The New York Times recently reported eye popping investment returns by US based university endowments, including 56% by both Duke and MIT and 40% by Yale.  A big reason for the gain is investments with private equity funds.  Harvard’s private equity investments, worth a third of its US$53 billion portfolio, returned 77 percent in its latest fiscal year. Venture capital funds are also recording huge returns: The University of North Carolina logged a 142 percent return from that portion of its $10 billion endowment.

By contrast, according to the December 2020 Sector Performance Report issued by the Uganda Retirement Benefits Regulatory Authority (URBRA), average returns on investment for the Uganda pension sector during 2020 were just under 12%.  Uganda’s National Social Security Fund (NSSF) declared nominal investment returns of 13.82% for the year ended 30 June 2020.  Real returns after accounting for inflation were just under 10%.  The URBRA report further reported that 88% of pension assets are investment in government securities (76%) and quoted equities (12%).  Only 2% of the sector assets are held in unquoted equities.

Why pension funds love government debt

There are very good reasons for the pension funds’ preference for government debt and public equity.  The overriding reason is that pension funds are charged with preserving and growing their members’ funds.  Therefore, it would be remiss of them to invest in high risk ventures in the pursuit of unguaranteed high returns.  Another reason is that government debt markets in east Africa have over provided relatively attractive risk free rates as well as tax planning benefits.  The hurdle rate for investment in alternative assets is therefore much higher.  Why would a pension fund manager invest in risky private assets when they can earn equivalent risk adjusted returns from government debt?

A significant missed opportunity

However, the current dominance of government securities in pension fund portfolios is a missed opportunity for the pension funds and the Ugandan economy.  As demonstrated by the more developed economies of Asia, Europe and America, well managed private equity investments deliver returns well in excess of what is available from traditional debt and equity markets.  In addition, private equity investments provide much needed investment diversifications benefits.  But the biggest unexplored benefit is the impact on the overall economy.

UK private pension fund NEST recently launched plans to invest £1.5 billion (5% of its assets under management) in private equity.  Nest’s Head of Private Markets was quoted as saying that “we want private equity to play an important role in our portfolio, offering strong returns and diversification”.  In a letter dated August 2021, UK Prime Minister and Chancellor argued that UK assets are being overlooked by domestic investors, leaving their international counterparts to gather the returns. “Over 80 per cent of UK defined contribution pension funds’ investments are in mostly listed securities, which represent only 20 per cent of the UK’s assets,” they said in the letter.  “We want to see UK pension savers benefiting from the fruits of UK ingenuity and enterprise, being given the opportunity to back British success stories, and secure higher returns and better retirements,” the pair wrote.  There are rich lessons for Uganda in the stance taken by the UK government in promoting investment of pension assets in alternative assets.

Private equity – a driver of sustainable economic development

In addition to potentially higher than average investment returns, well developed private equity investments deliver several benefits to developing economies such as Uganda.  These include:

  1. More sustainable enterprises by providing appropriate finance and the technical assistance that most businesses crave. Sustainable enterprises create much needed employment, which in turn increases the savings available to pension funds. 
  1. Improved national competitiveness. In addition to appropriate finance, private equity funds bring strategic and operational excellence to their investees, and ultimately improve the odds of enterprise success.  This is great for economies such as Uganda that experience several competitiveness challenges.
  1. Alternative sources of long term return. In the likely event of significant drop in yields on government securities, private equity investments will provide much needed income to the pension sector.

Therefore, it is in long-term interest of the pension sector leaders such as URBRA and NSSF, as well as foresighted pension funds to facilitate the development of the private equity investments in Uganda.  One proactive initiative would be for these sector leaders to pronounce themselves on minimum acceptable requirements for investment in private equity.  They should then engage with private equity funds active in Uganda to develop and implement these standards. 

Achieving the astronomical investment returns reported by US based university endowments may take several years of concerted effort, but it is a worthwhile venture.

Robert Katuntu is a Partner at J. Samuel Richards & Associates, Certified Public Accountants

Contact us:

Regency Plaza, 30 Lugogo Bypass

PO Box 22934 Kampala, Uganda

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.



