‘Listing 50 SMEs on the bourse will be beneficial’

“They ask themselves things like: how much of our stuff is out there, and at what price?” The more they export, the richer they get. That wealth eventually reflects in their currency. And this therefore means that if Ugandans export more, the shilling will strengthen. The challenge with this is that a strong shilling makes exports pricey, shrinking demand abroad.

And that’s perhaps why a couple of economists argue Uganda’s long-term growth might need a weaker shilling. If we go by that, it makes sense but that’s not ideal for foreign investors into our capital markets. When the currency tanks, their returns shrink. Look at Kenya, last year many foreigners fled the Nairobi Stock Exchange for better yields. Still, it’s all about timing. 

“A weak shilling hurts old investors. But new ones—armed with hedging tools and dollar targets—can win big. Coffee exporters? They cheer a weak shilling. So do dairy farmers, for instance. Selling at $3 per litre, a weaker shilling brings more local currency—if costs are domestic. But if you import feed, the same weak shilling cuts into margins,” Mwebaze says.

The NSSF problem

When the shilling dips, foreign investors in equities or bonds often flee. “They don’t like that,” Mwebaze says. 

“But Bank of Uganda [BoU] needs them and it has that challenge should the shilling depreciate.” BoU auctions a trillion shillings in bonds monthly. You would have imagined that if they are sidelined, domestic investors can chip in, but Uganda’s capital markets are dominated by a heavyweight—the National Social Security Fund (NSSF) whose assets under management are worth Shs20 trillion as of 2024. It owns massive chunks of both bonds and equities. And when it moves, the market feels the tremor. The worry? NSSF might wake up one day and feel that it's too exposed to sovereign debt. 

More than 75 percent of its assets are in bonds—mostly local. If the country stumbles (think war), it could be in trouble. Its equities portfolio? A modest 2 percent. Uganda’s market cap sits at Shs8-10 trillion. NSSF’s stake? 3-4 percent. Not exactly a stock market kingpin. Clearly, the Fund’s overweight on bonds. But there’s a shift—slow, deliberate. Through the Hi-Innovator programme, NSSF’s now investing in start-ups via convertible grants.

Think of it as early-stage funding that could flip into equity. But this is still in its infancy. The hope is that in 3 to 5 years, some start-ups will be big enough to list on the Uganda Securities Exchange (USE). Uganda’s big players are, however, hesitant to list. 

Right now, the USE hosts just 10 local firms and eight cross-listed ones. Not exactly Silicon Valley’s playground. “Our problem isn’t the stock market—it’s how we see it. We want it to look like America’s. But that model was built by titans like Vanderbilt and Carnegie, who understood the why. That story doesn’t quite resonate here,” notes Mwebaze.

As we talk, he pulls out Security Analysis, the 1934 classic by Graham and Dodd that mentored Warren Buffett. “The first time I read it,” Mwebaze says, “I thought, ‘this is where Uganda could be.’ It’s the foundation. It teaches you to think like a top investor.” He pauses, grinning. “While we were composing Ekitiibwa kya Buganda, others were already building stock markets.

They’ve grown up with them. We’re trying to copy the outcome without understanding the journey.” Then, he drops the truth bomb: “We need to admit—maybe their way isn’t our way.” 

I ask, “So, what’s our way?” He paints the picture: “Imagine you’re the owner of Nice House of Plastics…” (I pause—great name. Seriously, whoever came up with Nice House of Plastics nailed it.) “Or Roofings. You’ve got challenges—expansion, machinery, modernisation. Should you go to the stock market?” He shrugs. 

“Here’s the American playbook: frequent reporting, public scrutiny, board oversight. You’ve run a profitable business. Now you need an information memorandum approved by the Capital Markets Authority and USE. You need verified turnover, audited reports, board approval—it’s a maze.” To many Ugandan entrepreneurs, those are roadblocks. So they ask the real question: ‘What’s the path of least resistance to capital?’ And if that path is a cozy bank relationship and a straightforward loan?

That’s the route they’ll take because at this point they’d know that sometimes, the fast lane isn’t the stock exchange. Mwebaze does think that many Ugandan businesses prefer state-backed financiers like Uganda Development Corporation or Uganda Development Bank. With a bit of lobbying, these routes feel more familiar—and faster—than navigating the USE. 

“The real question for the stock exchange,” he muses, “is how do we admit that some thing is off? These systems only work when [the] government invests or when a handful of die-hard investors believe in them.” Meanwhile, local Saccos are thriving. “Are you telling me Sacco operators are more sophisticated than our mighty stock exchange? No. The problem is the stock exchange speaks American to people who understand Luganda or Runyankore. And no, translating won’t help.”

So, what’s the fix?

