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Uganda’s score in Absa Financial Markets Index 2019 improves, but more still remains to be done

By
George Mangula
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David Wandera, Absa Bank Uganda's Head of Markets.

Uganda’s score in the latest Absa Financial Markets 2019 has slightly improved with the country scoring 52 out of 100 points compared to 50 scored in the year 2018.

However, Uganda remained in 10th position behind leaders; South Africa, Mauritius, Kenya, Namibia, Botswana, Nigeria, Tanzania, Zambia and Rwanda respectively. The Index also shows Uganda was fourth, behind her East African Community peers of Kenya, Tanzania and Rwanda, respectively.

The Absa Africa Financial Markets Index evaluates financial markets development in 20 countries and highlights economies with the clearest growth prospects. The aim is also to show how economies can improve market frameworks to meet yardsticks for investor access and sustainable growth.

This was the third year the Absa Financial Markets Index is compiled under six pillars like; Market depth, Access to foreign exchange, Market transparency, tax and regulatory environment, Capacity of local investors, Macroeconomic opportunity and Legality and enforcement standard financial markets master agreements.

The Absa Financial Markets Index 2019 compiled in association with official Monetary Financial Institutions Forum (OMFIF) shows that out of 100, Uganda scored 45, 71, 73, 16, 69 and 35, respectively for the respective pillars listed in that order above.

The report notes that during 2018-2019 Uganda reduced withholding tax on 10-year government bonds to 10 percent from 20 percent, a policy change that can boost growth of financial sector. It also notes that all local Ugandan banks also signed onto the Global Master Repurchase Agreement (GMRA) and the market is able to trade horizontal repos.

Relatedly, the report notes that the Capital Markets Authority of Uganda (CMAU) is ‘developing mandatory listings for firms in strategic sectors such as telecommunications, tier one banks and mining firms to increase the number of listed companies on its bourse, the Uganda Securities Exchange (USE).

However, the report notes that respondents in Uganda complained that the country has the highest tax rates on dividends in the region with no exemptions or incentives to encourage financial market development.

Uganda at glance: Pillar 1 – Market depth

Uganda’s overall performance improved slightly, with the decline in liquidity offset by the higher value of listed bonds and equities. However, Uganda’s market liquidity continued to drop, with $11 million in turnover, down from $25 million. Turnover has been hit by uncertainty over Umeme, the country’s main electricity firm and most-traded stock.

Pillar 2: Access to foreign exchange

Uganda ranks highest in East Africa on access to foreign exchange, in third position after South Africa and Egypt. Uganda performs strongly in this pillar, with almost the same score as top-ranked South Africa.

It has a high level of foreign reserves relative to net portfolio investment flows and enough reserves to cover more than four months of imports.

Pillar 3: Market transparency, tax and regulatory environment

Uganda’s credit quality has improved as the report points out that Uganda has earned international corporate credit ratings for the first time, alongside Cameroon and Senegal. International credit ratings aid transparency and reflect confidence levels.

Pillar 4: Capacity of local investors

Uganda’s pension assets have risen with government securities accounting for 75 per cent of assets and quoted equities tallying up to 14 per cent.

Pillar 5: Macroeconomic opportunity

Uganda registered a decline in non-performing loan ratios, boosting the country’s Pillar 5 scores.

Areas for Improvement

The country has the highest tax rates on dividends in the region with no exemptions or incentives to encourage financial market development.

Uganda’s lowest ranking is on Pillar 4, ‘Capacity of local investors’, reflecting in large part the country’s low level of pension fund assets per capita. Initiatives to broaden access to pension plans should be considered in future financial inclusion strategies.

Uganda’s second-lowest ranking is in Pillar 6, where it is 12th. This is due mostly to weaknesses, as measured by the World Bank, in its insolvency framework. Improving this score can help attract international investors, who want to be sure they can quickly and easily reclaim at least some of their capital from a failing investment.

