BusyMarkets Kampala #010: UGX poised to gain some ground in 2023

In 2022, Uganda’s economy faced several challenges, but it managed to withstand them. It is expected that the country’s GDP growth will bounce back to 5.7% in FY23, thanks to the recovery of the services and industrial sectors after the COVID-19 pandemic.

Here is why UGX is poised to make some gains

Although the agricultural sector experienced a decline due to weather-related factors, the increase in investments and employment growth boosted domestic demand. However, lending rates increased following a tighter monetary policy implemented in June 2022.

Fuel prices start to ease down implying a curb on inflation

The Russia –Ukraine war has seen discussions held at a global level to ensure continuity of oil production and supply. The drop we are seeing today is an outcome of the efforts put in place. The other reason, is that 4.5 million liters of fuel is now being transported from Kenya via Lake Victoria daily, a move that has reduced the transportation costs to about 50%.

US banking crisis

This can only point to a weaker dollar in the long run as investors and depositors tend to lose trust during such times. Recent turmoil in the US banking industry may have one worried about their money. On Monday, officials announced that they closed San Francisco-based First Republic Bank, making it the third US bank to collapse in the past two months.

Most of First Republic’s assets are being acquired by JPMorgan. Trading at 3735/3745 but we highly likely to appreciate 3725/3735 by the next edition of the business insight.

Somewhat good results announced by Bank of Baroda

Board of the Bank has resolved to recommend dividend of UShs 25 billion for the year ended December 31, 2022 i.e. UShs 10 per share. The proposal for paying dividend at UShs 10 per share (100%) will be subject to approval from Bank of Uganda and by the shareholders at the ensuing AGM. The book closure date will be announced subsequent to receipt of the said Bank of Uganda approval. The change of guard early this year is doing well after all.

Notice is hereby given that the AGM of Umeme Limited

To be held on Thursday 18th May, 2023 at 10:00 am and conduct the following business.

  1. To receive, consider and if approved, adopt the Company’s Audited Financial Statements for the year ended 31 December 2022 and the Directors and External Auditors reports thereon;
  2. To receive and adopt the recommendation of the Directors on the declaration of a final dividend for the year ended 31 December 2022.
  3. To approve the re-appointment of Ernst & Young Uganda as the External Auditors of the Company for the year 2023 and to authorize the Board to set the auditor fees.
  4. To elect directors in place of those retiring.
  5. In accordance with the provisions of the Article 93, 94, 95 and 96 of the Company’s Amended Articles of Association, the following Directors are due for retirement by rotation and being eligible, offer themselves for re-election: Patrick Bitature, Florence Namatta Mawejje, Gerald Ssendaula

I believe through the corridors of this Annual General Meeting (AGM), investors may piece together a futuristic strategy or disposition when the UMEME concession has ended.

Money Markets: Rates unchanged

Below are the prevailing & Indicative interest rates per annum.

91DAY T-BILL 10.00%
182 DAY T-BILL 10.26%
1YEAR T-BILL 12.50%
2YEAR BOND 13.50%
3YEAR BOND 14.00%
5YEAR BOND 15.00%
10YEARBOND 15.75%
15YEARBOND 17.00%
20YEARBOND 17.00%

There is no treasury bill or bond auction this week but we have one next week that begins the 8th of May 2023.Stanbic Bank is interesting investors to this investment. I would recommend. Treasury Bill. 10 months. Maturity: 14/March/2024. Interest: 12%


Investment Value 100,079,847
Face Value 111,300,000
Interest Before Tax 11,220,153
Interest After Tax 8,976,122

My assessment predicts that interest rates will hold steady. WHY?

  • Loose monetary policy as a way to stimulate demand and production.
  • Inflation is shifting in to desired ranges as expected by technocrats.
  • Trickle down of banking crisis in the US hasn’t materialized in Uganda.

Seth Nuwagaba is an investment banker at one of the biggest banks in East Africa.