Let’s begin with a foundational understanding—what exactly is Pegasus Technologies, what inspired its creation, and how has its role in Uganda’s financial technology ecosystem evolved over the years?
Pegasus is a financial technology company. And to break that apart, it’s really about delivering financial services using technology. So it’s a portmanteau of two words- finance and technology. We are a financial technology company licensed by the central bank as a Payment System Operator (PSO). We were the first indigenous Ugandan company to attain that status in 2021. We’ve held and maintained that license for the last three years, going into four. We are the oldest FinTech in Uganda- we were incorporated in September 2007 and made 17 years this September.
Initially, we were a business-to-business entity. Our products were not designed for the mass market at the time. Our business was about interconnecting or allowing systems of different entities to speak to each other. For example, telecom systems can talk to the systems at banks, and the systems at banks can speak to the systems at utilities.
One of our first achievements, perhaps the most groundbreaking at the time, was developing the first bill payments API. And what does that mean? It meant that where initially you had to go to institutions of the utility houses to pay your bills, now you could do that at banks, either over the counter or via bank apps and the bank systems could speak to the systems at the utility houses in real time, validate your details and in real-time, that system would communicate to the billing system of the utility and update it. And this was before the advent of mobile money.
We had tremendous success, amplified by the introduction of mobile money. Then, Pegasus moved from being an integrator to a product developer. When we started, all we did was get two systems talking to each other. Still, we learned from that and began developing products that individual clients could use, especially after the growth of mobile money.
Essentially, that is what Pegasus is. We are both a technology provider and a solutions provider in the financial technology industry.
As I was parking, I noticed a powerful statement on your window—your mission is to deliver the most technologically advanced and cost-effective solutions that empower your clients to serve their own customers more efficiently. Can you walk us through some of the flagship products that bring this mission to life? What innovations truly set Pegasus apart in Uganda’s fintech landscape?
We pride ourselves on developing solutions that have revolutionised how people do things. Remember that our vision is to replace any cash-denominated transaction with digital payment methods, such as mobile money, cards, bank apps, etc. We want to reduce cash usage in the industry. The last statistics show we’ve achieved about 26% conversion, but 74% are still cash transactions.
So how have we done it, and what products have we created? The first one, like I said earlier, was bill payments. That was so successful that the utility houses shut their cash offices. For example, you can no longer go to Umeme with cash to pay over the counter for a token. That was one of the first revolutionary things we did. We then developed a product for Makerere called MaKPay, a precursor to most of the school fee payment products you see today. We provided a platform for Makerere University that students could use to interface with and pay their school fees using mobile money, which had enormous advantages. Firstly, students or parents/guardians could pay anytime during the day and night. One didn’t have to wait to have banks open or anything. The university would receive instant notification upon payment because they had a portal. So, a student being stopped at the exam door could make a payment on his phone and immediately, their information would be made available, and they would be admitted to sit the exam.
With the platform, the administrators can see which students have paid and which ones haven’t, all in one view. That was quite revolutionary. We, of course, moved from that and developed a school fee payment product for all educational institutions- the very first of its kind. It was called FlexiPay, and it is associated with Stanbic Bank. At the time, Stanbic Bank was plagued by long queues at their branches. The idea was to give the product free to schools. Schools can input all their students and provide them with unique student numbers. All the parents have to do is go to a bank or get their mobile phone and enter a student number. The system will then validate and enable the payee to complete the payment. To complete the payment, the system takes the money from the payee’s mobile money account and deposits it into the school’s bank account in real-time. There’s no longer that latency or delay or someone having to carry a bank slip and take it back to the school to validate his payment. The school can see all transactions happening on a portal in real-time. But that’s just the payment part. The system is so rich that it allows schools to promote students, issue and track classwork, report cards, etc. So, it’s a product that allows for so many other things.
Besides school fees, we’ve done billing systems for the Ministry of Water through the Umbrella Authorities. Some may not know, but the National Water & Sewerage Corporation (NWSC) only operates in urban centres. The PERI urban non-urban or rural areas are serviced through the Ministry of Water, and they have an umbrella authority- so we developed a billing system for them. Like schools, we gave them the billing system free of charge. This very robust billing system allows things like meter management, new connections, inventory management, etc. But we come in at the point of payment and now will enable a person with a meter to make these payments digitally. Again, the ministry can have this information integrated with their GIS systems, which can say whether this meter in Kikandwa has paid, whether this one has yet to, and so on. It’s a very clever system that also integrates into their SAGE accounting system.
