FutureLink Technologies: Financial Technology and ICT Solutions in Uganda

Interview with Vincent Tumwijukye, CEO of FutureLink Technologies Ltd

What projects are you currently working on? What challenges are associated with these initiatives?

Our main challenge is funding. Growing revenue is only achievable if you have completed the ecosystem. Right now, many companies within the ecosystem are not automated. If you do not automate the operations of your customer, then you actually exclude them. We understand that financial inclusion is ICT inclusion, at least in Africa. So, in our approach to actually build a marketplace where we are automating the savings and credit cooperatives, we have identified the SACCOs as the agents of economic transformation in their rural communities. We cannot forget that Africa is largely segmented. Because of the different cultures, languages, etc., in different communities, they approach things differently. For example, in Uganda alone, there are certain places where the land is owned by the community, whereas in other areas, land is owned by the individual. When you are talking about collateral for credit, there will be a different consideration for communities which do not own land personally. This is an aspect that is unique to Africa. SACCOs are very important to customize the financial solutions for the different communities. We enhance their capacity to do exactly that job by automating their processes, enabling them, and pooling them together. By doing that, we achieve the sustainability aspect because many of them are not able to actually afford the monthly bills of IT experts that will manage and maintain their servers. We have also negotiated with the telecoms to give us connectivity solutions. For as low as $18 per month, they are able to connect a branch in remote districts of Uganda. With that, they are able to save about 90% on what they would have spent on connectivity of a branch. After you have enabled them, you need to not only automate, but automate in a sustainable manner. One of the things they have always feared is whether this situation will last. Once you have automated where the source of data is, which is those SACCOs, you must look at how to improve other components of the ecosystem. That is the market access. If you have a farmer who has produce but they cannot sell it or they are selling it for peanuts, then they will not be willing to bear that cost of the transaction. It is imperative for us to also enable market access. One of our plans for the next 12 months is to enable and automate those agricultural value chains. We did research with the MasterCard Foundation and we have identified three market agricultural value chains. One is the banana. The farmer is greatly disadvantaged. He takes care of all the farming, weed control, fertilization, etc. Finally, when they produce, because they produce in seasons, as does every other farmer, the price of their harvest suddenly decreases. Then, there is also a long chain of brokers who come, buy from the farmers, then sell to the urban traders. The farmer never knows about the prices at which their produce is finally being sold in the urban centers. Our plan is to put farmers in control of the price by giving the farmers the visibility of their produce in the market in the urban centers. We also want to digitize that chain in such a way that we are able to remove some of the nodes of unnecessary brokers. We will have warehousing in the urban centers and collection centers in the villages. All this will happen on the same platform where the farmer is able to communicate and the village collection agents are able to coordinate with the farmers to bring the produce to one place in the village then to the urban warehouses. There is a well-coordinated framework where the urban traders can place an order and have it delivered within at most two hours. You are then able to unlock the economy by empowering the urban trader with a stable supply of produce. You can pay more to the farmer while stabilizing the prices in the urban centers. Once you do this, you can lift up the farmers, give them the power to actually command their price, and in so doing, ensure that your customer has the money to pay you. We have been working a lot on the digitization of the financial space and we have done well. But now, the financial sector is not sufficient unless we unlock market access for every farmer. We need to automate the agricultural value chain with a focus on market access. That is our next stage.

What do you need to be able to unlock the market?

With funding, we can achieve this. We will be able to roll out these initiatives that are able to give the rural farmer visibility of what is happening in the urban centers. We need communication to the different stakeholders, both the farmers and the urban traders, supply chain delivery, and warehousing management. Warehousing is the stability factor for agriculture prices.

Do you want to control the supply chain?

We want to build a shared marketplace where the population is able to get services that are tailored to their communities through the SACCO of their association and in so doing, get ready for the cheapest IPO that is actually to be rolled out.

Yes. We are working with the different stakeholders, such as cooperatives. Our role is first and foremost to connect those different stakeholders. In this, we look at the SACCOs and we look at working with the urban traders in a more coordinated way by connecting them to a stable supply. What is happening is that a truck will come from the village once or twice a week. This urban trader, who has very little capital, will be forced to buy produce that will last them 3 to 4 days. But they do not have the facilities to keep this produce. So, it stays in the sun, there is no cooling, it is exposed to the heat, etc. By the time the end customer buys a banana at the end of those 3 to 4 days, it has ripened or gone bad already. We give the urban trader a stable supply of quality products. In so doing, we stabilize the prices for the end customer. Then, we can give the farmer better prices. If we are able to manage this efficiently, we are able to buy the produce, push out the brokers or organize them into village collection agents, and then make sure their work is to coordinate the farmers instead of keeping the end prices obscure to the one who puts in all the work growing the produce in the first place. We are then able to create jobs around that within the supply logistics and delivery element to the urban traders. The farmer needs to be paid better for their hard work. The urban trader needs to be able to have the capacity to guarantee a stable, quality supply. All these would then be using the financial infrastructure that is interoperable and we would then increase our transaction revenues. This provides value added for the financial institutions.

