Kampala- Government is drafting new regulations that will require all foreign companies with a substantial level of capital to list on the Uganda Securities Exchange, Finance State Minister in charge of Planning David Bahati, has said.
Speaking at the launch of Lucky 3, a betting product by Moja Betting Company in Kampala at the weekend, Mr Bahati said the regulations, which are currently being drafted, will compel or force some or all foreign companies with substantial capital to list on the exchange.
“We are working on regulations to request and [or] compel every foreign company to float shares. The regulations will be coming soon so that we minimise on the issue of capital flight,” he said without giving details of the draft regulations.
Government, Mr Bahati added, will initially focus on betting companies due to the sensitivity of their operations, especially on the public and money laundering, but will later roll out to other sectors subject to as and when the regulations are completed.
A number of government officials including President Museveni have previously said that local ownership in foreign companies is the best solution that will mitigate capital flight, one of the biggest problems in investment and development.
Already, government has put in place the National Broadband Policy that requires all telecommunications companies to have local ownership to ensure capital retention within the country.
Currently, MTN has said it is willing to offer a 20 per cent stake to Ugandans but is still considering a number of options through which locals can be involved.
Airtel is yet to take a stand on the listing in Uganda but moves have been taken to list on the London Stock Exchange and in Nigeria.
Government officials, including Finance Minister Matia Kasaija, have also previously said that they will force all privatised government enterprises to list on the exchange.
However, no policy has been made in that direction and no guidance has been given to telecom operators to ensure that they fulfil new demands.
Dr Fred Muhumuza, an economist and Makerere University lecture, told Daily Monitor at the weekend that whereas government’s intentions mean well, it was taking on a strategy that is not research based.
Forcing foreign companies to list, he said, does not mean Ugandans will have the capacity or will to buy into those firms.
“Local ownership means you must find Ugandans who will be able to raise that capital and pay for the shares, and that I think has been partly the problem for Ugandans,” he said, emphasising that it is not possible to find people with enough money to buy into the companies or even interested in those companies.
The Uganda Securities Exchange, a key capital mobilization alternative, has struggled to attract initial public offerings going for as long as six years without any prospect.
For instance, the exchange, which currently has nine locally listed companies and eight cross listings, had gone for six years before listing Cipla Quality Chemicals last year.