To bolster market capitalization, Uganda’s Capital Markets Authority is developing mandatory listings for firms in strategic sectors such as telecommunications, tier one banks and mining

The index tracks the progress on financial market developments across South Africa, Nigeria, Mauritius, Botswana, Kenya, Namibia, Ghana, Zambia, Egypt, Uganda, Mozambique, Senegal, Morocco, Ivory Coast, Angola, Tanzania, Rwanda, Cameroon, Seychelles and Ethiopia.

Products available in Uganda’s financial markets; equities, corporate bonds, government bonds, asset-backed securities, exchange-traded funds, cross-currency swaps, mutual funds, repo documented under GMRA and unit trusts.

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Two UPDF officers perish in a plane crash

By
Geoffery Serugo
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Major Naomi Karungi and her co-polit who are reportedly to have died in the accident.

Two Uganda People’s Defence Forces (UPDF) officers have died in army jet crash in Gomba. The development has been confirmed by UPDFs Spokesperson, Brig. Richard Karemire.

“We regret to inform that a UPDAF Jet AF 302 Ranger on a training mission has crashed. It had two crew members. Sadly, no one has survived.” He said

Brig Karemire said UPDF has embarked on investigating the cause of the tragic plane crash, “Condolences to their families and the entire UPDF fraternity.” He added.

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FIFA Secretary General calls on Parliament to harmonies the country’s sports laws

By
Our Reporter
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Fatma Samoura (L), Speaker of Parliament Rebecca Kadaga and FUFA President Moses Magogo

 

 

The Secretary General of the Federation of International Football Associations (FIFA), Fatma Samoura has urged Parliament to harmonies the country’s sports laws with the international regulations.

Samoura who is in the country to officially launch the extension of the FUFA headquarters in Mengo said that FIFA has called on national federations to ensure that the sports laws and policies are aligned with the international laws. As part of her programme, the FIFA Secretary General met the Speaker, Rebecca Kadaga. She was accompanied by a FUFA team led by the President, Moses Magogo.

“A letter was recently sent as a reminder to the Federation of Uganda Football Association (FUFA) regarding the necessary adjustments of the statutes of the Federation and football law to be compatible with FIFA statutes. Any support to accelerate the process will be appreciated,” Samoura said.

She added that FIFA will only extend the US$6 million support to local federations that have compiled with the requirements that meet international regulations.

Samoura said that FIFA has scheduled a conference on the mapping situation in Africa to take place in February on the sidelines of the next Executive Committee meeting in Egypt which she said FUFA could use for lobbying.

“It will be a good opportunity for Mr. Magogo to raise his concerns for football in Uganda, because we have invited eminent bankers and influential people in the financial market, to raise US$1 billion for construction of stadia in Africa,” added Samoura.

Kadaga said that there is a gap in the football law and that she would engage the State Minister for Sports to expedite the process.

“We have a new Minister for Sports Affairs who is very enthusiastic; I hope he can quickly work on the law. I will be happy to fast-track it when it comes to the floor of Parliament so that we can become complaint with the conditions that you require of us,” Kadaga said.

The Speaker also called for more support from FIFA to develop stadia across the country to complement those being constructed by Government. She called for support to young girls in football.

FUFA Chief Executive Officer, Edgar Watson said FUFA has on-going projects to develop football in Uganda through construction of facilities like the FUFA Technical Centre in Njeru, a mini stadium in Lugazi and the Kabira Technical Project in Lungujja among others.

Magogo said the only hindrance FUFA faces is acquiring land in the Federation’s names which is a prerequisite for project funding from the International football body.

 

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Plans to have East African single currency by 2024 underway

By
George Mangula
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EAC Logo

 

 

The Secretary General (SG)of East African community (EAC), Liberat Mfumukeko has said that the Bill for the establishment of the East African Monetary Institute (EAMI) has been assented to by the Summit of Heads of State, adding that the EAMI would later be transformed into the East African Central Bank that would issue the single currency.