Business owners in Uganda cite the lack of appropriate capital as the biggest hindrance to their success. However, investors including impact funds, banks and private equity investors disagree. They contend that the majority of SMEs in Uganda are not investment ready. SME owners are either not aware of the alternatives to bank debt finance in Uganda or they are unwilling to seek these alternative sources of finance.  In addition, those who are willing do not understand what investors are looking for or how to “sell” themselves and their businesses to potential investors.

In this article, we define investment readiness and provide a roadmap for SMEs seeking to access alternative sources of growth capital.

What is investment readiness?

Investment readiness is the capacity of an enterprise to understand and meet the specific needs and expectations of investors, and it plays a critical role in shaping whether a business receives investor funding. There are three dimensions of investment readiness: equity aversion; business viability and quality of investor materials.

Equity aversion concerns the entrepreneur's attitude towards equity finance. Consistent with the pecking order hypothesis there is a high level of equity aversion amongst SMEs. The pecking order hypothesis states that companies prefer to finance themselves through first retained earnings, then debt and finally through the issuance of new equity. Most high growth business owners are reluctant to surrender ownership and control. Equity aversion is also related to the entrepreneur’s lack of information about the characteristics and availability of alternative sources of finance. The consequence is that many potentially investable projects opt for usually inappropriate bank debt financing, often to the detriment of their long term viability.

Business viability is the second dimension of investment readiness. The high rejection rates of business banks and private equity funds clearly indicates that most businesses that seek external finance do not meet the requirements of external investors. The investment decision-making process involves two stages. At the first stage the opportunity is assessed against the investor’s investment parameters - for example, sector, stage of business, size of investment, location. The first concern of investors when appraising an investment opportunity is the “goodness of fit‟ between the opportunity and their own personal investment criteria. Investors reject investment opportunities which do not meet their investment parameters. Lack of information – or failure to seek out the information that does exist – explains why entrepreneurs make approaches to inappropriate investors.

During the second stage of business viability assessment, the investor selects those businesses which meet their investment parameters.  Deals are rejected during this stage for three major reasons: weaknesses in the entrepreneur/management team; marketing and market-related factors, notably flawed or incomplete marketing strategies; and financial considerations, notably flawed financial projections.

A study of investment decision making by UK business angels based on business plan summaries indicated that they were turned off by businesses that lack focus; where comprehensive and credible market information is lacking; that operate in highly competitive markets; and lack a unique selling point (USP) (i.e. “me too” products and services). Investors wanted to understand the way that the product or service is distinctive or superior to that of the competition and how any competitive advantage will be sustained. They also placed considerable emphasis on the experience and track-record of the entrepreneur, his/her commitment, the upside potential of the business, and the use to which the finance that is sought will be put.

The third dimension of investment readiness is quality of investor materials. Even if the underlying proposition is sound, a business may still fail to raise finance if the business plan is poorly constructed and presented. This includes shortcomings in business plans and other written documents that are aimed at investors and also deficiencies in “pitches” at investment forums. Investors are frustrated by missing information in business plans, particularly when it relates to any of the generic questions that investors ask of any investment proposal. Poor oral presentation is likely to generate a negative reaction amongst potential investors. Poor presentation is often interpreted by some investors as a warning signal for the entrepreneur’s wider lack of competence: “if he can’t sell to investors, how can he sell to customers?”.

The benefits of investment readiness

Investment readiness has multiple benefits for businesses:

(a) Businesses understand themselves better. Investment ready businesses understand their capital needs and are aware of the capital available to them. Such businesses are best placed to manage external financing.

(b) Businesses can engage better with investors to raise external capital. An investment-ready business can more easily raise external capital as it is prepared to meet the needs and expectations of investors.

(c) Investment readiness accelerates the capital raise process. Businesses will have their documents and information prepared in advance, which will shorten the due diligence process and minimize other process delays.

The capital raising process

Raising capital is typically a multi-step process involving preparation, investor engagement and execution. This process typically takes between three and eighteen months but could last longer.