But we’ve also gone into things like airport parking. There was a time when I came from Burundi, and my car was in the long-term parking lot, and I lost my receipt. It took me forever to get my car out. It was such a problem getting out. I spent almost five hours at the airport trying to sort that out. And if you arrived on a day and time when big aircraft like Qatar or Emirates have landed, the queues on those machines were just terrible. You had to find someone to give you changed money and the delays were quite something.
But we have revolutionised that as well. We now make digital payments off your phone, and the gates will open automatically. You don’t need to insert a ticket or keep a ticket; as long as you know your number and your car registration, you enter that into your phone, make your payments and exit. We’ve extended that also to malls. Most malls needed help managing their parking, so Forest Mall, Lugogo Mall, Village Mall, Makerere University, and Mulago Parking now have their parking digitised. We have also developed a street parking product and will roll it out to include street parking in Kampala. We should allow someone to pay for a week or a day, which would be digital. You can park anywhere once you’ve made your payment. We are in talks with the Kampala city council authority to see if we can roll that out, and then, once that’s successful, we will probably scale it out across the country to allow people to manage parking.
We’ve done rental collection systems; again, we give that solution free to landlords. They can input all their properties, the units under their properties, the fees for each unit, and the tenants in each unit. And with just one view, they can say which units have paid, which ones haven’t, and so on. The idea is to get the tenants to pay their rental fees digitally so that no cash is exchanged. Our proposition to the landlords is that they receive their money in the bank account in real-time.
We’ve implemented institutional collection systems for churches, mosques, and any other institution that may want to collect money, as long as it’s operating legally. A church has to have a license, and so on. We do not offer services where someone wants to collect money for a wedding because that’s not a legal entity. You could flee with people’s money.
We are the only fintech institution in Uganda licensed to do card transactions, and for you to do that, you have to get an international certificate called PCI DSS- Payment Card Industry Data Security Standard. You must have a specific data security standard to integrate into those card systems, such as Visa, MasterCard, AMEX, Union Pay, etc. It’s a very painstaking and challenging certification to get, but we have it, and therefore, we are connected to MasterCard, into Visa, etc., and switch transactions.
We are also an SMS gateway. We carry SMSs for most of these financial institutions. They are OTPs because of the secure environment we have created. So, all Umeme tokens for banks come through Pegasus Technologies, among others. We also offer USSD services. If you have your product out there that you want clients to interface with, maybe you have an airport solution; how do your clients interact with it? So we offer you USSD, a text-based interactive menu allowing people to interact with your services. It’s simple text: you dial, maybe, *1262#, get a menu, and then interact with that menu until you consume the service you want.
We are connected to all the telecoms and most banks, and we allow money movement across all of those.
That’s an enormous responsibility you carry—powering the digital backbone of businesses, institutions, and even daily life for many Ugandans. Out of curiosity, how do you personally handle the weight of that? Do you ever get a full night’s sleep knowing so much depends on your systems running flawlessly?
We barely sleep. I’ll be at my desk by 07 am. I sleep at midnight, and I am up at 05 am. For example, we are now supporting Umeme, which is changing its vending system. Even last night, we didn’t sleep. We’re making sure vending can come up again. So, being at the centre of nearly all this- we are like a hub; we sit between the telecoms, the banks and the utility houses and facilitate the movement of value. And I’m careful to use value, not money- we encourage value movement between these entities. So if any of them has a challenge, it sits on us. So it is such a heavy responsibility, as you said.
With the sheer volume of digital transactions you facilitate daily, Pegasus must sit on a treasure trove of data. From your vantage point, what are some of the most compelling trends, behavioural patterns, or emerging opportunities you’ve observed in Uganda’s fintech ecosystem—and how are these insights shaping your strategy going forward?
We’ve identified three trends. First, we are dealing with a very youthful population, which means they easily adopt technology. We’ve also seen the proliferation of mobile devices, such as phones, tablets, and so on, which has expanded considerably. When we did our first research with the Bill and Melinda Gates Foundation about 10 years ago in Jinja, Eastern Uganda, smartphone penetration was only 12% among men and 4% among women.