EAC Partner States are in the process of harmonizing critical policies and putting in place the requisite institutions to attain a single currency for the region by 2024 as outlined in the EAC Monetary Union Protocol.

“The establishment of this institute will help to provide impetus towards the formation of the East African Monetary Union, which is the third pillar of our integration,” said Mfumukeko.

Amb. Mfumukeko disclosed that the Council of Ministers had approved the EAC Domestic Tax Harmonization Policy, adding that proper implementation of the policy would reduce tax competition thereby enhancing cross-border trade and investment in the region.

On the Financial Sector, the SG said that the Community had developed requisite legal instruments (Bills) for the insurance and microfinance sub-sector and strategies for implementation of financial education and insurance certification.

“Further, we implemented the financial market infrastructure for payment and settlement systems as well as finalized regional regulations for portability of pension benefits and consumer protection,” he added.

Mfumukeko was giving his New Year’s Address to the Staff of EAC Organs and Institutions spread across East Africa from the EAC Headquarters in Arusha, Tanzania.

He said that Community would have in place an EAC Investment Helpdesk and a Buyer-Seller Online Platform by June 2020.

“Both facilities will increase intra-EAC trade by creating awareness and markets for products manufactured within the EAC region.”

The Community, with US$20 million support spread over five years the World Bank, had also operationalized an EAC Statistics Development and Harmonization Regional Project.

“The project will support production of quality and harmonized statistics in the region through capacity building in the National Statistical Offices of the Partner States and the EAC Secretariat as well as support the establishment of the EAC Bureau of Statistics,” said Amb. Mfumukeko.

On the East African Court of Justice, the SG disclosed that sub-registries opened in the Partner States’ capital cities had elevated the visibility of the Court and reduced the costs of litigation and access to justice to the citizens of the Community.

“The residents can now easily take advantage of the Court and have their disputes resolved. In addition, the finalization of the review of the EACJ Rules of Procedure in 2019 will now provide seamless procedures to the benefit of the litigants,” said Amb. Mfumukeko.

On fisheries, the SG revealed that the Lake Victoria Fisheries Organization (LVFO) updated the status of fish stocks on the lake registering a 21 per cent increase in total biomass to 2.68 million metric tonnes between 2018 and 2019.

“The Nile Perch population increased by 48 per cent, from 0.55 million to 0.82 million metric tonnes over the same period. LVFO also revised Co-Management Guidelines for Lake Victoria, which provide for enhanced participation of stakeholders in fisheries management as well as capacity of fish traders and inspectors to promote market access, improved revenue collection and enhanced fish quality and safety assurance.”

LVFO received funds from the EU for a Start-up Phase of ECOFISH Project to enable consultations with key stakeholders to facilitate development of the detailed programme for enhancing regional policies and institutional frameworks.

The SG urged all EAC Staff to rededicate themselves to serving the region, a task he described as a privilege, adding that they had been recruited competitively based on their unique skills and expertise.

 

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Uganda to mark World Wildlife Day

By
Geoffery Serugo
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Mountain gorilla

 

 

The state minister of tourism, Godfrey Kiwanda Ssuub,i has said Uganda is set to join the rest of the world to mark World Wildlife Day 2020 celebrated on the 3rd day of March every year.

On Dec 20, 2013, 68 session of UN General Assembly proclaimed 3rd March of every year as World Wildlife Day 2020 to celebrate the beautiful and varied forms of wild fauna and flora and to raise awareness of the several benefits that conservation provides to humanity.

Under the theme ‘Sustaining all life on earth’, the day will be celebrated at Ssaza grounds in Kisoro Municipality, Kisoro District in Kigezi sub region. The year 2020, known as a ‘biodiversity super year’, will host several major global events that place biodiversity at the forefront of the global sustainable development agenda.

