News 

Thursday, June 22, 2017 

Ugandans told to use Capital Markets for cheaper loans

Paul Bwiso, CEO, Uganda Security Exchange


KAMPALA, Uganda--Ugandan Entrepreneurs  have been urged to exploit opportunities in the capital markets  to raise funds that can finance their businesses without necessarily visiting commercial banks for loans that have high Interest rates.

 

“For the local entrepreneurs to  expand their businesses,  they need to access long term  but cheap loans  of which commercial banks can’t offer  due to the market price.

“Investees need to diversify  their source of financing  to involve  Noncommercial banking institutions like the capital markets and private equity firms,” said Paul Bwiso, the Executive Director of Uganda Securities Exchange.

 He was speaking at the Private Equity and Capital Conference Organized by the Uganda Investment Authority.

Bwiso said capital markets have the potential to support local entrepreneurs provided they present visible projects.

He said there are many options in which entrepreneurs can access working capital at the USE like through Initial public Offers (IPOs), Corporate Bond’s, Commercial Paper and Medium Note products.

“At USE we offer the above products.  They are good for entrepreneurs because of the long  re- payment back period,” said Bwiso.

  “Capital Equity firms give more priority to large investors especially in the manufacturing and processing sector.

“Many of the Small and Medium Enterprises have been neglected by these developmental financing Institutions thus leaving us with only one option of going for expensive loans from commercial banks,” noted James opio  an Agri- business dealer  from Northern Uganda .

On the issue of Capital Markets neglecting small entrepreneurs, the State Minister for Finance in charge of Privatization  Evelyn Anite -- blamed it Ugandan entrepreneurs  who are not trustworthy.

“We are trying hard to get investors for the private sector. It is proving to hard because our morality as Ugandans is questionable,” said Anite.

Anite said Uganda has come up with other financing mechanism through its institutions such as the Uganda Development Bank where the Government has Injected about Ush 50Billion to finance the private sector especially the SMEs.

Jolly Kaguhangire, the Executive Director of Uganda Investment Authority said the private sector has not fully utilized the capital markets because they lack information and knowledge on what the requirements and the procedures are for one to access these funds.

 

“The investment sector has over Shs 9 trillion but only 2% of this money is going to the private sector. We allow up to 15 percent of the investment funds to be invested in private sector but this is not possible because the private sector has no capacity to fully consume and grow these funds,” said Kaguhangire.             

By SAMUEL NABWIISO , Thursday, June 22nd, 2017