African Alliance pulls out of the stock brokerage businessBwaiso (left) hands over a certificate of appreciation to Kitariko whose firm will exit the business at the end of the month.
April 17—Financial services firm, Africa Alliance Uganda Limited is pulling out of the stock brokerage business citing low profits from dealings on the Uganda Securities Exchange (USE). Uganda’s stock exchange has a total market capitalization of just over $5 billion compared to Kenya’s $21 billion.
“We regret to notify our brokerage clients and the general public that the Company will not renew its broker license with CMA Uganda, and will therefore cease to offer the service effective 30 April 2019 when the current license expires,” statement released a few days back states.
Uganda Alliance CEO Kenneth Katariko said the decision came after a considerable discussions among the shareholders who believed the stock brokerage arm of the company was no longer making reasonable profits and hence the need to rethink their options.
The exit of African Alliance will leave five firms in the business, namely Baroda Capital Markets (Uganda) Limited; Crested Capital; Dyer&Dyer; Equity Stock Brokers; sbg Securities and UAP Uganda Limited.
Katariko said they will transfer its Securities Central Depository (SCD) account to UAP Old Mutual Financial Services Limited.
“We request all our brokerage clients to contact the company urgently to enable them transfer their respective SCD accounts to any other broker of their choice. This exercise will take place from Friday April 12, 2019 to Monday May 6, 2019. Clients’ SCD accounts that are not transferred by May 6, 2019 will have their accounts transferred to UAP Old Mutual Financial Services Limited,” he said.
UAP Uganda CEO, Simon Mwebaze said they were ready to take up the clients’ and other businesses of Africa Alliance’s brokerage arm because they have market experience.
Paul Bwaiso, the Uganda Securities Exchange CEO said it was unfortunate that Africa Alliance had to exit the market considering the contribution they had made in the development of the stock brokerage market.
“We have established a lot together over the 15 year. In numbers alone, they have traded over UGX 920 billion in the past 10 years, opened 5612 SCD accounts making up 17 pc of the clients on the Exchange,” Bwiso said.
USE was set up in 1998 as a result of a government policy of transforming the economy of the country from a public sector to the private sector basis. The Exchange was incorporated in June 1997 as a company limited by guarantee without a share capital. It became operational in January 1998. In May 2017, the USE demutualised and registered as a ‘public company, limited by shares’. Its authorised share capital is UGX 1 billion, consisting of 100 million shares of UGX 10 each.