According to the minister, the theme encompasses all wild animal and plant species as a component of biodiversity as well as the livelihoods of people, especially those who live closest to the nature. It also underlines the importance of sustainable use of natural resources in support of the achievement of the United Nations Sustainable Development Goals

“Uganda boasts of a rich and diverse wildlife heritage owing to its unique location at the zone of overlap between the savannah of East Africa and rainforests of W Africa. We’re distinctly blessed with spectacular landscapes of unrivalled beauty.” He said

“It provides a unique opportunity to deliver transformative progress for the conservation and sustainable use of the species of wild animals and plants in response to global sustainable development challenges that can best be addressed with nature-based solutions.”

Wildlife, namely the species of both wild animals and plants for the purpose of World Wildlife Day, is an integral part of the world’s biological diversity which has the greatest resonance with the general public.

In the run-up to and on World Wildlife Day 2020, the ministry will raise awareness of the multitude of benefits of wildlife to people, the interlinkages between the various components of biodiversity and the threats they are facing.

 

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We are closely monitoring all consultative meetings –  police 

By
Geoffery Serugo
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Police Spokesperson Fred Enanga

Police has said that they are closely monitoring consultative meetings and preparations of all aspiring candidates for observation of the law and maintenance of sanity in the country.

According to police spokesperson Fred Enanga, some political actors and groups have released road-maps for public consultations online, and went on calling delegates and supporters to take part in these consultations.

“We would like to remind them that it is a requirement under the EC guidelines, for all aspiring Presidential Candidates to formally notify the police.  At the moment we are carefully monitoring all politicians planning on holding consultations to ensure they do not fraunt  these guidelines.” he said at police headquarters in Naguru.

Based on recent experience, Enanga said they have observed negative impact of illegal processions and assemblies which climaxed into threats to public order and safety in the areas of in Kasangati, Jinja and Soroti,   “As a result we would like to ask all politicians and their organizers to work with the police to achieve their objective of consultations,” he said.

“We continue gathering intelligence on all potential risks and threats to public safety.  We have plans to respond proportionately, in the face of any violent situation by using minimum but necessary force that may include the use of teargas to disperse and arrest the offenders.” He said

He said all Territorial police Commanders have been reminded to train and equip our officers to maintain public order and to further have effective plans of mobilizing officers within their territorial jurisdiction or across territories where necessary.

“We pledge to continue policing all lawful and peaceful assemblies.  We also call upon the public to help us fight illegal protests by being vigilant and reporting any suspicious behavior,”he said.

Recently police clashed with Kyadondo East MP who is also an aspiring presidential candidate, claiming that the singer did not notify them on his consultative meetings. They later met and ironed out all the indifferences in line with the law.

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The new Mulago specialised Women and Neonatal Hospital to open in March

By
Our Reporter
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The new Mulago National Specialised Hospital is expected to open in March this year to serve the public as rehabilitation works remain in high gear.

According to the permanent secretary at the Ministry of Health, Dr. Diana Atwine, the contractor is doing final works that are expected to be completed within the month of February.

The construction and renovation works that started in 2014 and were expected to end in 2016 and have had a three-year delay because of failure to meet all the previous deadlines.

Dr. Atwine says the hospital will now offer organ transplants, the first time such procedures will be conducted in the country.

The move to decongest and renovate Mulago hospital came after the old structures constructed in the 1960s got dilapidated and equipment broke down forcing the government to seek a loan of US$50 million from the African Development Bank to rehabilitate it.

Attachments area

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NWSC embarks works to boost water supply in Kampala and other areas

By
Geoffery Serugo
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The NWSC Kampala Water management team has embarked on a project aimed at stabilizing the water levels at Muyenga bulk water reservoirs and subsequently boost water supply to some parts of the city experiencing supply challenges during this dry season.

The project involves laying new steel transmission mains between reservoirs, system reconfiguration works at the Rubaga- Muyenga water reservoirs and associated water distribution installations along the network.

When completed, the intervention will allow for operational flexibility and a better supply situation during the dry season

Kampala Water General Manager Eng. Mahmood Lutaaya assured city dwellers that the corporation is working around the clock to stabilize water supply in the city.