There is a lot of competition to attract investors to Africa. There are many vibrant tech companies with great ideas in Uganda. Why should investors look to you and to your company?

We have a clear understanding of what investing in the space of financial inclusion looks like. You need to develop a product, you need to build the infrastructure, and you need to push the product to the users. We are at the stage where we have built a product and the necessary infrastructure. This infrastructure is not only the physical infrastructure but also subscriber based of over one million subscribers. Our marketplace, which is the digitized institutions, the microfinance, and SACCOs, consists of 288 institutions automated on a shared infrastructure that is interoperable. For us, that is power. We are only using 3 to 5% of the subscriber base. What we need in terms of support from development partners could be in the form of grants, but also, we are now open to discussing equity financing. We appreciate the different development partners we have worked with including the MasterCard Foundation Fund for Rural Prosperity. We believe that with this support, we are able to scale the usage now of these digital financial services by a million subscribers in Uganda and spread to other markets. We are already incorporating in Zambia and we are looking to move into Kenya. A unique aspect to our way of doing things is that we strive to complete the ecosystem. Usage requires that we open market access for the farmers that we are working with. In the past, we have not been able to move as fast as we would have wanted because we were only concentrating on the savings and credit. The major challenge of Africa and Uganda in particular is market access. With a digitized ecosystem of agricultural value chains, we bring in more transactions from which we can then make revenue. We are seeking development partners that are looking for not only revenue, but a sustainable ecosystem and sustainable economy. We are very passionate about an economy that is equitable, sustainable, and that empowers rural communities. For any development partner or investor out there, we offer that very important aspect. These development partners could be leading banks or payment cards like VISA. We offer over 250 institutions in just one pipe. Working with us gives you access to the entire ecosystem of finance through the individual small banks in the form of microfinances and SACCOs who are able then to give you the right feel of the communities that we serve. With that, we should be able to not only make revenue for every investor that works with us, but also to empower the people and continue to serve what we have built.

Who are some of the partners you currently work with?

The 288 partners we work with include different segments of the SACCOs. First, we have the employee based SACCOs. These are the civil servants in the country who bank with these cooperatives, such as the Uganda Revenue Authority, Uganda Prisons, NSSF, Vision Group, Parliament, Uganda Wildlife Authority, the United Nations, and other large institutions. Then, there are the public SACCOs. These are community SACCOs which serve a particular area or region, such as Mushanga SACCO and Namugongo SACCO. We have enabled them to give services to their customers in the manner that is appropriate for a leading bank in the US, for example. A rural person can use their phone – not a smart phone, but a feature phone – to do all their banking: deposit, withdraw, pay credit, move money out of their account. Where we have found that the network signal is not available or is subpar, we have installed network boosters. Within a radius of 200 meters, when people come closer to the branches, they are able to make phone calls and transact because of the technologies that we have deployed in these rural communities. So, working with us gives a development partner access to an already established infrastructure, which, by pooling together resources is sustainable because it would otherwise have been very difficult for each of these institutions to maintain their own infrastructure. We have reduced the cost of connectivity from $200 to $18 per month which is over 90% savings. With that, we are able to keep the communities connected to the financial system.

How do you see the company in the medium term, three years’ time?

In the next three years, we should be able to enter another market, particularly Zambia and Kenya, and be able to do the kind of work that we have done in Uganda. We want to build a shared marketplace where the population is able to get services that are tailored to their communities through the SACCO of their association and in so doing, get ready for the cheapest IPO that is actually to be rolled out. The bigger vision is that as we work with these SACCOs in Africa, we would like them to be partakers of the company. Within the medium term, three years’ time, we see ourselves in very good preparations for a busy IPO. The funding that we are looking for is to help us to extend our services to other economies and start the deliberate journey to go to a busy IPO. This should be achievable within five to six years. We have done a good job in Uganda and Uganda has given us an impression of what other economies in Africa could look like. If we have three countries, three economies, we will be able to move in and offer investment opportunities to other investors that are looking to not only make money for themselves, but to transform the economies of Africa.

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