Ugandan businesses urged to seek cheap financing from Capital Markets

By Silvia Nyambura

Ugandan businesses have been advised to turn to the capital markets for cheap financing instead of carrying bad debt from banks. This according to the Capital Markets Authority CEO Keith Kalyegira will help them increase profitability and strengthen their businesses. He urged retail investors to take up government securities as they are solid and their interest rates are higher than those of banks. In addition, Kalyegira emphasized the need for companies to keep proper books of account in order to attract the right investors.

“These are difficult economic times when inflation has hit a high and bank interest rates are shooting up. Financing business through bank loans is therefore expensive and unsustainable. Investing in the capital markets provides cheap financing while helping your business grow. For that to happen however, investors need to see accountability if they are going to put their money in a business. Proper financial reporting ensures there is transparency and boosts investor confidence,” he said.

Kalyegira was speaking at the 5th annual Financial Reporting awards held at the Kampala Serena Hotel  yesterday and organized by the Institute of Certified Public Accountants Uganda (ICPAU).

Stanbic Bank Uganda emerged Gold winner of the report of the year award. The bank was recognized for its transparency in keeping books of accounts and upholding the right financial principles. Power utility company Umeme came in second with the silver award while DFCU Bank scooped the bronze award.

Making his remarks, ICPAU President Ben Patrick Kagoro said, “We are happy to recognize financially compliant companies for the 5th time running. Over the years we have seen growth in terms of participation from 37 in 2011, 45 in 2012 and 64 in 2013. Last year the number remained constant we had a participation of about 70. This is a clear indication that companies are becoming more transparent with their financials, a move that builds investors’ faith in the industry’s regulatory environment.”

He however noted there were minimum disclosures relating to International Financial Reporting Standards (IFRS). Kagoro urged companies to make significant improvements in the illustrative value of their reports.

Giving the keynote speech on behalf of the Prime Minister, Lawrence Kiiza an official from the ministry of Finance said, ” We need to uphold the right principles in this industry. Transparency exposes the risks companies and investors are exposed to and builds confidence. Proper books of accounts also allow investors gain an understanding of what the business is trying to achieve and therefore make sound decisions based on integrity.”