NSSF to buy bonds

By Samuel Sanya

The National Social Security Fund (NSSF) has unveiled plans to buy bonds of high growth potential start-ups on the Growth Enterprise Market Segment (GEMS).

The fund intends to buy well-designed bonds on the alternative market and later sell the same to new investors through the stock exchange; the move is expected to bolster the segment.

Richard Byarugaba, the NSSF managing director, told the media at Workers House that discussions have been held with the Capital Markets Authority (CMA) and the Uganda Securities Exchange (USE) on the prospects of the bonds.

He revealed that separate discussions have been held with senior offi cials of Bank of Uganda about increasing the variety of  investment instruments such as infrastructure bonds, like is currently available in Kenya and Rwanda.

Since 2012, when the GEMS rules were issued, the USE is yet to register a single listing.

In contrast, Tanzania has at least two listings on its equivalent of the segment that targets Small and Medium Enterprises (SMEs).

Reacting to the plans, Charles Nsamba, the acting communication and public relations manager at CMA, said the plans are exciting and that the regulator has no objection to products that will enhance activity and bring about the desired growth of the market.

“Small and medium-size enterprises are a very important driver for the economy and more specifically for the capital markets. However, the principle mandate which is investor protection is paramount, and we will ensure it is not compromised,” Nsamba said.

“This product might need to have the necessary credit enhancement which is usually useful for giving investors additional comfort for a product of that nature.

“And part of the proposed amendments to the CMA Act provides for approval of credit rating agencies by CMA. We will, however, ascertain all this when we receive an application for review,” Nsamba added.

On the USE, the all share index dropped to 2011.64 from 2012 by close of business on Tuesday, while the local share index went up to 319.59 from 314.71.

Only three counters were active on the day.

Baroda traded 196,975 shares at sh122 per share. Stanbic Bank traded 1.7m shares at sh34 per share. Umeme traded 61,000 shares at sh503 per share. Supply is generally higher than demand.

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