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Xeno Technologies takes a move to drive investment opportunities for investors

Aeko Ongodia

Kampala, Uganda | JULIUS BUSINGE | Xeno Technologies Uganda Limited is an indigenous investment fund management company that officially launched business on Jan.03. The company’s CEO, Aeko Ongodia spoke to The Independent’s Julius Businge about their plans.  

What is your core business like?  

Xeno Technologies is a newly licensed company and regulated by the Capital Markets Authority to do fund management for both individuals and institutions. We got the license in June 2017 and started taking customers in October. We are the first indigenous company to get such a license. Investment management is essentially about helping people invest their money for particular goals – retirement, building wealth, generating income, child education and funding emergencies. Xeno will take around 2% of the total return on investment for each client.

What is your reading of the market so far?

This is a start up. We have so far mobilised Shs1 billion in assets under management. We are serving about 250 customers including two institutions. We have ideas about giving people access to professional investment guidance. I used to be a fixed income portfolio manager for National Social Security Fund and controlled about Shs 4.5tn.  There is a significant demand for professional investment management in Uganda.

What gives one confidence to trust you with their hard earned money?

Xeno is a licensed and regulated entity; our team potentially has the best experience and training and we are ethically responding.

What management philosophy are you using to record tangible results for investors? 

I use research and empirical evidence plus sound theoretical principles to serve and make investment decisions. My team and I emphasise ethical conduct as well as developing talent.

How do you describe Asset management market in Uganda at the moment?

We don’t have locally based people who benefit from the training and experience. We don’t have as many competent to serve in this market. The other players don’t have actual Asset Management Offices here…they collect assets and go with it and manage it elsewhere. Xeno’s investment team will be based in Uganda and will make decisions from here.

What safeguards do you have in place to deal with big risks related to macro-economic shocks that might compromise investor’s money? 

We are operating in an environment which has challenges related to the economy, politics and external shocks. We are ensuring that our investors have a diversified portfolio – this means a person holds a number of assets which might include fixed income, cash, and bonds, domestic and regional equities. They say don’t put all your eggs in one basket. You spread your assets so that in case one fails to perform well in one particular year it will be balanced out by the other assets performing well. We have designed our execution strategy to include this diversification strategy.

How do you intend to survive amidst liquidity challenges that often hit this market?  

There are many risks including liquidity, political, economic and market risk. Under market risk you will have exchange rate risk, inflation, liquidity and credit risk. When there is reduced liquidity in the economy it will impact many of these assets but differently. When there is a lot of money in the economy, you will see interest rates spiking and for you to borrow, lenders will charge you expensively. But from an investor’s perspective, that is interesting because lending to the government which has the best credit rating would be profitable– the yields on government securities will increase and that means you as an investor will earn a lot.

With oil and gas coming onboard and the optimism that the economy will be better in the coming years…how will that benefit investors for Xeno?

I am very positive about this economy and the region. First, Uganda is growing in terms of population (3.3% growth annually) which is about 1.2 million people added per year. This means more demand for products, food, clothes. What we need to work on is the supply side. Can those people have jobs; can they engage meaningfully in economic activity. There are a few positive shocks if they happen which will help propel growth of our economy – including the significant infrastructure spending which is going to deal with structural bottlenecks. There is the integration of trade within the EAC, development of the pipeline and other related oil and gas infrastructure plus the Standard Gauge Railway among others. If those come to fruition, they will boost the economy and certainly, if someone has money to invest in order to oil that productivity, there will be a return to be made. For political risk, that will always be there and cyclical in the region. What we hope for is when it happens; it doesn’t get out of control.

What lessons can Uganda learn from other advanced markets to push performance up?

Openness to innovation is one. The other is; our regulatory structure within industries is a little more rigid and not as responsive to advances in technology, science like the people are receptive to them. That is something that needs to change. We also believe that you can build a career ethically without cutting corners.

How are using technology to achieve results amidst low internet penetration?   

To use our platform, you need internet which is really expensive. What gives me hope is many people don’t send text messages anymore, they use Whatsapp. We have over 14 million people using internet in Uganda which is lower than that in the Western countries but a good number. We are going to hope that penetration increases faster than we expand. If it doesn’t happen, we will think creatively to give people access to the platform using say USSD code for mobile phones among other avenues.

Where do you want to see Xeno in its first 5 years of existence?

We will expand this service across the country and the region.

 

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