12 November 2008
Kampala — The African Securities Exchange Association (ASEA) have just concluded their 12th annual conference in Kampala.
ASEA brings together stock exchanges on the continent as well as various industry players to forge the way forward.
The suggestion of an eventual African exchange has been mooted, but initially there might be regional exchanges centered in Johannesburg, Nairobi, Cairo and Lagos.
This meeting could not have been timed better.
Capital markets at their core are mechanisms for the mobilisation of capital besides other functions they serve. In western economies when the central government, local governments and companies want to access funds they often go to their respective stock exchanges to mobilise the needed funding. Of course often times funding can also include bank loans.
There is a lot of loose change handing around but we have been unable to tap into it, a vibrant capital markets industry can help in this.
The meeting was particularly timely because with the current world financial crisis, there is a real danger that the donor countries, who are scrambling to shore up their own economies, will be less inclined to send money to donor dependent countries like Uganda.
Increased revenue collections means Uganda can almost meet its total recurrent budget, but donors still foot up to 90% of our development budget. In this budget funds for roads, schools and hospital are found. All essential public goods that government has to keep expanding, to keep track with our growing population.
So in the imminent absence of donor funds we need to mobilise funds internally to finance these projects, hence the importance of a vibrant capital markets environment.
We have been brainwashed into thinking that resources to develop Uganda have to be externally sourced, but the recent share offers of the first Stanbic Bank and Kenyan telecom giant Safaricom provide more than enough evidence to suggest we can go a long way to financing our own needs if we had more developed capital markets.
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