His solution? Set a clear KPI: list 50 SMEs on the stock exchange by a certain period of time. Ambitious? Yes. But, as Mwebaze puts it, “they’re cartoon numbers.” If even 10 succeed, that’s enough to spark others. “Imagine I’m a trader in Kikuubo and I see a fellow expanding because they listed and got investor money, what do you think it does to me?” he asks. It sparks envy. Inspiration. Competition. “I’ll ask, ‘Who was your transaction adviser?’ and I’ll go on the list too.” The problem? The exchange believes it can dazzle people with complex tools—derivatives, indices—but ordinary entrepreneurs aren’t biting. “You’ll just end up following four stocks,” he warns. Back in 2006, when Mwebaze entered the investment scene, the USE had eight or nine listed companies, many cross-listed from Nairobi and it worked because it was about offering choice.

But two decades later? Same old tickers dominate—dfcu, BOBU, Stanbic, MTN, QCIL, Umeme, and Airtel. 

“Sure, some companies have grown, but none have listed.” Even MTN is soon splitting off its Mobile Money business on the listed holding. That might hurt its turnover, even if dividends stay strong. 

Meanwhile, the ecosystem—unit trusts, brokers, asset managers—keeps innovating, searching for returns in a pool they still believe is vast. Take UAP Old Mutual. Once managing Shs1 trillion in assets, it grew to Shs2 trillion in a year. Proof that the market was always there. Why? They’ve got a killer combo: a top-notch sales team, a strong brand that scaled across East Africa, and a solid internal culture. Today, UAP sits at Shs2.5 trillion in assets under management, while the second-largest player trails with just Shs400 billion.

Cornerstone

But there’s a new challenger in the shape of Mwebaze’s own firm, Cornerstone. “We’re not in the business of safekeeping your money. If that’s what you want, go to a bank. Or a regular unit trust provider. But if you want to be rich—really wealthy—you come here.” I ask, 

“From zero or with some money?” He grins, already anticipating the question. “Of course, with some money. But it’s not about the money—it’s about desire. Money is just the result. What matters is wanting it enough.” 

Cornerstone, he says, is about connecting people to prosperity. Helping Ugandans become wealthy—not just secure. “If you look at what [the] government wants to do versus the size of its wallet, it just doesn’t add up. That’s where unit trusts and asset managers step in. They don’t replace the state, but they definitely substitute it in key areas.” 

This isn’t just a theory—it’s already unfolding. Take Cornerstone, his firm, it’s diving into spaces where traditional assets like bonds, equities, and real estate feel too slow and too narrow. Mwebaze sees opportunity in the real economy, especially among SMEs.

A case in point is Shona Capital, a financial services firm that lends to small businesses. Its biggest hurdle? Forex volatility. Shona often secures capital from overseas investors, but deploying that cash in Uganda exposes them to wild currency fluctuations. Investors don’t like that unpredictability. And that’s where Cornerstone comes in. Here’s the play: Foreign foundations provide capital, but instead of sending dollars directly into Uganda’s market, the funds are used as a full cash guarantee. Cornerstone then invests these funds in Ugandan shillings—hedging the forex risk for Shona. It was a deal worth Shs1.84 billion. “If the dollar shoots up to Shs4,500, we feel some heat. But that’s unlikely.” Shona makes that money back by lending out to SMEs at competitive rates and earns a return. The foundation meets its social impact KPI.

Cornerstone takes on the managed risk. Everyone wins. The partnership between Shona and Cornerstone is locked in for three years with an option to renew. “This is where asset management is headed. Before long, you’ll see fund managers financing dams. Government used to do all this alone. But now, we can start a conversation on the Standard Gauge Railway [SGR]—or even the expressway.” The SGR has been stalled for years, mainly due to funding gaps. 

In contrast, the Kampala-Entebbe expressway is a working project, generating cash daily. 

“If government was really, really serious about monetising that expressway, they could do it. They could bring in a firm like Cornerstone, use the cash flow, unlock capital, and reduce public debt.” He sketches out a rough plan: Let’s say the total investment needed is $300 million.

Government only needs to raise the first $50-100 million as an anchor investment. With guarantees in place and a structured offering giving investors 8-9 percent dollar returns, an asset manager or a unit trust could jump in with something like $50 million. That small initial investment would catalyse the broader infrastructure dream. “Why? Because the expressway is already working. People are using it. It’s monetisable. Government just needs to get creative.” That’s why Mwebaze believes policymakers are now offering sweeteners—tax incentives and regulatory room—to firms like his, unit trusts, and private equity players. 

“They’ve realised that capital markets can do more than just list stocks –they can grow the economy.” He leans back and smiles. “The truth is—capital isn’t paralysed anymore. It just needs direction.”