UMA Signs Partnership with Markets Authority on Capital Financing

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The Capital Markets Authority (CMA) and the Uganda Manufacturers Association (UMA) have signed a Memorandum of Understanding to increase access to financing from the capital markets.

The MoU will enable Uganda’s manufacturing sector to take advantage of customized training on various options for raising long-term capital to bolster their uptake of non-bank, market-based financing that best fits their needs.

Speaking during the MoU signing ceremony held at Golf Course Hotel in Kampala on Wednesday, Keith Kalyegira the CMA Chief Executive Officer said the MoU will allow the CMA and UMA to consult, exchange information and cooperate closely to expose UMA members to alternative means of meeting their financial needs by tapping into both private and public markets.

He notes that over the last 20 years the Capital Markets have provided about 5% of the total financing to the economy which he says is very little contribution but not unusual for many countries in sub-Saharan Africa.

He says analysts predict a decline in contribution to GDP by the manufacturing sector during the COVID-19 pandemic, so businesses need patient capital in such a time.

Kalyegira notes that the concern of manufacturers about access to capital without losing control of their businesses will be addressed by the Capital Markets Authority.

He mentioned that businesses can also borrow from the public through long term corporate bonds.

Daniel Birungi, the Executive Director UMA said that the collaboration will explore the promotion of market-based financing for manufacturers as a means of reducing the cost of capital that currently negatively impacts manufacturing as a priority sector for Uganda’s social-economic growth and transformation.

He says SMEs contribute about 80% of the membership of the association and the MOU will help solve the significant challenges faced by the SMEs in the face of the COVID-19 pandemic.

He pledged to have interactions to develop Work plans that speak to the implementation of the MoU.

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