By David Mugabe
The Uganda Securities Exchange (USE) wants government to offer a series of incentives to grow the capital markets that has somewhat stagnated with the listing of mainly government firms.
Innocent Dankaine, the acting chief executive officer of Uganda Securities Exchange, says a favourable tax regime would help boost the industry attracting private sector that have largely shied away from listing.
“We want incentives. If you compare with Kenya, which is at 10% withholding tax on dividend income, we are at 5%. Also for corporation tax for companies listing, in Kenya, they have tax holiday for five years where they pay 20% instead of 30%. It would stimulate more companies to list,” says Dankaine. In Uganda corporation tax is 30%.
“The idea is to facilitate the market. We also hope transactions can be exempt from capital gains tax,” noted Dankaine ahead of the budget reading.
It remains to be seen on whether the Government would consider such proposals, although it appears late for 2013/14 inclusion in the budget if it is already not there.
On the stock market, Umeme bounced back yesterday, trading at an average of sh355 per share.
The power distributor sold 115,000 shares to realise sh40.8m in turnover.
Kenneth Kitariko, the chief executive of African Alliance, noted that the counter will be interesting to watch in the days ahead, even though there were not many trades yesterday.
“It is a beginning, it is worth a mention,” noted Kitariko.
But Stanbic Bank took the day, selling over six million shares and realising sh182m in turnover. The bank traded at an average of sh30 per share. Demand on the Stanbic counter remains huge with Wednesday closing with over 50 million unbought shares on offer.
Only four companies traded on Wednesday, among them Bank of Baroda and National Insurance Corporation (NIC). NIC sold 1,214 shares to pick sh36,420 turnover after trading at an average of sh30.
Bank of Baroda, meanwhile, traded 15,000 shares at average price of sh113, resulting in a sh1,700,000 turnover. Total shares traded were 6,216,914, while turnover was sh225m.
USE wants incentives to grow market