Right now, I think the last research in which we participated, this time, we used another region. Smart mobile phone penetration in a town like Mbarara was almost 36%, so it’s grown threefold in the last 10 years. So you have a youthful population, a proliferation of mobile devices, a lower internet cost, and better infrastructure to deliver the internet- interconnectivity has improved. We’ve also seen high literacy levels, meaning that more people can consume the technologies we develop. So, as a FinTech or person who has been in the industry for 17 years, I’ve seen that we are at the confluence of all those major factors, which presents a huge opportunity.
Another major trend is that phones have taken over a good portion of basic banking. We have 8 million bank accounts in Uganda today and 36 million digital accounts. I say that carefully because I know that nearly every Ugandan has two SIMS, but even if you divided that by half, you’re looking at 18 million digital wallets out there. Often, people operate their bank accounts by moving money to their mobile wallets and then spending it off them. So, we’re beginning to see the phone becoming the standard bank for Ugandans. The idea of having a national database with a NIN that uniquely identifies citizens has been of immense help. While many Ugandans have yet to get National IDs because of the inefficiencies there, and I’m not qualified to speak about that, at least the fact that people can be traced back to a national ID has been important.
We’ve even proposed to the government that everyone should have a mobile wallet and an NIN. The government can decide who runs the wallet platform, but it can also say that you should have a national digital wallet as soon as you get your national ID. That would revolutionise and accelerate financial inclusion.
Of course, the other trend is that most utility houses shut their cash offices, and more than 90% of their transactions and bill payments are now done on mobile money. So we are seeing a trend where people, either by force, like in this case, are being forced to do digital transactions. For us, who are in the middle of all of that, it’s easy to see the behavioural patterns of Ugandans, who either do P2P, bill payments, then school fees, etc. You can see a pattern of these numbers, and the advantage that has also been brought is that credit scoring has been made easy. We use a lot of AI and machine learning to say how much we can extend loan services to an individual X, what he can consume, and how much he is worth.
For example, we developed for MTN Uganda an agent management system called Extra Float, where MTN extends float services to their agents who have run out of float so that instead of an agent running to the bank to purchase float and having first to lock up his kiosk, now he can apply for a loan for as much as UGX1 million, operate and pay later. That was all enabled through machine learning and AI, where we know agency Y transacts about UGX2 million a day, so if we extend to him a loan of UGX1 million, they can easily pay it back. Some agents have even begun to rely on that as their capital for business entirely. They borrow at 05 am and pay off at 7 pm. When we initially started it, we thought this would be a small UGX3 billion portfolio, but as we speak today, at any one day, there’s UGX21 billion out there. So it’s grown sevenfold. Of the 70,000 MTN agents, we’re only operating at 30,000 agents, which is less than half. If they were to scale it out for everyone, they would certainly need a lot of help from banks. So, it’s also forcing a relationship between telecoms and banks to look at each other no longer as competitors but as complements.
These are some of the interesting trends I see in the market—the positive ones. Of course, there are also some adverse effects, the largest being cybersecurity. A youthful population with internet connectivity who can access the dark web and is very creative can do all sorts of harm. We’ve seen that, and we’ve also seen very reluctant law enforcement. People get off easily.
For example, up to now, we have only relied on four laws to prosecute criminals. We have the Computer Misuse Act of 2020, the Electronic Transactions Act, the Electronic Signatures Act, and, most recently, the NPS Act. None of them prescribes any deterrent sentences for these offenders. They get off lightly. Let me use an anecdote here. We got someone who was recently trying to recruit my staff member to give him access, and we did a sting operation with the police and arrested the culprit. He had carried UGX5 million he was to use to bribe our staff. The police swooped in and grabbed the man. We took him to court. He pled guilty, and he was fined UGX3 million. It’s inconceivable. But that’s it. That’s what we are dealing with. All these risks are what we have to deal with. All these risks are. So all of those have, they’ve again, tried to make the cost of digitisation, of course, risky, more expensive because we have to get in more tools, but I think it’s still much cheaper than having armed security on premises, bullion vans, etc. But in a sense, even though it’s a lot, it’s still much more affordable than having humans managing and watching over cash.
It’s often said that innovation outpaces regulation—and in the fintech space, this gap can be both a challenge and an opportunity. Beyond tightening legislation and enhancing enforcement around cybersecurity and fraud, what additional policy or regulatory interventions do you believe government should pursue to foster a safer, more inclusive, and truly thriving digital economy in Uganda?
