Over the past three years, the startup ecosystem in Uganda has seen an average of 11 investment deals and one startup acquisition per year. While some startups like SafeBoda, Ensiibuko, Asaak, Numida, and Tugende have gained recognition, the local venture capital and investor scene remain largely underdeveloped. Additionally, there are few initiatives to support startups in the country.

When I visited Kampala two months ago, I noticed that the ecosystem is not well represented in the African tech industry. Despite the difficulties that entrepreneurs face in creating solutions for this market, their contributions have not been acknowledged on a larger scale.

But among these challenges, there’s the story of Anthony Natif, which serves as a good example of seizing the opportunity. Recently, Guardian Health Limited (GHL) was in the news for a successful acquisition by Kenya-based MyDawa. Operating through 19 stores at the time of acquisition, Guardian Health was valued at around USD 12 M at the time of exit, as per Natif.

Private equity firm Alta Samper bought 100% equity in GHL via its investee company MyDawa.

Back in 2012, while he was still a student at The University of Washington, Natif founded Guardian Health Limited. Some may argue that if one can afford to attend a foreign university, one can start a company too. However, I learned that Natif is the youngest of over 20 siblings, and his father was a schoolteacher. Throughout his student years, he was mostly advanced to the next class on scholarships.

I found his story intriguing because his choices and actions ultimately resulted in the establishment of a thriving pharmacy chain in Uganda. Here’s my exclusive conversation with Natif and a peek into his entrepreneurial journey.

The Starting Point

Natif was raised in Seeta, Mukono, which is located about 30 minutes east of Kampala. He grew up with over 20 siblings and was raised by his father and grandmother. Although he remembers his childhood as happy, he also recalls that his family struggled financially.

He worked as an Oncology Pharmacist specializing in cancer treatment. He received training at the Fred Hutchinson Cancer Research Center in Seattle, Washington, where he completed a fellowship program focusing on HIV-associated malignancies. Natif earned his pharmacy degree from Makerere University in Kampala and obtained a Master’s degree in Public Health, with a concentration in Leadership, Policy, and Management, from the University of Washington.

Natif founded a company with the intention of fulfilling the pressing demand for affordable, high-quality medication accompanied by friendly service.

Natif said, “Really, all I had was public health in my heart. I didn’t start the business for business’ sake.”

He started Guardian Health back in November 2012 while still a student at The University of Washington. He was on a short break from school in Uganda and had recently sold his stakes at another pharmacy where he worked for about USD 100 K.

The healthcare system in Uganda operates under a quasi-socialized medicine model where the government is responsible for providing free medical services through various facilities located in different districts. However, these hospitals are unfortunately underfunded, understaffed, and often lack basic medical supplies. As a result, over 60% of Ugandan citizens first seek medical assistance from private pharmacies and drug shops.

Anthony points out that many wealthy individuals and government officials, who are often one and the same, leave Uganda for medical treatment abroad. Natif estimates that Uganda loses over USD 300 M annually in medical tourism revenue to destinations such as Nairobi, South Africa, and India. Only 1% of Ugandans have access to medical insurance, and the private healthcare system is fragmented and in need of consolidation.

Natif has held positions in Uganda as the leader of cancer pharmacy services and also as the head of finance and administration at the Uganda Cancer Institute. He takes pride in his contributions to the present-day Uganda Cancer Institute pharmacy and his involvement in developing the essential drugs list for cancer treatment in Uganda’s government health sector.

He adds, “My efforts at this institute saw the growth of their medicine budget from just about UGX 50 M (USD 14 K) a year (not enough to buy medicines for a week) to more than USD 2 M in just 18 months.”

Enter Entrepreneurship

In the retail pharmaceutical sector, stores can reach their break-even point relatively quickly. Success is largely dependent on factors such as location, branding, stock range, and staff quality. With proper attention to these elements, a store can typically break even within 4 months. However, at a group level, achieving this milestone can prove more challenging, particularly if there is a large executive staff.

Being a young company, GHL did not encounter such difficulties and was able to break even within a short period of time. In fact, the pharmacy chain generated over USD 2 M in revenue within just two years of opening, the founder says.

Natif started GHL with USD 50 K, and it grew through pure bootstrapping. Mostly he used supplier credit etc., to manage his cashflows until after two years when they took their first bank loan of USD 20 K.

