Investment services firm African Alliance has disclosed that it plans to close its stock brokerage business in Uganda by 25th April after operating in the market for 15 years. The company cited low market activity on the Ugandan Stock exchange as one of the main reasons for exit.
“We regret to notify our brokerage clients and the general public that the Company will not renew its broker license with CMA Uganda, and will, therefore, cease to offer the service effective 30 April 2019 when the current license expires,” the firm says in a press release.
It is not the first time the firm has closed business in Uganda; in 2018, African Alliance shut down its asset management arm due to low returns on investment, volatile interest rates, and a small asset base.
African Alliance is based in South Africa with operations in other African Countries such as; Kenya, Nigeria, Ghana, Malawi, Zimbabwe, Zambia, Botswana, and Mauritius.
The firm’s departure from Uganda has raised concerns about its future in African Financial Markets. Between 2004 and 2007, the company played a key role in developing capital markets in the continent by establishing stock brokerage units where foreign investors traded. However, major capital outflows from the frontier markets in recent years have led to a decline in revenue for the South African company. As a result, the firm has downsized its presence in African markets such as Rwanda and Uganda.
In reference to the departure from Uganda, the African Alliance Uganda CEO told The East African, “If you have a cattle herd and you are stuck with a dry spell, you may be forced to slaughter some cows in order to fatten the herd and ensure the livestock survives with the little water available until the next rain season.”
African Alliance will continue to run its investment advisory business in Uganda. Its clients in the stockbroking arm will be transferred to UAP Old Mutual Financial Services upon approval by Uganda’s capital markets regulator and the Uganda Securities Exchange.