“We are experiencing high demand for services during this dry season. Whilst we produce 240million liters of water per day, the current demand for water during this peak season is about 330 million liters per day,” he said.

He said some customers in Buwaate, Nansana and the surrounding areas, Kyengera, Gayaza, Kanyanya, Namasuba, Rubaga and Mutungo service areas are experiencing water supply challenges.

We are working on a number of interventions to bridge the supply gaps and serve our customers better,” he said.

Kampala Water Senior Manager Water Supply Eng. Moses Bigabwa said that the corporation is working on a new water works in Katosi that is near completion.

The combined water production from Katosi and Ggaba water works will cater for the demand for water services in the city up to the year 2040.

“Kampala is no longer the 7 hills we knew. Currently, the Kampala network serves customers as far as Wakiso, Namawojjolo, Mukono among others areas in the peripheral of the network. We are working on a number of interventions to address the supply challenges in some parts of the city very soon,” he said.

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Pentagon blocks plan to tighten controls on US sales to Huawei – report

By
Agencies
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The US Commerce Department has withdrawn proposals to tighten restrictions on US firms selling to Huawei, the Wall Street Journal reports. People familiar with the matter said the plans were blocked by the Defense Department, which is concerned about the impact on tech firms from the loss of sales to Huawei.

The Pentagon is concerned that if US firms can’t continue to ship to Huawei, they will lose a key source of revenue, depriving them of money for research and development needed to maintain a technological edge, the report said. The chip industry has pressed that argument in talks with government officials.

Defense Secretary Mark Esper said “we have to be conscious of sustaining those [technology] companies’ supply chains and those innovators”. He was asked about the WSJ report during an appearance at the Center for Strategic and International Studies in Washington.

After the paper reported on the Pentagon’s action, US Senators Ben Sasse, Tom Cotton and Marco Rubio sent a letter to Esper asking him to explain his rationale. They have pushed for a harder stance against Huawei, calling it “an arm of the Chinese Communist Party”. Huawei has repeatedly denied such a connection.

Support for new suppliers

Separately, the US government is exploring how it could help companies produce hardware that could compete with Huawei on 5G within 18 months, a senior administration official said. Discussions include government and corporate representatives from Japan and other democratic countries, the official said.

That effort would help the US persuade other nations, including the UK and Germany, to bar Huawei equipment from their networks, the official said.

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Revealed: what’s fuelling the rapid hotel growth in West Africa

By
Agencies
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Today, Africa is seen as one of the most promising regions for hotel developers. Aside from small chains and independents, four global hotel groups dominate signings and openings on the continent. Over the last four rolling quarters, as of September 2019, Accor, Hilton, Marriott International and Radisson Hotel Group have opened 2,800 rooms and signed deals for 6,600 rooms. Across Africa, hotel development remains important in most advanced economies, such as Morocco and South Africa; and projects are multiplying in East Africa, especially in Ethiopia, Kenya, Tanzania and Uganda. In West Africa, Nigeria is back on the development scene thanks to emerging regional destinations beyond Abuja and Lagos. Francophone Africa is also moving fast. The Ministry of Tourism of Ivory Coast has launched an ambitious national plan for tourism development, Sublime Cote d’Ivoire, and already announced over US$1bn investment in the sector. Senegal is the other regional star, with local programmes such as Diamnadio, Lac Rose near Dakar and Pointe Sarene. Other countries showing active hotel development include Benin, Cameroon, Guinea, Niger, and Togo.

Now, in an interview, Philippe Doizelet, Managing Partner, Hotels, Horwath HTL, West Africa’s leading hospitality consultant, in conjunction with the Forum de l’Investissement Hôtelier Africain (FIHA), the premier hotel investment conference in Francophone Africa, has identified four fundamental factors which are fuelling an increasing flow of investment into the hospitality sector in West Africa. They are, in alphabetical order: Air connectivity, Better economic growth, Currency and Demographics.

