It was an overall quiet week with the shilling maintaining trading within a narrow range between the 3650 – 3685 levels, as Corporates remitted mid-month taxes and inflows were limited with continued pockets on the demand side as activity picks up in the market. 

Catherine Kijjagulwe, Head of Trading at Absa Bank Uganda said as we draw close to the end of the month, usual inflows from NGOs should start to trickle into the market but also continued demand tickets that are still likely to keep the unit within the 3640 – 3740 trading range.

Money Markets were still tight during the week impacted by tax remittances with overnight yields still elevated at averages of 12%. Bank of Uganda held a Treasury Bill auction on Wednesday and yields in the 91-day, 182-day and 364-day tenors cleared at averages of 10.384%, 10.512% and 12.302% respectively.

Bank of Uganda is scheduled to hold a 5-year and 20-year Treasury Bond auction on Wednesday February 22, 2023.

The Kenya shilling saw some remittance inflows and inflows from the tea sector that helped cover some of the demand in the Kenyan market. However, the unit continued to trade within the 126.00 -133.50 trading range – a range it is likely to maintain in the near term.

She said the dollar remained strong as economic data continued to boost it. Jobless claims contracted to 194k and positive Producer Price Index data also rose to 0.7% Month on Month, further cementing the notion that the Fed will continue its rate-hiking cycle.

The Euro weakened on Thursday as the dollar strengthened, closing trading at $1.0668.

“The Pound also faced pressure due to dollar strength. On Thursday, it had touched highs of $1.2074 intraday but later weakened to close at $1.1993,” she said. 

Brent crude traded at $83.69 a barrel and West Texas Intermediate at $77.03 a barrel with the continued build-up in US Stocks as the market awaits a pickup in demand from China. Also, strong US economic data indicates that the Fed will continue its rate-tightening cycles in the short term.

Gold traded at $1821.73 an ounce.

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The government accountability and public procurement agencies in East Africa have joined the East African Procurement Forum and exhibition amidst discontent about foreign competition for local contracts.

The 14th Forum has been organised under the theme: “Open Contracting as a vehicle for Sustainable Development,” is aimed at transparency in the procurement industry. It is open to local, regional, and international firms seeking to offer services or supply in the East African Community.

It comes at a time when Ugandan firms are calling for affirmative action by the government when giving out public contracts. Unfortunately for local firms, a number of government projects are executed on a pay-later basis or compensation basis for investment. Local companies simply lack the capacity to operate under such conditions.

The Forum is hosted by the Public Procurement and Disposal of Public Assets Authority and organized by Fathil International Projects (FIPRO) a regional marketing firm.

FIPRO representative Fred Kanongo has said that the big deals are likely to be taken by multinational agencies against Ugandan and East African firms.

He suggests that for local contractors and suppliers to get contracts, the host agency and government departments have to ring-fence for them.

He also says that there’s a need to boost the capacity of local contractors and producers to be able to compete on their merit. A similar strategy should also be applied to suppliers of products to fence off suppliers from developed countries, according to Kanongo.

PPDA Executive Director, Benson Tumuramye says this is the first time that the East African Business Expo and the Forum will be running concurrently with the aim of bridging the gap between suppliers and buyers.

“We have always had The East African Procurement Forum every year, but without opening up the platform to suppliers. This year, we have partnered with FIPRO, who will organize the business expo alongside the procurement forum over a four-day period,” said Tumuramye.

He said that they are expecting 500 exhibitors, something Ugandans should take advantage of.

East African Community Affairs Minister and first Deputy Prime Minister, Rebecca Kadaga, said she is participating in the program as part of the agenda to eliminate trade barriers in the region.

The government and the business community have been urged to use this opportunity to fortify trade relationships in East Africa.

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Stanbic Bank Uganda has won the Bank of Uganda (BoU) award for ‘Best-performing Primary Dealer Market Maker (PDMM) for 2022, becoming the first to earn the honour for a record 11 times, since its inception eighteen years ago. 

“Primary Dealing’ refers to the practice of a commercial bank directly buying government securities from the central bank and retailing them to the rest of the market (secondary market), to help raise revenues to support government spending. 

In 2005, BoU launched the primary dealer (PD) system to promote participation and operational efficiency in the government securities market, improve secondary market trading and foster financial market development.

The system was reformed in October 2020, allowing 8 banks to guarantee subscriptions of primary auctions with added market-making obligations, for increased trading and more efficient pricing, for a three-year period after which the eight banks would be restructured based on performance. 

Speaking at the awarding ceremony on Wednesday morning, Deputy Governor Dr. Michael Atingi Ego recognized Stanbic Bank Uganda for its contribution to the development of the securities market through participation in the primary auctions and fulfilling their market-making obligations in the secondary market. 

“The bank has consistently posted two-way bid-ask pricing across the entire yield curve, as well as trading and reporting trades on the Bloomberg. I am therefore pleased to announce Stanbic Bank Uganda Ltd as the Best Performing Primary Dealer Market Maker in Uganda government securities for the ranking year ended September 2022,” he said.

Vote of confidence 

Speaking at the award ceremony, Stanbic Bank Chief Executive Anne Juuko said winning the award for a record 11 times is a statement of approval in the lender’s commitment to supporting government mobilize resources to finance development activities.

“I thank Bank of Uganda for the recognition and our global markets team at Stanbic, for the hard work. This win is a statement of our commitment to playing our part in the collective responsibility of driving Uganda’s growth, which also happens to be our purpose,” she said.

Allan Muhinda, the Stanbic Bank Uganda Head of Global Markets which directly oversees securities trading business, also said the award is a strong vote of confidence in the team he leads.

“We thank our customers because this award is only possible when their experience doing business with us is satisfactory,” said Muhinda.

Strong growth

Secondary market liquidity grew for the period under review, with trading volume rising 11.17 percent to Shs 47.4 trillion in the PDMM year ending September 2022 from Shs 42.6 trillion in the year ended September 2021. 

The ratio of secondary market turnover to the total outstanding stock of government securities was 154.55 in the year ended September 2022 from pre-PDMM year levels of below 55%. 

The number of trades increased to 15,330 in the year ended September 2022 from 15,038 in the previous year (compared to 6,442 deals in the pre-PDMM era of 2020), partly due to increased retail participation in the secondary market supported by the countrywide promotion of government securities.

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