Unlocking patient capital for inclusive growth

Access to long-term finance remains one of the biggest constraints to enterprise growth in Uganda. While businesses can access short-term working capital, access to long term patient capital needed to expand operations, invest in productivity, create jobs, and scale sustainably remains a challenge.

This gap is particularly significant for small and growing businesses operating in sectors that are critical to financial inclusion, such as agribusiness, light manufacturing, education, healthcare, and financial services. These businesses serve last-mile customers, strengthen local value chains, and create livelihoods, yet many remain excluded from formal investment markets due to weak investment readiness, limited investor confidence, and fragmented market infrastructure.

FSD Uganda’s Deal Flow Facility (DFF) responds to this challenge by strengthening both sides of the market: supporting businesses to become investment ready while improving how investors engage with Uganda’s private capital ecosystem. DFF’s mandate is to support the market to build a pipe line of investible businesses and attracting the right capital to drive inclusive economic growth.

Moving businesses closer to investment

In 2025, beyond pipeline development, the DFF focused on providing support to deals to move them further down the transaction cycle to deal closure.

Investor-led engagements during the year resulted in stronger deal progression, with four new deals signed and disbursed and several others advancing into final negotiation and documentation stages.

This progress included the review of eight term sheets comprising four debt deals, three equity deals, and one convertible note. Investor feedback also generated technical assistance needs across financial management, strategic planning, and operational strengthening, while three businesses received legal transaction advisory support to help complete deal closure.

Building a stronger investment pipeline

The sectoral distribution of investor-ready businesses reflects where opportunity and impact intersect.

Agribusiness remains the largest segment of investee companies at 43 percent, followed by manufacturing, financial services, education, healthcare, and clean energy. These are sectors with strong potential for job creation and broad-based economic participation, particularly for underserved and rural populations.

To date, the Deal Flow Facility has supported deals worth over US$10.8 million across agriculture, financial services and light manufacturing through a mix of debt and equity investments. Financial services account for the largest share of capital raised, reflecting the strategic importance of inclusive finance institutions in expanding access for underserved populations.

Supporting investment into these sectors strengthens the wider financial inclusion agenda by ensuring capital reaches businesses that directly affect livelihoods, productivity, and resilience at the last mile.

Rather than treating financial inclusion only as access to credit for individuals, the DFF recognises that inclusive finance also depends on strong enterprises that can absorb capital, create markets, and expand opportunity.

Generating market insights for stronger capital markets

In 2025, the DFF also commissioned research to better understand Uganda’s private capital ecosystem and the barriers limiting investment flows.

The findings reinforced a key lesson: Uganda’s investment ecosystem requires solutions that are locally grounded rather than imported from more mature markets.

Investor readiness programmes must be tailored to local business realities and sector dynamics. At the same time, fund managers need a stronger understanding of Ugandan enterprises and more flexible investment strategies that reflect the realities of growth-stage businesses.

The research also highlighted the importance of stronger public-private coordination. Government has a catalytic role to play through more efficient legal processes, stronger support for blended finance models, and partnerships that crowd in private investment.

Local capital mobilisation remains another priority. While foreign capital continues to play an important role, greater mobilisation of domestic institutional capital, including pension funds and high-net-worth investors, will be critical for long-term sustainability.

Additional priorities include improving business development services, strengthening ecosystem talent across investment professions, and improving data sharing through more credible market information systems.

These are not isolated recommendations. Together, they point to the need for a stronger market architecture where investors, businesses, regulators, and service providers can operate with greater confidence and efficiency.

Looking ahead

The next phase of the Deal Flow Facility will focus on sustainability and institutionalisation.

Engagements with potential donors and other stakeholders such as the Ministry of Finance, Planning and Economic Development and the Capital Markets Authority, are helping shape pathways for the facility beyond current grant funding. An Information Memorandum and financial model were also developed to support future fundraising and long-term positioning.

The objective is to move beyond individual transactions and strengthen Uganda’s long-term investment ecosystem.

Financial inclusion is not only about access to finance at the household level. It also depends on whether businesses can access the right kind of capital to grow, employ, and serve others.

By unlocking patient capital for enterprises that matter, the Deal Flow Facility helps build a financial system that supports both inclusion and economic transformation.

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