Some interventions are urgently needed at the policy level and legislative levels. The first is facilitating seamless cross-border, especially intra-African payments. Let me give you a personal anecdote. A young man in Kenya sells IPTV, which has many more channels than DSTV, especially documentaries and history. I bought this product and am supposed to pay a subscription of just UGX50,000 a month. I am the MD of a FinTech company, but I struggled every month to subscribe to that service digitally, and this is just next door in Kenya. The technology is there, but a supporting regulatory framework is needed to send money seamlessly to our neighbouring countries, especially in the East African Community. Can the EAC governments prioritise conversations that remove these boundaries? Why can’t I integrate into Safaricom the same way I integrate into MTN Uganda? Or, why can’t a Kenyan company integrate into MTN and be able to move money seamlessly? The technology is there, but all of these barriers are in place.
First, we have different currencies, so there’s an issue with conversion and exchange rates. Some of the laws in our countries say a foreign company cannot integrate into a service provider’s systems in that country. I, for example, have to register a physical company in Kenya to integrate into Safaricom. Why? Why can’t Pegasus here connect to Safaricom the same way PayPal will connect to my American, British, and Ugandan accounts and operate seamlessly? Can our regional governments come together and say, let’s remove these barriers, let’s trade?
Because of all these barriers, I had to cancel my subscription, and I’m sure there are many people like me. Even these traders who move goods across borders, what can we do to ensure they don’t need to carry cash? Most of them have fallen prey to these predators at the border, who have given them terrible exchange rates that make them lose up to 10% value of their cash. Don’t go with money; instead, offer digital options. Facilitating cross-border transactions is one-way governments can help us.
The second one is a central switch. I have had to do bilateral connections for all the connections I’ve had to do as Pegasus. If I’m connected to 500 clients or service providers, those are 500 individual connections. If the central bank were to provide a central switch that we could all connect into, such that if I want to send a transaction to MTN, I send it to the switch, and MTN is obliged to honour that transaction. That would drive down prices and increase inclusivity. It would also make interoperability much more manageable. The portability of digital money would be much easier. Anyone with a wallet can plug into the switch, and it will not matter whether you have a Wendi wallet or an MTN wallet; you should be able to make a transaction without batting an eyelid. Legislation that enables this portability of money in a much more straightforward is necessary.
Number three is we need to support the local fintech industry by layering the sector to protect the startups and SMEs from being swallowed up by the big boys. Let me give an example of the beverage industry. An institution like Coca-Cola does not sell bottles of soda to individuals. I can’t go to Coca-Cola with UGX1000, and I say, give me a bottle of soda. What they’ve done is they’ve developed a structure in which you have them concentrating purely on manufacturing and then outsourcing the rest of the business to distributors, transporters and ultimately the retailers who then sell the soda to you and me. Usually, these other third parties are local entities. What that has done is preserve different business lines.
But in our sector, you have telecoms and banks owning the platform that issue electronic money; they are also in the market, selling to the last person, pushing out the other smaller players. They want to play at every point in the ecosystem and kill everybody else to their advantage. That’s wrong. Again, if you take the model of Coca-Cola, it doesn’t matter if it is Sheraton Hotel or your local kafunda that sells the bottle of soda to the final consumer; the ultimate beneficiary remains Coca-Cola. They don’t have to come down and be able to sell you the soda. We should have the same strategy for financial technology services. Let banks and telecoms be platform owners. Let the other fintechs go out and innovate and do the products that allow people who have money in the wallets of MTN and Airtel and the bank accounts to transact freely. We shouldn’t have these large companies coming down to play at the bottom of the ecosystem. It ruins it.
One of the challenges, and I’m glad there’s an opportunity to review the NPS Act now, is letting these companies that are platform owners have both Payment Service Provider (PSP) and Payment Systems Operator (PSO) licenses. That will kill the other not-so-large companies in the ecosystem with only PSO licenses. They will squeeze us out. We’ve seen situations where they’ve offered some of our clients zero shillings on collections and then charged us expensively when we use their platforms. We will lose business. I employ 60 Ugandans. All of those will lose jobs. I buy them lunch, so the lunch lady will lose. I have several other service providers who will lose if I close. The entire industry is now going to contract, and that affects everyone else.
Just like Europe is saying, Google should not own both the browser and the search engine; the two should be split, and Amazon cannot own the platform and sell its products there. Doing both risks the big boys deliberately disadvantaging and/or driving the others who use their platforms out of business. They will employ some kind of scorched earth policy to their advantage.
