By Ben Ssebuguzi
The post-Covid era has been more challenging as global economies are still staggering with after-effects like hyperinflation. However, many Ugandan companies like Airtel have remained resilient because of robust and efficient government fiscal and monetary policy which has made investors to appreciate doing business in Uganda.
Additionally, Airtel’s decision to sell their ownership stakes in the company to investors in exchange for capital is a vote of confidence that multinational companies continue to position themselves to stay here in Uganda to partake of the good investment policies of the NRM government.
According to Research,52% majority of families in the US invested in stocks which are smarter investments. With this kind of investment, investors’ money works harder for them.
An Initial Public Offering (IPO) of Airtel on the Uganda Securities Exchange market (USE) in Uganda will positively and significantly increase our long-run economic growth in many aspects.
Stock markets affect economic activity through liquidity as Ugandan retail traders and international investors will invest money in Airtel hence giving the company cheap capital to provide better and affordable telcom services to Ugandans.
Furthermore, stock markets provide a vehicle for the diversification of risk. Our local investors will be able to invest their savings in areas with minimal risk which creates more streams of income. If you have been depending only on farming as a source of income, it will be better to put your savings in more reliable options like equity financing investment.
Stock markets may also help to promote the acquisition of information about firms according to Grossman and Stiglitz (1984), because it will be easier for an investor who has gotten information to trade at posted prices.
Moreover, stock market development may also influence corporate control. Jensen and Murphy (1990) show that efficient stock markets make it easier to tie manager compensation to stock performance. This helps align the interests of managers with owners.
In terms of raising capital, Greenwood and Smith (1996) show that large, liquid and efficient stock markets can ease savings mobilization which enlarges the set of feasible investment projects.
In a nutshell, after examination, the coming of Airtel on bourse gives the empirical relationship between stock market development and the economic development of Uganda and therefore it will be easy for them to relinquish 20% in order to raise Ugx 800 billion.
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Ben Ssebuguzi is the Head of Research at the Office of the National Chairman -NRM.
Long live General Yoweri Kaguta Museveni, Long live Hajjat Uzeiye Namyalo, SPA/Manager ONC
