Uganda: CMA wants 5 companies to list on the USE

The Capital Markets Authority (CMA) in Uganda has taken a firm stance on private companies operating in the country by urging the Ministry of Finance to ensure that five Ugandan companies list their shares on the local stock exchange. The companies had committed to listing shares during the privatization process in 2000 and 2001, but have failed to comply with this requirement over the past two decades. Among the five companies that CMA is focusing on are Tororo Cement, Apollo Hotel Corporation, Sheraton Hotel, Lake Victoria Hotel (now Winsor Hotel), Barclays Bank (now Absa), and the Kakira Sugar Company. Despite the CMA's efforts to encourage these companies to list, there has been a significant delay in their compliance. However, there is optimism that the discussion has gained traction within the government and parliament, which could potentially lead to these companies finally listing on the exchange. The CMA believes that the listing of these companies would have a positive impact on the stock market and attract more investors. The delay in the listing process raises questions about the possible repercussions for these companies, but the CMA remains hopeful that they will eventually adhere to the listing requirements. In particular, there is anticipation surrounding the potential listing of MTN Uganda, which could offer 20% of its stake to the public as part of the renewal of its license. While there are no updates on MTN Uganda's listing at this stage, the company's renewal of its license has set the stage for a possible market entry in the near future. The liquidity flow in Uganda's banking sector has been affected by the lack of demand, leading to an increase in banks holding government securities. This shift in investment strategy was driven by the uncertainty and risk aversion caused by the COVID-19 pandemic, which resulted in many businesses being unable to meet their financial obligations. As businesses gradually resume operations post-COVID, there is an expectation that commercial banks will regain their risk appetite and return to traditional lending practices. Overall, the CMA's push for companies to list on the local stock exchange reflects a broader effort to strengthen Uganda's capital markets and attract more investors to support the country's economic growth.