Uganda Securities Exchange CEO on how COVID-19 is impacting the bourse

The economic turmoil caused by the COVID-19 pandemic has had a wide and severe impact on financial markets around the world, including stocks, bonds, and commodity markets. The Uganda Securities Exchange has not been immune to these effects, as revealed by the CEO, Paul Bwiso, in a recent interview with CNBC Africa. Bwiso emphasized that the impact of COVID-19 on the stocks in Kampala and the Stock Exchange has been significant. One key indicator is the decline in trading turnover on the exchange, which dropped by 31% from 34 billion in 2019 to 23.8 billion in 2020. The number of deals has also decreased notably. Despite these challenges, the local share index has only experienced a modest drop of 2.3%, with many investors choosing to hold onto their stocks and seek fixed returns in the fixed income market instead. The situation has been exacerbated by factors such as restrictions on companies holding annual meetings, which has led to uncertainty and impacted trading. Additionally, the inability of businesses to operate normally due to social distancing measures has created further challenges for the stock market. In response to these difficulties, the Uganda Securities Exchange issued an ultimatum for companies to adapt to the new environment and find ways to navigate the crisis. Bwiso highlighted the importance of companies holding annual general meetings within the required timeframe and introduced virtual EGM guidelines as a way to ensure business continuity during the pandemic. One notable case that exemplifies the financial impacts of the pandemic is that of SIPLA, a drug manufacturer that reported a loss of approximately 10 million US dollars. The company attributed this loss to challenges faced by one of its major clients, the government of Zambia, who was unable to pay for their consignments. This led to significant write-offs and provisions for expected credit losses. Another point of discussion in the interview was the issue of telecommunication companies listing on the Uganda Securities Exchange. The government had issued a directive for telecos to list on the exchange, citing the benefits of local investment and greater transparency. While some telecos, like MTSC, expressed willingness to list for the benefit of local investors, there were discussions around private placements as an alternative route. Bwiso highlighted the success of previous IPOs on the exchange and emphasized the potential interest from local pension funds and investors in participating in the listing of telecommunication companies. He noted that while private placements may have benefits, being a publicly listed company adds value and enhances transparency for shareholders. Overall, the interview with Paul Bwiso provided valuable insights into the challenges faced by the Uganda Securities Exchange amid the COVID-19 pandemic and the strategies being implemented to ensure resilience and adaptability in the current market environment.