24 January 2019

Africa: Uganda's Capital Markets Ranked Among Africa's Best

Kampala — Uganda's capital markets have tremendously improved, scoring highly in areas such as trade and settlements automation, according to a report compiled by Absa, which operates the Barclays Bank Africa franchise.

While presenting the Absa Africa Financial Index 2018 report in Kampala on Tuesday, Mr David Arthur Wandera, the Barclays head of markets, said Uganda's capital market were ranked ninth among 20 other notwithstanding its low turnover.

Uganda has only 17 firms listed on the stock exchange with a total market capitalisation of Shs22 trillion.

This, according to the report, has been a challenge to the growth curve of capital markets in Uganda with participation largely limited to elites and large corporations.

Capital markets development in Uganda began with the enactment of the Capital Markets Authority Act which subsequently led to the establishment of the Uganda Securities Exchange in 1998.

However, growth has been slow in the sector with the exchange experiencing long droughts of initial public offerings. The exchange currently has nine locally listed companies and eight cross listings, all from Kenya.

Mr Wandera said a number of reforms such as providing incentives to local companies seeking to list, are likely to increase market depth as well as attract new companies to the exchange.

South Africa, Nigeria, Mauritius, Namibia, Egypt and Kenya, among others were ranked ahead of Uganda. The report indicated that Uganda must engage in innovation to increase on it product portfolio in a bid to create diversity.

The Uganda Securities Exchange currently offers three instruments including government bonds, corporate bonds and share sell.

This according to Mr Wandera locks out participation thus lagging behind other markets that have innovated new products.

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