Expert calls for investment bank licensing in Uganda
Chief executive officer Crested Stocks & Securities Robert H Baldwin. File photo
Kampala- Regulators in the financial market have been urged to consider licensing investment banks to support corporate actions in capital development.
Addressing a news conference at the launch of the sale of National Insurance Corporation (NIC) right issue shares in Kampala yesterday, the chief executive officer of Crested Stocks & Securities, Mr Robert H Baldwin, said the importance of having a Ugandan investment bank would help in building the expertise of local citizens as well as provision of jobs internally instead of relying on investment banks from outside Uganda to do investment banking services for stock market brokers who do the technical work of corporate listing of shares or issuing corporate bonds.
He said investment banking helps companies and governments and their agents to raise money by issuing and selling securities/shares in the markets.
One outstanding importance of investment banks services is that they provide corporate finance and advisory work, normally in connection with new issues of securities for raising finance, take-overs, merges and acquisitions.
In the current NIC right issue, Crested Stocks and Securities partnered with Standard Investment Bank of Kenya to do the technical work/advise in arranging the right issue shares currently on sale.
Mr Baldwin said most of the investment banks providing technical and advisory works regarding issuing of securities in the Ugandan market are from Kenya.
Uganda currently has licensing classes as per the 2004 Financial Institution Act, under which the Bank of Uganda licenses commercial banks, Microfinance Depositing taking Institutions, Forex Bureaus and Money Remittance.
Commercial banks’ role is more of lending funds to the general public as opposed to investment bank’s roles is which provides advisory services to companies to raise funds in the capital markets.
Commenting on the NIC’s right issue, Mr Baldwin said the right issue being done by NIC will lead to increased activities and liquidity levels of the Uganda Securities exchange.
The managing director of National Insurance Corporation, Mr Bayo Folayan said that through the right issue, they want raise Shs8.4 billion for expansion of the company’s operations to the country side.
The sale of right issue of NIC begins today (Friday November 22nd to December 13) and shareholders have been advised to take their right issue shares in full, which go for Shs26 per share.
Investment banks facilitate flows of funds and allocations of capital. They bring together those who need money to invest (for example corporations that build factories and buy equipment) with those who have money to invest ( institutions that manage money for pension plans), and they make markets that allocates capital and regulate price in these financial transactions (who gets how many Shillings, with what terms and at what cost).