That is why the regulators in the more advanced and mature markets have said no to predatory tendencies that give undue advantage to a few large players in the ecosystem. Initially, when we started this conversation, we had engaged the central bank to develop guidelines on regulating these anti-competitive tendencies, whether through pricing or other means that disadvantage other players in the ecosystem. Unfortunately, when that came up, it was hijacked by the Ministry of Trade and blended into The Competition Act of 2024, but in such a broad way that the specific and unique concerns of the financial industry were almost drowned out. Nonetheless, that remains a salient issue if we are to support a homegrown innovation and technology economy. Those are some of the challenges we’ve also seen, and we hope that as we review the NPS Act and other existing legislation, they can be ironed out to accelerate growth, creativity, innovation and jobs.
Technically, there’s nothing Pegasus can benefit from, and the telecoms won’t because we use their platforms. When you pay for airport parking with mobile money, the telecom has earned twice because I pay them a 1.5% commission for collecting that money, and they also charge the person paying a transaction fee. As if that is not enough, they are going directly to my clients and saying they can offer the collections services for free, thereby cutting me out. Of course, once I am out of the way and they are in charge of everything, they can increase the price any way they want. That is the big boy syndrome, where they cannibalise the small boys and remain the dominant players with a chokehold on the ecosystem. We don’t want to see a scenario where only two large companies are the ones to determine Uganda’s digital financial infrastructure and future.
The ecosystem’s large and small players must be protected and preserved.
Cybersecurity and financial fraud are growing concerns globally, especially in rapidly digitising economies like Uganda’s. From your perspective, what are the most notable trends in cyber risks and financial crimes today? Are the bad actors simply getting smarter? And amidst this evolving threat landscape, how is Pegasus safeguarding its systems and clients—and what impact does this have on the overall cost and ease of doing fintech business?
Cybercrime and fraud are usually used interchangeably, but they differ slightly. Cybercrime is any attack on your systems for any reason, e.g political or any other reason. There’s no pecuniary reward, but maybe they want to make a name or protest. We’ve seen that take the form of, e.g., defacing some government websites. All of that is cybercrime. Fraud, on the other hand, is commercial. Someone is doing this for pecuniary rewards.
Cybersecurity has three levels of attack. The first one is intercepting transactions as they’re being transmitted, often called a “man-in-the-middle attack”. In this case, the attacker simulates a transaction that gets in the middle of the genuine transaction and diverts the transaction to somewhere else. The second one is compromising the system at rest- basically, you go to a place like a bank or the platform owners, like the telecoms. Usually, using some insiders, you compromise the system. The third, which is quite pernicious and perhaps one of the biggest, is where you do social engineering- they take advantage of people, and you’ve seen this quite a bit, where they call someone claiming they have won something and require the victim to input their password and then take their money.
We’ve addressed cyber security at the industry level and in partnership with our regulator, the Bank of Uganda, which has done a fantastic job. We’ve also addressed it at the institutional level, as Pegasus. At the industry level, we’ve made a concerted effort to educate the users of these digital platforms. And there have been campaigns like Beera Steady, Tebakufeera, where it’s just about educating the masses, to avoid falling prey to these phone calls. If you’ve noticed, they’ve decreased drastically in the last few months. We no longer have these conmen ringing. If they are, it’s a few outliers. We’ve also educated the masses on keeping their PINs secure, not sharing them with anyone whatsoever, not writing them down but memorising them instead and not allowing anonymous calls. We’ve educated them that there’s no such thing as quick money.
Internally, we are taking advantage of emerging technologies like artificial intelligence and machine learning that allow us to learn the transaction behaviours of clients, e.g. frequency, the volume of transactions, etc.; if any transaction falls out of that pattern, we delay it until we verify its authenticity and genuineness. So, we call those in our industry velocity checks. A velocity check determines things like how much money one can receive in a single transaction before you flag it, how many transactions one can perform in a day, realistically, before you flag the transactions, and what the sum of the total money that someone can transact in a day before the particular number is flagged. We’ve set thresholds for all of that. So, for every transaction, we monitor it to ensure it falls within a specific client’s normal behaviour.
The other issue is that we are in a global village now and must screen for international sanctions. So, for every transaction we make, we screen it against the OFAC (America), the EU sanctions lists, the HMS (the UK one), the UN sanctions list, and all the other sanctions lists worldwide. We are expected to do all that.
