East African Business Week (Kampala)
David Mugabe
10 September 2007
Kampala — The Uganda Securities Exchange (USE) Central Depository System (CDS) bill that has dragged on for years has finally been debated by the Uganda cabinet.
"There is good news. Hopefully it should be ready by the end of the year," said Mr Simon Rutega, the chief executive officer, USE last Friday.
The bill is expected before parliament for first mention in the next two weeks.
The CDS allows for electronic handling and processing of share certificates. If approved by parliament and the Uganda bourse is given the go ahead to install the CDS altogether, the Automated Trading System (ATS) would be implemented by June 2008. Essentially Uganda would be ready to beam her trading electronically like the Nairobi bourse.
"Implementation of the CDS project will soon be initiated as the consultants have been contracted and the CDS is expected to be operational by the end of November 2007," said Rutega.
The bosses of the three exchanges of Uganda, Kenya and Tanzania were in Kampala last Friday attending the 8th East Africa Securities Exchange Association (EASEA) meeting.
At the EASEA meeting, Mr. Simon Rutega, Mr. Chris Mwebesa and Mr. Jonatham Njau of USE, NSE and DSE respectiviely also expressed a strong resolve to entice small and medium sized enterprises to list onto the exchanges. SMEs form about 80% of the economies in East Africa.
Yet the formal financial sector often targets the big companies and organisations, ignoring the SME sector which also employs the bulk of the population.
The move to intergrate SMEs onto the financial markets as members of the Alternative Investment Market Segment (AIMS) as opposed to the Main Investment Market Segment (MIMS) is to allow sectors that do not have huge capital to exploit the benefits of listing.
A huge consistent impediment to the listing of SMEs and companies generally has always been the stringent conditions imposed by the capital markets, conditions that companies find so demanding and restrictive.
Now EASEA is looking at relaxing the rules much further. One of the entry requirements to list on the DSE for example is capital to the tune of Tsh500 million. The DSE has now amended their rules and regulations to create a new market segment called the Enterprises Growth Market Segment (EGMS), which is expected to play a big role in the implemetation of the Tanzanian government's small and medium sized enterprises development policy.
One of the advantages that the SMEs will attain by listing onto respective bourses is business continuity (by good public centered management), and increased capital accumulation.
For the first time, EASEA accepted the bosses of the central banks of Rwanda and Burundi as observers. Rwanda and Burundi were in the middle of this year accepted formally as members of the East African Community.
The two countries are also in the process of establishing their own capital markets.
The Kampala meet chaired by Mr Chris Mwebesa, the EASEA chairman also received reports on activities in the different markets.
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