All is not well for the stock brokerage business in Uganda as long time players in the industry quit the business leaving only five brokerage companies operating in the market.
African Alliance Stockbrokers Limited effective April 26, 2019 will cease to deal in stocks after their fifteen years of operation
Kenneth Kitariko, the Executive Director of African Alliance, made the announcement. He ascribed the decision to diminishing returns in the sector, with the company no longer making profits.
Kitariko said African Alliance would not renew its licence with the Uganda Securities Exchange.
The disappointed African Alliance ED said the company had invested a lot of money and effort in their Ugandan chapter but had not got adequate returns. He said it was time for his business partners to plan for the future.
Questioned further, Kitariko blamed the declining value of many African currencies. He said the government decision to increase the interest rate had forced investors to lean on the fixed income side of business to survive.
Rather than risk the survival of the entire company, Kitariko and fellow directors had decided to pull out of the Ugandan stock exchange.
The Uganda Securities Exchange (USE) Executive Director Paul Bwiso was present during the announcement.
Bwiso commiserated with African Alliance. He said that the current market isn’t favourable for traders as many institutional investors are reluctant to float their shares on the stock exchange. This has left USE with limited liquidity to do business.
He commended African Alliance for performing excellently in the more than ten years it had been in the business trading at least 920 billion shillings. African Alliance was ranked second on the USE board.
In it’s run, African Alliance managed to attract 6,566 accounts. Of these accounts, 4,843 were local with 161 of them being institutions and 608 from the rest of East Africa.
African Alliance has transferred all its willing clients to UAP Insurance Uganda.
Bwiso said despite the setback, several companies had already approached USE with interest to be listed. A decision is yet to be reached at cabinet level though telecom companies are expected to be listed on the stock exchange.
USE performance has been in decline for several years. While 466 billion shillings were traded in 2014, by 2018 those figures had dripped to 46 billion shillings with Umeme listed as the biggest trader.
Edited by David Tumusiime