Uganda Securities Exchange (USE) registered a huge slump in trading turnover and volumes during 2017, exposing pressure following the exit of many foreign institutional investors and a decline in corporate activity. But industry players, pegging their optimism on falling interest rates as the Bank of Uganda maintains a low central…
Govt presents loan funding request
The Ministry of Finance, Planning and Economic Development will present loans of USD495 million to Parliament for Approval. This will increase the total disbursed and undisbursed to nearly USD15.5 billion (approximately 60% of Uganda’s GDP).
According to the Bank of Uganda, state of economy report for December 2017, the total external debt exposure (debt disbursed and outstanding and debt committed but undisbursed) amounted to USD11.7 billion as at end November 2017.
The provisional stock of public external debt disbursed and outstanding stood at USD 6.7 billion as at end November 2017, representing an increase of 8.2 per cent from June 2017 compared to an increase of 1.8 per cent in the corresponding period a year ago.
Total domestic debt outstanding is USD3.3 billion. Additionally, Government intends to borrow an additionally UGX736 billion this financial year to fund a supplementary budget. This added to the approved borrowing of UGX934 billion will bring total domestic UGX1.67 trillion (about 11% of the domestic revenue).
This supplementary budget is largely recurrent, which implies continued trend of recurrent budget overruns. At half year, the development budget both domestic and externally financed continued to be under executed.
Broadly, while debt is assessed as low debt stress, the risks are more pronounced now than ever and there is a risk that fiscal adjustment as foreseen in 2020 will happen.
There are a number of pipeline projects whose full cost is yet to known including the oil roads, the government planned expenditure on SGR, refinery and pipeline. There are also a number of Private Public partnerships where government has born full risk and thus risk materialisation would lead to contingency liabilities.
No IPO for Uganda
Only Uganda Stock Exchange among the East Africa four (Uganda, Kenya, Rwanda and Tanzania) has had no Initial Public Offer (IPO) between 2013 and 2017.
Diageo to Exit East African Breweries as Asahi Takes ControlThe last IPO was undertaken in November 2012 by Umeme Holdings Limited – the monopoly distributor of electricity power. According to the 2017 Africa Capital Markets Watch by PricewaterhouseCoopers (PwC), the Nairobi Securities Exchange (NSE) had no IPOs raised in either 2016 or 2017.
The NSE has only been able to raise USD 42 million through two IPOs offered in 2014 and 2015. Rwanda Stock Exchange saw only one initial public offering (IPO) in 2017 when I&M listed bringing the total number of listed companies to 8, where 4 are banks and the rest are from service sector.
The only telecom company listed – Crystal Telecom listed in 2015. Other two firms expected to float shares still going through the approval process with Vodacom listing on the Dare-es Salaam Stock Exchange in 2017 brought the total number of listed companies reached 26 and remains the second largest stock exchange after NSE.
Mucoba Bank listed in 2016, Mwalimu Commercial Bank and Yetu Microfinance in 2015, Mkombozi Commercial Bank (2014) and Maendeleo Bank. The bank based listings.
However, across the board both Foreign Direct Investments and Public entities dominate activity of stock exchanges. The local private owned companies are yet to open doors to the equity markets.
However, the Uganda Securities Exchange (USE) among the EAC member states registered the biggest growth — measured by the All Share Index performance that rose 63.8 per cent from 1,477 points at the start of the year to 2001 points currently, followed by the Nairobi Securities Exchange (NSE), whose performance was up 21 per cent from 134.1 in January to 170.
The bond segment of the stock exchanges remains fairly underdeveloped. In a six pillar pilot Barclays Financial markets index covering 17 countries that measures the openness of countries to foreign investment, Uganda of score of 47/100 lags behind Rwanda (48) and Kenya (59) but is ahead of Tanzania (44).
The least scores for Uganda respectively were with the weak capacity of local investors and legality and enforceability of standard financial markets master agreements.
