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Governance problems obstructing long-term financing for Ugandan companies

2019 Financial Reporting-FIRE Awards. PHOTO via @ICPAU1

Kampala, Uganda | THE INDEPENDENT  | Companies are not accessing long term financing due to failure to disclose details of their operations to the investors as a basis for giving them money.

Uganda Securities Exchange (USE), Executive Director Paul Bwiso, said there is money out there but investors want to know what a company’s prospects are, and ownership structure, yet many companies in Uganda don’t want to disclose much about their operations.

This was the message at the 2019 Financial Reporting-FIRE Awards, organized by the Institute of the Public Accountants of Uganda (ICPAU). The awards are given to companies that beat others in financial reporting and disclosing much of the information that investors look out for.

According to Bwiso, some companies have seen their owners siphon money out of them and prudent reporting would ensure that investors spot this.

Keith Kalyegira, the Executive Director of the Capital Markets Authority said that integrated reporting and good corporate governance is a must for companies seeking to access long term financing.

“Some firms have a board of directors, a key component of corporate governance. For some, you find a wife is a director while the children are running key departments – this has an impact on how a company operates,” he added.

National Social Security Fund-NSSF Deputy Director Patrick Ayota said recently that the fund tried to invest in some local companies but was turned away by the refusal of their owners to reveal key information.

One of the ways to access long term finance is by floating shares on the stock exchange where the public buys shares into your company. In Uganda, only two companies have listed in the last eight years, making it one of the dullest exchanges.

Buganda kingdom premier Charles Peter Mayiga called out accountants to uphold integrity and not abet corruption that is eating up both public and private sector.



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