Ugandans now have an opportunity to trade government securities on a daily basis after the launch of an exchange platform by ALTX Africa.
In Uganda, government securities are not traded on the open market - or on exchange - but are mostly a preserve of commercial banks in a closed market. ALTX Africa Group is expected to launch a platform, ALTX East Africa, where ordinary Ugandans can now buy and sell government securities in an open market.
"This is a market where you can make money. The people who are investing in government securities are those who have minimum amounts of about Shs250m. With our exchange, one can invest as low as Shs10,000 and participate in the buying of government debt," Mr Joseph Kitamirike, the chief executive officer and co-founder of ALTX East Africa, told reporters on Tuesday.
Government debt is often issued through instruments known as Treasury Bills and Bonds by Bank of Uganda. For instance in the next financial year, the government will borrow about Shs690 billion from the domestic market. Commercial banks, offshore funds, and the National Social Security Fund usually take up this opportunity to lend to government. However, there is the opportunity to trade the debt at least until it reaches maturity. This buying and selling process, known as secondary market activity, is mostly prohibitive to members of the public.
"We buy the securities from the commercial banks and then place them on our exchange platform. In the future, we shall participate in the market by buying securities directly from Bank of Uganda," Mr Kitamirike said, adding: "Our system allows price discovery and transparency because it is an open platform. Additionally, we are also bringing both buyers and sellers on the same platform. That way, we are creating liquidity."
ALTX is leveraging technology to grow its capacity to handle as many transactions as possible. The company, which has been testing the technology for the last one year, has the ability to settle securities transactions on a Delivery versus Payment (DvP) model within 15-20 seconds.
Second Player
Founded in 2014, ALTX Africa Group is now the second stock exchange that Uganda operates. At the moment, only ALTX will be handling the secondary market trading of government debt.