Of course, we’ve also included what they call perimeter defences. All our machines are behind firewalls, and none can be accessed over the Internet. We also ensure that our servers are not on-premises, so someone can’t come and plug something into them. Often, what you see as a hack depicted in movies, where people type away on a laptop and enter the system, is quite old. That’s Hollywood. Usually, it’s an insider helping the outside attackers. Unfortunately, for that, it usually comes down to integrity. Sadly, we live in a country where integrity is not well rewarded. We must constantly implement mechanisms to ensure our staff are motivated and monitored. For example, here, we use a system called PMP. When a staff member requests access to a server, they must request access and show what they will do there. Otherwise, they won’t access it. And when that permission is granted, there’s a video recording of everything done while on the server. So we are not leaving things like trust to chance and say, I know so and so- because even if we know you, we want to see what you are doing.
On top of that, the central bank has also put out what they call minimum security requirements for everyone supervised by them, and this includes things like having firewalls, having regular external audits, carrying out those velocity checks I mentioned earlier, and reporting suspicious transactions. We have to do audits on our systems by an externally appointed auditor who then reports to the central bank and shows you everything you’ve done wrong. So whether it’s people, processes, or technology, we’ve tried to put those in place to ensure our systems are secure, but regulations have also come in to reassure the industry. Remember, because of our longevity, we’ve operated in a situation where there was no regulation, and now, when there is regulation. The fact that the central bank comes in to say so and so is regulated gives people the confidence to trust and work with this entity.
The challenge has been that so many people remain unregulated in the industry, perhaps because the central bank has been lenient. Those few might be the ones that are now dragging the industry back.
The fintech industry in Uganda has seen exponential growth over the past decade—but has the supply of talent and technical skills kept pace with this surge in demand? How would you assess the quality of graduates entering the market, and is there enough local talent to sustain innovation? Given the intense competition for skilled tech professionals—both locally and from abroad—what has been Pegasus’ experience in attracting, training, and retaining top talent?
We have a very low talent pool. Let me give you an example of how we recruit as Pegasus. Every year, we go to Makerere University in the School of Computing, where I taught for seven years, and they always give us their 20 best students whom we bring here and train. These are the same people who end up at the banks and telecoms we support. They are poached when they go to do work. Of course, I will never compete dollar for dollar with those companies. They take them, and I return, pick another group, and train them. So it’s been a very odious task, teaching these people. One of our challenges is our education system, which emphasises rote learning- memorising information based on repetition instead of free thinking.
We are in an industry that should accommodate free thinking, which is part of why I take the best students: I don’t have to tell them what to do, but they can tell me what to do. That’s why I get first-class students. So, skill is one thing, but the ability to think is another. If I told anyone to implement this piece of code, there’s every chance they could do it, but for them to sit and think and say, “Wait, we need a solution for the transport industry that’s not there”. That’s where I find the problem; whether this is a function of our education system or just people choosing to settle for less, I don’t know, but the level of innovation we had during our school time, I no longer see it among students of today, and that’s a very worrying trend.
They might have some skills in writing code, but in terms of thinking and saying, I have the infrastructure for this. This time, let me implement a solution that allows people to move money from their mobile wallets to their cards- that still has got to come from me to tell them how to implement it on all counts.
Secondly, the talent pool is smaller, so we are fighting for the same people. As I am at the bottom of the ladder, I see all these industry players taking my staff, and I don’t have much to do because, partly, I wouldn’t say I like standing in the way of someone advancing their career, because they would all want to work for big-name companies. But it’s also essential how they leave – so I try to talk to them and say, yes, you have gotten an extra UGX1 million increase; don’t just throw the laptop through the Ventilator. They need to sign out properly.
There is also the issue of work ethic. People are no longer willing to work as many hours before they start claiming mental health issues. It’s frustrating. But we also recognise that we are dealing with young people. These are 21 to 22-year-olds who have never worked anywhere before. They always feel that the grass is greener on the outside.
In terms of education, we’ve even proposed to have an MOU with the College of Computing and Information Sciences, where we take industry people to help deliver some of the lectures at the university. Hence, the students begin learning what’s expected of them at university. Not to think, you know, that they come here to do some coursework. This is the real-life thing.
Technology is ever-evolving, and we’re seeing a new wave of startups emerging almost daily. Having steered Pegasus through 17 years of growth, turbulence, and transformation, what are some of the toughest lessons you’ve learned along the way? What insights or advice would you offer to Uganda’s next generation of tech entrepreneurs who are just starting out and eager to make their mark?