Figure 1 The capital raising process


Features of an investment ready business

Businesses improve the odds of a successful capital raise by addressing the key dimensions that investors use to evaluate investment readiness.  In other words, businesses should endeavor to achieve the features of an investment ready businesses summarized in Table 1.,

Table 1 Features of an investment ready business


Features of investment readiness


Market landscape

Clearly defined target market with an understanding of the competition and risks

Business model

Proven and efficient processes and partnerships to ensure implementation of the model


Competent and motivated team with clearly defined roles in the business

Traction to-date

Positive trend in the financial and operational indicators that are regularly monitored

Growth strategy

Well-defined growth strategy with detailed financial projections and a formally documented business plan

Capital need

Defined capital requirement outlined in an investor teaser and memorandum


Clearly defined governance mechanisms and controls

The JSR investment readiness program

Our investment readiness program has two elements:

(a) Information Provision

Through broadly targeted information workshops focused on equity as an alternative source of finance for SMEs at all stages of development.  We address the following key matters:

  • what equity is and the benefits it may bring
  • the limitations of debt funding and when it should be considered
  • the different types of equity providers in the market place and their specific focus
  • how to access the right investor
  • equity investors’ evaluation process and decision-making criteria
  • how to present information which addresses the investor perspective
  • determining realistic funding needs for the future
  • what to expect in relation to the equity parties control and legal safeguards for the future
  • risk and return aspects of equity investment and the determination of “value”.

 (b) Investment Readiness Reviews

 We focus on those attendees at the information workshops who decide to progress as candidates for equity finance.  We work with these businesses on a one-on-one basis to assess their suitability to raise equity finance.  We cover such issues as:

  • what are the entrepreneur’s aspirations?
  • how experienced is the entrepreneur and management team?
  • can the management team successfully execute the business strategy?
  • is the market opportunity clearly articulated?
  • can the business provide a reasonable and realistic business plan?
  • can the entrepreneur articulate how the finance will be utilized?
  • what is the likely rate of return on an investment?
  • are the corporate governance processes appropriate?
  • is there the likelihood of an exit strategy?

 (c) Investment Ready Program

 We then work with those businesses that receive a positive assessment to address issues raised by the investment readiness review. The objective is to accelerate companies to the stage of positive cash flow as soon as possible because such companies are easier to “sell” to investors than those that are still at the ideas stage. We address such issues as the management team, boards, intellectual property, market analysis, market positioning and market validation, business models, competition, differentiation and barriers to entry, future products/services, and financial planning.

(d) Investment Presentation Review

The fourth and final element is an Investment Presentation Review to assist companies to prepare a “winning” investment presentation. Presenting an opportunity effectively to potential investors is one aspect of being “investor ready” as it requires an understanding of what investors look for in an opportunity and an ability to anticipate and address the concerns of investors. Central to this presentation is the use of information which demonstrates and signals personal and organizational competence and the entrepreneur's abilities and motivations. This includes an awareness of deal structures and valuation.

 Robert Katuntu is a Partner at J. Samuel Richards & Associates, Certified Public Accountants

Contact us:

Regency Plaza, 30 Lugogo Bypass

PO Box 22934 Kampala, Uganda

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.


  1. OECD Discussion Paper on Investment Readiness Programmes
  2. Energy Catalyst Investment Guide – June 2020

When the World Health Organization (WHO) declared the coronavirus a global pandemic on 11.March.2020, the number of confirmed cases worldwide was at the 100,000 mark. The WHO alerted all countries that the virus was spreading at an alarming rate and containment measures were urgently required. It became obvious that international travel was one of the main risk factors and thus airlines were grounded and airports closed. Land and sea borders were also closed to passengers.

Most countries implemented lockdown measures to reduce the rate of daily Covid-19 infections during the months of March, April and May 2020. One of the common measures was to restrict travel within the country to minimize human-to-human contact. Social distancing was a critical model to minimize large gatherings of people. Another measure was regular hand washing and sanitization of hands and surfaces to kill the virus.