In the past few years, additional flight connections have transformed travel to and from West Africa, which, in the words of Philippe Doizelet, Managing Partner, Hotels, Horwath HTL, has been a game changer. He said: “It used to be that the main hubs for flying between West African countries were Paris and Casablanca. However, thanks to the rapid growth of Ethiopian Airlines and other carriers, such as Emirates, Kenya Airways and Turkish, the situation has changed; and new routes are offered to travellers. For example, it is now possible to fly direct from New York to Abidjan, where the African Development Bank is located, and to Lomé, where the Central Bank of West African States (BOAD) is situated… and with increased travel comes increased commerce and demand for accommodation.” According to the UNWTO, international tourist arrivals in Africa grew by 7% in 2018, one of the fastest growth rates in the world together with East Asia and the Pacific. The flight data analyst, ForwardKeys, recently confirmed that trend continuing. In 2019, African aviation experienced 7.5% growth and it is the stand-out growth market for Q1 2020. As at 1st January, international outbound bookings were ahead 12.5%, 10.0% to other African countries and ahead 13.5% to the rest of the world. As a destination, Africa is also set to do well, as bookings from other continents are currently ahead by 12.9%.

The second factor is the superior economic growth of many West African countries, which are expanding substantially faster than many of the world’s most advanced economies. According to World Bank data for 2018, several, such as Benin, Burkina Faso, Gambia, Ghana, Guinea, Ivory Coast and Senegal are growing at 6% per annum or better, more than double the world average, 3%. That is a potent attraction to international investors. However, that’s not all; as prosperity grows domestically, so too does the local financial services industry. It then looks to invest client monies; and a good proportion of that capital gravitates towards real estate projects and, in turn, new domestic infrastructure. As those projects come to fruition, more prosperity is generated and so a virtuous cycle is stimulated, which acts as a catalyst for further economic development.

Currency is the third factor. Later this year, the CFA franc, which is pegged to the euro, is planned to be dropped and 15 countries in West Africa (ECOWAS) will adopt the Eco, a new, free-floating, common currency, designed to reduce the cost of doing business between them and so increase trade. However, whilst there is great enthusiasm for the Eco, it is somewhat qualified because the economies of participating countries are at different stages of development and governments may find it difficult to adhere to agreed guidelines for managing their economies.

The fourth factor is demographics. The population is young and the fastest growing of any major world region. According to Philippe Doizelet, it is also characterised by a hunger to learn and confidence about the future. “People are seeing their standards of living improve and they are keen to seize opportunities. We are seeing that mindset reflected throughout the hospitality industry; it’s incredibly refreshing and it’s attracting business.” He said.

However, the picture is not all rosy. Horwath HTL also identifies four factors which threaten economic progress; they are security issues, political agenda, governance and increasing public debt. Although Africa today experiences much less conflict than it did three or four decades ago, when most African countries experienced war, some parts of the Sahel are still subject to security threats. On the political front, although democracy is continuing to spread, it is not yet the general rule everywhere, especially when come the times of major elections. Third is governance. Philippe Doizelet says: “When people are poor and the state is weak, there will be corruption, but I’m not convinced that it is much worse than in other parts of the world.” The fourth concern is rising public debt, much of which has been incurred as long-term loans from the Chinese to build infrastructure. That said, the debt to GDP ratio of many West African states is still less than many highly developed nations.

Matthew Weihs, Managing Director, Bench Events, which organises FIHA, concluded: “Africa is not the easiest place to do business, but it is an incredibly exciting place because the opportunities substantially outweigh the threats. Every time we organise a hotel investment forum, I see more hotel openings being announced and I meet new players keen to enter the market. The FIHA delegates are literally constructing the future of Africa in front of our eyes and anyone who attends the conference has the opportunity to join in.” FIHA takes place at the Sofitel Abidjan Hotel Ivoire in Abidjan, March 23-25.

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