As you rightly said, it’s been a blood, sweat, and tears journey. Maybe from the outside, we make it look simple. Everyone thinks they can do it. The other day, I told someone at the central bank that we need three licensing tiers to allow young Ugandans, who all they have is a laptop and an idea, to make their way into the market. With the current capital, governance and reporting requirements, it is difficult for a startup to enter this industry. If this regulation had been there 17 years ago, Pegasus would never have started because we started with just a laptop and an idea. What mechanisms can the regulators put in place to ensure that these are prudently regulated but in a less stringent way that accommodates their unique situation- some sandbox regulatory environment? Where will a graduate fresh out of university get a server and server room, international certifications, and external auditors? You definitely can’t ask them about capitalisation or who their board members are because all they have is an idea and, most often, an innovative one and their laptop. Do they maybe start with Pegasus and then break off after they’ve acquired the requisite requirements?
Regulation aside, as I’ve already told you, there is a cabal of dominant players who have made it their mission to ensure that no one else can join their ranks. So, how do we break that cabal and protect these young Ugandan innovators? How do we ensure that the Ugandan industry thrives amid such a situation and that the young techies coming up are supported?
Another lesson or piece of advice to startups is to ensure that their creations are about solving problems. Our business and many other businesses are about solving problems. So, if anyone wants to make a big break, they have to be solving a big problem. When I used to lecture at Makerere, I would give students what we call the end-of-the-course projects to do, and most of them came up with really, really clever things, but they needed to solve real-world problems. So, what problem are you trying to solve? I lost my parking ticket at the airport, and I said I must digitise airport parking. I worked for the National Water & Sewerage Corporation, so I said I must digitise how bills are paid. I worked at Makerere and saw how students were suffering with paying tuition, and I said I must digitise school fees. We can’t have an excuse. So, can they think about a problem to solve? And there are so many.
The transport sector is still essentially cash. Healthcare is still primarily cash. So what problem are they solving? The young men and women who are coming in, can they come and say, let’s change the way this is done? Milk, coffee, and so many other sectors are still largely cash-based. Builders at construction sites are still being paid in cash, and so on. So, they can still do quite a lot, but they have to put in the hours. Like I told you, I wake up at five every day. I sleep at midnight. I’m never on leave. I don’t take a holiday. It’s burnout. It’s complete burnout. So they must be willing to put in the hours. Apart from that, it’s an industry ready to receive many people, so the more, the merrier.
Many Ugandan startups find themselves stuck in the limbo between being promising SMEs and fully-fledged industry players—often held back by regulatory hurdles, lack of access to capital, or a poor credit history. Based on your own journey with Pegasus, what are some of the hardest challenges you’ve faced in scaling up? And in your view, what targeted interventions—policy, regulatory, or infrastructural—should the government prioritise to help more tech startups break through and thrive?
Firstly, as you mentioned, regarding taxes, why don’t they give these companies tax holidays for five or ten years so that they can quickly find their feet?
Number two, we spoke about a server room and the numerous regulatory requirements that make the cost of compliance out of reach for many. Why can’t the government put up shared technology infrastructure such that if I am a startup and I am asked for my server room, I can say that my server room is at NITA- I either rent their space or they’ve given me some space there. This is what most of these companies abroad do. Companies don’t have to start up with their servers. They will rent servers or some ‘ room’ in the cloud. Let me give you an example of Pegasus. For us to have servers, you have to have physical infrastructure, which is the actual servers. Then, you have to have the software that runs on those servers. That’s another expense.
We have to pay almost USD500,000 for security appliances, such as firewalls or endpoint detection and response systems, antivirus systems, etc. Suppose the government could have an infrastructure where all these things are. With an idea, all the startup has to do is be allocated space on the server with the operating systems, the Endpoint Detection and Response (EDR), the firewalls, etc. In that case, I get space there, and I start working. Then, lower the cost of the internet. It’s down to the inputs. What input do these fintechs need? And can the government provide shared infrastructure, and they don’t have to dole out money and, say, get UGX1 billion because I know people would misuse that, but give them the tax incentive, and it perhaps can even be tagged to the number of people they employ. So, we need that kind of affirmative action, just like they’re trying to put up milk coolers for the cattle corridors, let them put up IT infrastructure and lower the cost of Internet, and put tax holidays and give tax incentives for people who employ Ugandans. So, those are some affirmative actions that can be taken to improve the industry.