Uganda CMA Woos Industrialists to List Stocks

Uganda's Capital Markets Authority and Uganda Manufacturers Association have signed an agreement to encourage manufacturers to list on the Uganda Securities Exchange (USE).

The manufacturing sector contributes about eight percent to the GDP currently compared with 15 percent in the pre-pandemic times, according to data from the Capital Markets Authority (CMA) of Uganda.

"Uganda's manufacturing sector has an investment gap of more than $300 million per year and this offers strong growth opportunities for the capital markets industry," said Keith Kalyegira, CMA chief executive.

The country's economy is currently valued at $35 billion, representing the total value of goods and services produced throughout the year.

While players in the manufacturing sector are optimistic about huge capital fundraising opportunities, it is not clear how much cash the capital markets sector is willing to provide in an environment where many investors are reluctant to pump a lot of money into one sector at the expense of other rewarding sectors.

The severe effects of the global pandemic experienced in many economies have compelled many investors to inject more cash in liquid assets such as treasury bills and bonds, which offer quick returns on investments compared with long term commercial opportunities available in the manufacturing and mining sectors.

"There is great opportunity for raising capital on the stock market for local manufacturers because of huge market capitalisation levels, the lack of single borrower limits, which affect many banks and a wide pool of liquid investors such as unit trusts and pension schemes," said Martin Kyeyune, a senior executive at Roofings Group, a manufacturer of iron sheets and steel bars.

However, questions have been raised over a potential skill set match between Uganda's manufacturing sector and the capital markets industry.

"Local manufacturers are weak in dealing with third party investors because they have a poor understanding of corporate governance practices.

"The CMA alone is not in a position to figure out the skill set and investor profile match, which suit the manufacturing sector. But this question will be tackled through a long contemplative process facilitated by the new agreement signed between the CMA and the manufacturers association," said Deo Kayemba, the vice chairperson of UMA.

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