In 1991, the Uganda government started divesting its interests in several enterprises, giving some a condition to sell their shares to the public.
About 60 enterprises had by 2002 been privatised by the government. Some of these companies, according to the Prime Minister, Dr Ruhakana Rugunda, were required to list sell shares to the public by listing on the Uganda Securities Exchange (USE) and ALTX.
Currently, Stanbic Bank (acquired UCB), Bank of Baroda, National Insurance Corporation, Uganda Clays and British American Tobacco are the only companies to have issued shares to the public.
Umeme also sold shares to the public.
“I would also like to appeal to the public interest companies in sectors such as telecommunications and banking to consider selling a part of their shares to the public.
“Companies that were formerly government owned, companies that were privatised, whether or not this was a condition in the selling agreements should also consider selling some shares to some Ugandans who have supported their growth as customers, suppliers, and employees,” Dr Rugunda said during the launch of the Capital Markets Development Masterplan at the Kampala Serena Hotel yesterday.
The USE has only eight locally listed companies and about 40,000 retail investors – a number that remains low.
The last listing on the USE was Umeme in 2012.
Several of the other privatised companies, despite doing well, have not sold shares to the public.
Talking to Daily Monitor yesterday, the spokesperson of ministry of Finance, Mr Jim Mugunga, said: “In those days, when some of the companies were supposed to list, the stock exchange was not yet established.
“In 2006, when they (Barclays) was going to list, they acquired Nile Bank. These changes and the ones they are going through right now are the reasons they give for not listing.”
He also said other companies like Sheraton Hotel have also had several changes and renovations that have forced them not to list at this stage.
“Each company has to be evaluated on a case-by-case basis as some of them failed to meet the listing requirements,” he said.
In 2007, the government threatened to sue the companies that had not listed but backtracked on this move.
Growth of capital markets
According to Mr Keith Kalyegira, the chief executive officer Capital Markets Authority (CMA), some of the impediments to the growth of capital markets in Uganda can be linked to the limited supply of shares and the low public issuances by companies in the country.
“At a policy level, I think the government needs to pronounce itself on the privatised companies, especially those that made contractual obligations to sell shares to Ugandans.
“There has to be a discussion and a final decision made so that these companies are compelled to sell shares to Ugandans,” he said on the sidelines of the launch.
Uganda’s capital markets – investments in shares, bonds and other long-term instruments – remain underdeveloped in Uganda.
Several companies have been seeking long-term capital to grow their businesses but have shied away from the capital markets.
According to the Capital Markets Master Plan, some of the exclusion factors range from governance issues, restrictive regulation and high expenses involved in the process.
Uganda has a domestic market capitalisation of Shs4.7trillion.
About Shs543bn has been raised by listed companies through public offerings and Shs293.8bn through issues of debt instruments – corporate bonds.
Finance minister Matia Kasaija said: “The growth of Uganda’s capital markets is expected to play a major role in facilitating investment and growth opportunities.
“Capital markets are expected to partly fund the key infrastructure projects under Vision 20140 by mobilising both domestic and international resources.”
Privatised companies that listed include; Stanbic Bank Uganda (bought UCB) with a market value of Shs1.382trillion, NIC - Shs15.7b, BAT - Shs1.4 trillion, Dfcu - Shs338b, Bank of Baroda - Shs275b, and Uganda Clays - Shs10.8b.