These lockdown measures paid dividends as seen from the graph.

The rate of daily increase in confirmed Covid-19 cases has been dropping from as high as 56% per day, 54%, 26% and so on to the extent that by 27.June.2020, the rate was about 4% in Africa and only 1% in Europe.

The cumulative number of Covid-19 confirmed cases was obviously increasing. Within 108 of declaring the virus a global pandemic, the number of confirmed cases approached the 10,000,000 mark. An yet, most countries had already started easing the lockdown measures during the month of June 2020 and more relaxation is set to be implemented in July 2020 onwards.  60% of Covid-19 patients have recovered and 36% is undergoing treatment. Therefore, it appears that the Covid-19 pandemic is on its way down.

When the World Health Organization (WHO) declared the Covid-19 a pandemic on 11-Mar-2020, only 4% of patients were recovering from the virus. By then, it appeared that the virus had condemned many patients to early and premature death. However, the situation had brightened much to the relief of Governments and their citizens.

Starting with Africa, the percentage of patients who had recovered from Covid-19 were 27% at 20-April-2020. This percentage increased to 41% in just one month by    20-May-2020. Americas was still battling due to challenges in the USA and Brazil. However, the percentage of confirmed people recovering had also improved from 14% to 26%. Europe was also on steady progress from 29% to 43% despite heavy losses in the UK, Italy, Spain and France. Every continent was improving in terms of recoveries. Asia from 47% to 58% and the best performer was Oceania from 65% to 92%.

Source of raw data that was analyzed by author.

Given that global death was 7% of confirmed cases as of May 2020, the highest percentage of recovered cases would be 93%. But as this specific coronavirus pathogen fades away in the future and a specific antibody is discovered, 100% recovery from Covid-19 may become commonplace.  WHO says that this pandemic is far from over, but the economies cannot remain closed forever. Eventually, international travel must resume to bolster economies that rely on tourism and oil.

Therefore, a graph that shows the increasing percentage of people recovering from Covid-19 should motivate Government to open up the economy. Citizens can then be asked to follow mandatory health protocols to avoid upswing of new infections. Contact tracing, testing and treatment must continue in earnest. Social distancing can continue for most of 2020 until the virus is subdued. A combination of public health measures (hand washing, sanitizers, masks etc.) can become normal.

If new Covid-19 cases are 1% or less on a daily basis, this would be manageable using existing medical personnel and equipment (most of them have since been beefed up). If 80-90% of patients are recovering, then the virus would no longer be a major threat.

The Covid-19 pandemic continued to hit most countries worldwide despite that some semblance of normalcy was slowly filtering in many countries. The bitter truth is that 328115 people had died from Covid-19 globally representing 7% of the confirmed cases of 4996472 as at 20-May-2020.

There was increased optimism in that many patients have recovered despite the absence of a specific antibody and vaccine. 38% of confirmed cases had recovered globally, an achievement that had seen frontline medical personnel applauded for their tireless efforts to minimize demise. Unfortunately, some medical staff had perished trying to help. Governments have been tasked to beef up personal protective equipment (PPE) for medical personnel.

The medical personnel were still battling active cases some of whom had overwhelmed the medical facilities. This happened whenever there was an exponential increase in new cases over a very short period of time. Fortunately, due to a combination of containment measures like lockdown and social distancing, the rate of daily increase had gradually reduced.

Source of raw data that was analyzed by author.

Key to x-axis:        ap.20 = April 20th     ap.30 = April 30th    my.10 = May 10th    my.20 = May 20th


Oceania had virtually 0% increase since 20-April-2020. Europe was at 1% (down from 2%); Americas 3% (down from 4%) and Africa at 4% (down from 5%). If such steady progress were to continue, then by September 2020, the rate of daily increases in most countries could have fallen to 1% or less. However, this depends on robustness of health measures to avoid a second wave of infections once lockdown is eased.

The increasing percentage of patients recovering from Covid-19 has providing lots of optimism to Governments to open up their economies given that the virus will linger around for several months.