Yesterday morning, we had the choice of either going downtown to get internet access or attend the Ugandan stock market. As one of the individuals who attended the stock market, it was an eye opening.
First off, the stock exchange has only been open since 1999, or for 10 years. Currently, there are 10 companies that are being traded on the exchange with all of the trading done manually. But, in the next three months, trading will be down electronically. Officials hope this will open up the exchange so investment in the country will be increased. Also, trading is done only three days a week (Monday, Tuesday, and Friday) from 10am until noon. The 10 companies traded come from the five sectors of the Ugandan economy so officials believe it is a good representation of the economy.
Studying finance at Drake, I was shocked by the experience but also learned a lot. Take a look at America and the large stock exchanges that currently exist there and how much trading is done each week. Cash truly flows freely and capitalism is clearly present. But, not here in Uganda.
I believe one of the ways to jump achieve sustainability in Uganda is through the development of a strong stock exchange. By doing so, companies will be able to raise funds that they couldn't otherwise raise. Doing so, will allow them to grow. As companies grow, so does the economy, the GDP, and the GDP per person. More will be able to be accomplished within the country. But, the problem is that many companies in Uganda are family owned and they have no intent to go public because they do not want to share their profits with others (dividends). If companies aren't willing to do this, how is the economy suppose to grow? To me, it seems to be a cultural problem. My question to you is this: How does the government within Uganda convince companies of the benefits to go public? Also, what incentives could they offer to these individuals as well? And, how long until the stock market starts to grow substantially here?
Fianlly, with electronic trading, you as an American will be able to buy Ugandan stocks. Why would or wouldn't you buy Ugandan stocks. What are the benefits and the risks?