Josephine Ossiya: What awaits the new capital markets boss?

Under his rein, large corporations, including Airtel, MTN, and Cipla Quality Chemical, have listed on the Uganda Securities Exchange and has expanded USE market capitalisation to Shs11.8 trillion. 

“Mr Kalyegira’s commitment extended beyond market expansion. He spearheaded the issuance of Shs110b in private and public debt, broadening the investor landscape and fostering economic growth through a more diversified financial system,” CMA said in a statement.

He has also been instrumental in increasing public understanding of capital markets, as evidenced by the Collective Investment Schemes (CISs), which attracted 65,000 new investors and injected Shs2.2 trillion into the market.

However, the new boss must take on more to feed a market that seems to have a lot of hunger.  

It is troubling to understand why the stock market has remained an unappealing avenue for large companies in need of cheap long-term capital. 

Despite the rising cost of commercial debt, which averages at 18 percent for prime borrowers, no major corporations, save Kakira Sugar Works, have issued corporate bonds. 

Kakira Sugar Works is currently running a Shs76b bond, through which it had sought to raise capital in 2013. This is disturbing.

To-date, only nine corporate bonds have been issued in Uganda, raising a combined Shs289b, with majority of the issuers being financial institutions in the banking sector.

Issuing bonds is one way for companies to raise money. A bond functions as a loan between an investor and a corporation. The investor agrees to give the corporation a certain amount of money for a specific period of time. In exchange, the investor receives periodic interest payments.

CMA says that most companies issue corperate bonds when they are expanding but have failed to understand the alternative resource sourcing capital markets provide.

CMA and Financial Sector Deepening Africa are currently working together to review the 2003 Corporate Bond Guidelines with the goal of facilitating the process of raising alternative non-bank financing for project development and business expansion for a greater number of local governments and private companies.

The amendments seek to expand the range of debt products that can be issued, and switch from merit-based approval to disclosure-based approval, among other things. 

Green bonds, municipal bonds, and infrastructure bonds are among the products that will be impacted.

Ms Ossiya will also have to work with a market at a time when sovereign investors are showing less interest in buying into companies that are presumed to be a hot sale. 

Airtel would be the best example to illustrate this. Its initial public offering attracted no off shore investor and was only saved by a deadline day purchase by National Social Security Fund, which, as the only institutional investor, bought 10.55 percent of the 20 percent offer.  

This resulted in a 58.18 percent undersubscription. 

Beyond this, Ms Ossiya must address the market’s liquidity challenges. 

Many investors who buy into publicly traded companies struggle to sell. 

Recently some investors tried to sell Airtel stocks right after the company had been listed, but received relatively low bids, according to data from Crested Capital, a stock broker.

This creates posterity challenges and results into market agitation. 

Ms Ossiya will also have to get tough on investor protection. A recent breach of USE investor data, some of which is very personal, put the entire equity markets at risk and ponzi schemes seem to have re-emerged, disguising themselves as licensed collective investment schemes. 

For example, CMA recently had to halt operations of Capital Chicken, which is currently a subject of investigation for embezzling Shs2b from various investors.  Thus Ms Ossiya must make every effort to ensure that this never happens again. 

CMA has signed a memorandum of understanding with the Office of the Director of Public Prosecutions to efficiently prosecute offenses related to the capital markets. 

“We [CMA] aware that during such challenging times, unscrupulous individuals tend to take advantage of the unsuspecting public. Numerous schemers are eyeing the little you have saved,” Mr Kalyegira said recently in a statement.

Work and experience

No doubt Ms Ossiya appears to be a capable pair of hands given her depth of knowledge and experience.                                

She joined the Bank of Uganda board in February 2018 and has served as chief financial officer of Bujagali Energy since November 2014.

In June, she also became the first female president of the Ugandan Institute of Certified Public Accountants.

Her previous positions include being a finance director at Eskom, chief financial officer and head of finance at ATC Ghana, and financial controller at Standard Chartered Bank.  

She has worked with the British American Tobacco Uganda, National Social Security Fund, National Water and Sewerage Corporation, Shell (now Vivo), and other financial institutions.

She is a fellow of the Association of Chartered Certified Accountants, a member of the Institute of Certified Public Accountants of Uganda, and a member of the Institute of Internal Auditors of Uganda and the US.

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