Natif admits that he lacked a thorough understanding of funding beyond the basics of banks providing loans to help businesses grow. GHL experienced rapid growth but lacked the necessary HR and financial resources to support it. Due to insufficient collateral and a lack of working capital, banks were unable to provide GHL with loans, resulting in decreased cash flows.

Natif recalls, “I’d really bought a Ferrari but had no gas.”

Ascent Africa, a private equity firm, acquired a controlling stake in GHL in 2017 and further stabilised its cash flow and operational issues.

According to Natif, investors in GHL received a decent return on their investment, and MyDawa has acquired a company that is thriving. This company has solid foundations, as it is a well-known brand across the nation, has a dedicated team of talented and ambitious individuals, is profitable, and experiences rapid growth.

However, he noted that creating a product for a market such as Uganda has been a challenging experience for him. Developing GHL has been a solitary and emotionally draining journey. He discerns that having more mentorship and people who have gone through similar experiences would have been beneficial. It would have provided a support system for mental health issues and someone to talk to.

Developing in this area can be extremely challenging due to various factors. Obtaining financing can be difficult, and there are few experienced individuals to guide you through the process. Additionally, there are often issues with systems that can cause further complications. Reflecting on his experiences, Natif’s greatest obstacle was not adequately preparing for expansion, which nearly caused his company to fail. He experienced months of sleepless nights and is still affected by that time to this day, he acknowledges.

Looking back, Natif finds the journey to be rewarding, especially when considering the millions of people his company has reached and continues to serve through its services. Additionally, the company has provided a livelihood for hundreds of Ugandans.

“It’s tough. Exciting but tough. I’d do it again if I had to.”

Natif mentioned that he was not aware of any other funding options apart from a PE fund. Based on his current knowledge of funding and exits, he believes that exploring this type of financing early on and building towards an IPO is the ideal approach. This would be a great opportunity for Ugandans to own a stake in companies that they have assisted in growing. He hopes that the new owners will take the company on this journey, as they have the necessary resources, and the timing is perfect.

So, what’s the next big deal?

Natif is excited about his future prospects. He feels confident that his experience and knowledge of business in the region will enable him to build faster and more efficiently. Together with a like-minded outdoor enthusiast, he has launched a travel company called Rustic Expeditions. Through this venture, he hopes to transform the travel industry in Uganda and the wider East African Region. He notes that although Uganda generates approximately USD 2 B in tourism revenue annually, the sector appears disorganized and lacks direction. The Ugandan entrepreneur sees great potential in this industry and hopes to create sustainable businesses that will unlock its full potential.

It is worth noting that Uganda has one of the youngest populations in the world after Niger, with approximately 55% of its citizens under the age of 18, as pointed out by Natif. As the number of working-age individuals increases, there are limited formal sector government jobs available, which means that entrepreneurship is becoming a necessity for Ugandans. If these industries–FMCGs, healthcare, agriculture, and tourism–are nurtured, there is great potential for growth. By incorporating technology into these industries, individuals have the potential to achieve great success.

It is important to provide Ugandans with training on how to establish businesses that are investible. Running a business should not merely be for survival, as many businesses in Uganda currently are. People need to shift their mindset so that instead of owning the entirety of something small, they can own a piece of something that has a greater impact on a national or regional level. Success stories such as GHL are essential for combating pessimistic narratives that circulate within investment circles, which suggest that exits are not possible in this region. Although the playbook may differ slightly from what is found in Western capitals, there are plenty of opportunities available here.

The startup ecosystem in Uganda could benefit from greater access to local capital. There is a significant amount of untapped capital tied up in unproductive land. Natif sees this as a missed opportunity for the local founders to encourage more people to invest in stocks as a viable option. He suggests that Ugandan entrepreneurs should promote this idea more frequently and assertively.

Natif and his friends are planning to launch a venture studio that is still in its early stages. Their motivation stems from recognizing the vast potential of Uganda and the East African region to produce profitable companies, provided that certain steps are taken correctly.

“Think of us as the folks who want to create a conveyor belt of investable companies in the region.”

Natif has expressed that he is open to doing more work in the healthcare industry. He aims to assist in gathering resources to establish a specialist hospital of moderate size. To decrease Uganda’s foreign exchange depletion due to a disproportionate reliance on medical tourism, the citizens must be willing to put in the effort and work towards this goal, he maintains.

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