CMA Boss, Keith Kalyegira
It’s been a year dominated by Covid-19, and its effects. Although 2020 has been a year to forget, there have been some stellar moments for the capital markets.
The number of Ugandans saving for retirement has significantly increased, the Capital Markets Authority (CMA) industry report for the financial year 2019/20 indicates.
The report showed that assets under management by fund managers hit sh3.5 trillion in the financial year 2019/20 which ended in June this year.
This was a growth of 18.3% from sh2.9 trillion at the end of the prior financial year 2018/19. At the same time collective investment scheme managers had sh388.5b in assets under management at the end of June up 123.9% from sh173.5b in the prior financial year as more Ugandans save.
“The increase in assets under management can be credited to the increase in the number of retirement benefit schemes and also recruitment of new members by schemes whose funds are being managed,” Keith Kalyegira, the CMA top boss told reporters at the Golf Course hotel.
Kalyegira pointed out that more Ugandans are becoming aware of collective investment schemes (CIS) which has seen more investors open CIS accounts. He noted that there were 8,904 accounts in June up from 5,222 in the June 2019.
He pointed out that the Covid-19 pandemic has fundamentally challenged the financial and operational agility of the capital markets industry in Uganda. In the capital markets space, Kalyegira said that the current situation provides a golden opportunity for the digitization of the fund-raising process.
The report showed that issuer resource persons, who sensitize potential investors and issuers and are licensed by the CMA have initiated transactions worth $12m (sh45b) in the sectors of education, medical equipment, microfinance, construction manufacturing, real estate and re-insurance.
Furthermore, the CMA’s ten-year Capital Markets Development Master Plan launched in 2017 is slated for a revamp to identify areas of improvement to deepen the pool of formal savings in Uganda.
Dickson Ssembuya, CMA’s director research and market development pointed out that review of regulations is ongoing to create a regulatory environment that is certain, friendly to innovation and cost effective for investors, issuers, and market intermediaries.
Under review are regulations for prospectus, conduct of business, licensing, stock exchanges, finance and accounting, commodity exchanges, self-regulatory organizations, the capital markets tribunal, and corporate governance.
“CMA with support of the International Monetary Fund undertook a consultancy which sought to adduce the appropriate level of financial requirements for the various market intermediaries. The proposals will inform the finance and accounting regulations that are under development,” Ssembuya said.
He noted that domestic market capitalization closed lower at sh4.27 trillion in June, representing a 13.1% drop due to share price losses registered on all locally listed counters with the exception of British American Tobacco Uganda whose price remained unchanged at sh30,000 per share.
Consequently, domestic market capitalization as a percentage of Uganda Gross Domestic Product also fell from 4% in financial year 2018/19 to 3.4% at the close of financial year 2019/10 in June.
2021 promises to be a better year for the capital markets.
By the Capital Markets Observer
