Capital markets can solve Uganda’s debt burden, say experts

Finance experts have said the promotion of investment and retirement benefits schemes can eventually help the country stop borrowing from international financiers.

Capital Markets in Uganda remain small contributing about 7% of Uganda’s Gross Domestic Product (GDP).

Speaking at a capital markets development forum in Kampala on Wednesday, the experts discussed innovative pathways to unlock the potential of capital markets, emphasising financing infrastructure and key growth sectors like agriculture, tourism, and technology, building robust financial ecosystems to attract investments and leveraging global expertise for local market transformation.

Dr Michael Atingi-Ego, the Deputy Governor Bank of Uganda, appealed to the government to institute reforms to ensure that funds that are held in different schemes like collective investment and retirement benefits schemes are unlocked to finance development. 

He added that the Bank of Uganda’s focus on price and industry stability will go a long way in mobilizing and promoting long-term savings and investments. 

He also warned against leaving the financing of the 500-billion-dollar growth strategy to the government because, according to him, this will only propel the debt situation to record levels.   

 Dr. Atingi-Ego urged stakeholders to work together to reform the pension sector, create new investment products like green and infrastructure bonds, and enhance financial transparency. His call to action was clear: commitment, collaboration, and courage are essential for Uganda’s journey to economic prosperity. 

The Ministry of Finance, Planning and Economic Development admits that there is a need to diversify sources of patient capital, saying capital markets are the best alternative.

The Permanent Secretary and Secretary to the Treasury said there is need for urgent make policies that encourage those who want to invest, to have convenient investment areas with favourable terms.

In a statement read by Moses Kaggwa, Director of Tax Policy, PSST Ramathan Ggoobi said the 500 Billion Dollar Growth Strategy will succeed depending on the partnership between the public and private sectors. 

In his keynote address, Mr. Bola Onadele Koko, CEO of FMDQ Group, Nigeria, presented a compelling vision for Uganda’s economic growth. He outlined a transformative three-pronged approach—philosophy, architecture, and leadership—as the cornerstone of success. Mr. Koko called on stakeholders to view financial markets not as alternatives, but as essential engines of sustainable development. These markets, he emphasized, have the potential to drive progress in critical sectors such as agriculture, tourism, minerals, and technology (ATMs).

By adopting this approach, Uganda can unlock long-term funding to support infrastructure, foster innovation, and create value, paving the way for inclusive and sustainable development. Drawing from Nigeria’s experience, Mr. Koko expressed confidence that with bold strategies, strong collaboration, and a solid foundation, Uganda is well-positioned to become a model for economic transformation across Africa.

Capital Market Authority Executive Director Josephine Ossiya Okui said there are possible sources of cheap and patient capital, citing the bond market, which can help finance different areas.  

“Capital markets serve as the lifeblood of any thriving economy. They provide a platform for raising long-term capital, facilitating innovation, and enabling job creation. For Uganda, they hold the key to unlocking funding opportunities across sectors that underpin the tenfold growth strategy, particularly Agriculture, Tourism, Manufacturing, and Technology (ATMs),” she said.

“Currently, the ATMs sectors are estimated to annually contribute a total of USD 95 billion by 2040 and are pivotal for job creation as well as export growth. These sectors have innovative instruments such as agricultural bonds, green bonds and diaspora bonds that can facilitate sector wide investments and deepening of the capital markets,” she added.

Dr Fred Muhumuza, a university economics lecturer, with a global debt of 250 trillion dollars as per the International Monetary Fund in 2023, which is more than twice the global economy, Uganda’s debt will also have grown exponentially by 2040. 

It is for this reason that he calls on the government to support the creation of financial products that will attract investments from the public, citing the example of the gambling industry which has a lot of money but is nonproductive. 

Henry Musasizi, Minister of State for Finance Planning and Economic Development (General Duties) delivered a rallying call to action, urging stakeholders to champion homegrown solutions to finance Uganda’s ambitious Ten-Fold Growth Strategy.

The Forum provided a platform to draw insights from Nigeria’s FMDQ Group model, showcasing the transformative potential of capital markets as a vital tool for mobilizing patient capital and complementing traditional funding sources.

The Minister emphasized that Uganda’s development journey requires bold leadership and collaborative efforts between the public and private sectors, supported by strong policies and regulatory frameworks. With sectors like agro-industrialization, tourism, and technology at the core, capital markets are poised to unlock sustainable, inclusive growth.

The forum was held under the theme, ‘”Financial Markets as a Complementary Platform for Funding the Planned Ten-Fold Growth“