to the fore. He said there is an urgent need to enable local companies’ access to private equity as an alternative source of capital. This year’s conference mainly focused on the big enterprises even though some small ones too were invited reason being that the Private Equity firms invited were looking at companies that could absorb substantial amounts of capital in the range of ($500,000 and above). He called on the business people around to interact with the PE firms in their booths so that they get to know how they can get that much needed funding to their businesses. He closed by promising that next year we shall be holding the 3rd conference and hopefully we shall be able to witness some deals closed by then. 2 1.2 Acting Chairman – UIA Board of Directors He gave a brief background of the formation of UIA SME Division in 2009 and that one of the major roles was to identify alternative sources of finance and link SMEs to them. He pointed out that Ugandans are highly entrepreneurial people and that SMEs are the missing middle. The problem of SMEs is that the majority don’t get to celebrate their second birthday and financial needs are among the reasons for this high mortality rate. He pointed out that SMEs can be facilitated mainly in two ways: by widening their market and provision of easy cheap and affordable capital and that the conference provides a great opportunity for the SMEs to take advantage of the private equity and venture capitalist firms. He reiterated UIAs commitment to facilitate private sector led economic development. The Chairman thanked the partners who together with UIA organized and sponsored the conference to take place. These included BOU, AA, CMA, NTV, UIA, DTOS, PWC, UMA, USSIA, Enterprise Uganda, EATIH and USE. 1.3 The Chief Guest, Director Economic Affairs – MoFPED The conference was opened by Mr. Lawrence Kiiza, Commissioner Ministry of Finance Planning and Economic Development who represented the Hon. Minister of Finance, Planning and Economic Dev’t. He started by thanking UIA and the partners for organizing the conference and that the activities we undertake should be aligned to the National Development Programme. He singled out SMEs as being critical to the development of the economy (90% of working population employed by SMEs while 60% of GDP is from SMEs as well) He however noted that these SMEs face two main problems namely high costs of doing business and access to affordable capital. He reiterated that government supports such Private Equity conferences because they benefit the SMEs in a number of ways – by providing cheaper financing options, better management skills as well as access to large markets. Finally he pointed out that standards continue to be a major issue for SMEs to contend with and that government is going to equip SMEs with the necessary skills 3 2. KEYNOTE ADDRESS: - PROF. AUGUSTUS NUWAGABA, MD REEV CONSULTS INTERNATIONAL The Professor of Economics started by emphasizing that development of competitiveness and investment in research are keys to boosting economic growth. This he exhibited when he compared Uganda’s economy to some few selected countries in terms of GDP per Capita and size of the economy and noted that Uganda ranks low. This is because companies don’t go to countries as “magic” and that the key factors that attract them are demand,