Digital Accounting/Transparency Practices and Investment Readiness: Evidence from High-Growth Firms in Uganda

It is often argued that accounting and transparency (CAT) are key success factors for firms in Africa where corporate information environments are opaque and face little regulatory oversight. Development institutions may not finance these firms, directly or indirectly, because of their limited ability to produce and disclose information (Hornberger and Chau 2018). More generally, firms across Africa often lack digital recordkeeping systems and systematic financial information that managers can use for informed data-driven decision-making, such as costing and pricing products, budgeting and cost management, or profitability analyses. Thus, this project aims to answer the following research question: what is the causal effect of digital accounting and transparency practices on the growth of medium-sized high-growth firms in low-income countries?

The study involves a randomised controlled trial in Uganda that provides dedicated implementation consulting to 150 companies with at least 10 full-time employees. The intervention will be run by 25 expert Chief Financial Officers (CFOs) and one of East Africa’s leading investment-readiness firms (Imuka Access), and it will target businesses that are 40% female- and at least 90% black African-owned and led. For each treated firm, the researchers will plug a CFO – who will be trained using a curriculum akin to those used in executive classes for private firm CFOs at Chicago Booth – into the firm to: (i) introduce digital accounting software, (ii) teach effective costing and budgeting methods, and (iii) adopt financial reporting best practices. The researchers will evaluate both the short-run (6 months) and long-run (18 months) causal impact of this intervention on CAT practices (first stage), and on investment readiness and business growth (using expert evaluations, survey data, and investment data). To evaluate investment outcomes, a matchmaking workshop will follow the intervention, in which loan officers and equity investors will evaluate and consider both treated and control firms for real investment opportunities.

This study will be the first to shed light on digital accounting systems and transparency practices as a key friction to the growth of medium-sized firms in low-income countries. The project also aims to address gender and race imbalances in access to capital through enhancing support for female- and black African-owned and led businesses. The project directly speaks to British International Investment’s interest in examining the importance of digital technology for productive, sustainable, and inclusive growth, and fits the agency’s mission of fostering private sector development in Africa. Overall, the project has the potential for high academic and policy impact as it broadens our understanding of how to make high-growth firms in low-income countries investment ready.


Emanuele Colonnelli

University of Chicago

Thomas Rauter

University of Chicago