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 10 th 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 […]