Derivatives are financial instruments whose price is based on a product, warehouse receipts are the commonest derivative in Uganda.
The Capital Markets Authority (CMA) has urged the trade ministry to use the newly launched ALTX Africa securities market to serve as the planned digital commodities exchange as this will expedite trade in grains and derivatives.
Derivatives are financial instruments whose price is based on a product, warehouse receipts are the commonest derivative in Uganda. The value of the receipts, which can be sold, depends on the prevailing market price of maize, coffee, or beans in the warehouse.
Speaking at the official launch of the ALTX at the Golf Course Hotel Kampala, Keith Kalyegira, the CMA CEO said: "I am aware that there are plans to launch a commodities exchange. The ministry of trade can use the ALTX as the commodities exchange instead of creating a new one. That means that we do not have to approve rules again."
The trade ministry entered into a public private partnership to create the Uganda National Commodities Exchange (UNCE) last year, with government, through the Uganda Development Corporation, holding a 20% stake or 200million shares.
The largest stake of the commodities exchange is held jointly by the Uganda Cooperative Alliance (UCA), The Grain Council of Uganda (TGCU), Uganda National Farmers Federation (UNFFE), Uganda Commercial Farmers Association (UCFA) and Uganda Coffee Federation (UCF).
Matia Kasaija, the finance minister who represented Vice President Edward Ssekandi pointed out that Ugandans need to be sensitized on how to raise wealth and business capital through the capital markets.
He pointed out that Uganda is performing poorly against its peers in the region in the Capital Markets. He noted that Uganda has only 30,000 securities accounts, against Kenya with 2.5million accounts, Tanzania with 250,000 accounts and Rwanda at 200,000 accounts.
"We Ugandans are very poor savers and spend thrifts. Someone can spend sh100,000 in five minutes without saving some for the future or purchasing something of value with the money," Kasaija said.
Edward Mugwanya, the chairman ALTX Uganda pointed out that the exchange's aim to bring ordinary Ugandans on board as a means of encouraging a saving culture to push the country into middle income status. He revealed that company's ambitious target of attaining 10 million accounts in the next 5 years.
Joseph Kitamirike, the ALTX CEO explained that the company's ambitious growth plans are anchored the youthful Ugandan population which is set to enter into productive employment.
According data from the Uganda Bureau of Statics (UBOS), more than 70% of Uganda's population of 36 million is under 30 years, with 52% under 15 years. Kitamirike noted that the youth will lift Uganda into middle income status.