Hon. Maria Kiwanuka, Minister of Finance on Investing in Uganda’s Financial Markets — (Diaspora Bond)
Overview on the investing environment across Ugandan financial markets. Considerations to include preferred sectors, regulatory pressures and typical risk and return of investment funds, mitigation of risks, incentives and Diaspora Bond.
Edwin Senjobe, CRM Enterprise Architect at JuicyMobile
1. Hon. maria Kiwanuka, minister of fiance
2. Mr. Joseph S Kitamirike, Chief Executive, Uganda Securities Exchange
3. Mr. Eric-Vincent Guichard, CEO Homestrings
4. Mr. Phillip Wabulya, Executive Director Operations – Bank of Uganda
5. Mr. Kenneth Egesa, Assistant Director – Bank of Uganda
Harnessing the Diaspora financial base. Channeling remittance through the Diaspora Bonds. “If only a fraction of the African Diaspora ‘s annual savings could be tapped through Diaspora bonds, we could realistically estimate somewhere between $5bn and $10bn as the potential size of funds that could be raised,” argues DilipRatha, manager of the World Bank’s migration and remittances unit. Majority of remittance inflows have only fueled consumption and not been directed towards productive sector.
Talking Points • What are Diaspora bonds?
• Why should the Diaspora invest their hard earned cash in Diaspora bonds?
• What are the risks for potential investors and how can these be mitigated?
• Can outsider mobilise the Ugandan Diaspora or will it be necessary for the Ugandan government to strengthen its relationship with the Diaspora ?
• What is the role of the World Bank in all this? Can we trust the bank with our interests?
Moderator’s points RISKs (Trust, Market Maturity and a Diaspora Bond)
Trusting the Diaspora Bond
1. How will the bond be incentivised
2. How can the Bond’s project corruption and attrition be reduced
3. Are there risks of non-payment of earnings of the project the bond is invested in
4. How can Bond holders gain Trust in the Guarantor of the bond
5. What are the reassurances that the bond will work.
Bond Market Maturity
The Diaspora Bond requires Investment Banking or Capital Markets trading-know-how to advise the Diaspora investors regarding;
1. Various asset classes available in Uganda and why opt for a bond
2. Clarification why Bonds are being issued for the Diaspora
3. Understanding Fixed-income and related taxes
4. Understanding Capital Markets and how they can be accessed from abroad
5. Risk associated with bonds default or issuance failure
6. Who’s responsible for due diligence of the Diaspora Bond projects
7. Convertibility of the bonds
The Diaspora Bond Valuation
1. What are the Bond Interest rates compared to interest on bank account deposits
2. What is the impact of Libor (London Interbank Offer Rate) on Bond interest payments
3. What are the tax implications on interest on the bond, sale/transfer and or maturity
4. Will the Bond be Transferable and how many times
5. What is the Bond minimum purchase price
6. What is the Bond’s collateralization (are the project assets easily saleable (Uganda railway))
7. Will the Bond have a First-loss guarantee
8. Have Remittance fees for the Diaspora bond buyers been factored into the Bond’s pricing
9. Why not incentivize the bond through the dual citizenship fee of $400USD in exchange for the Diaspora Bond
10. Why not use the Diaspora bond or part of it for crowd financing
Question for: Eric Vincent Guichard- we understand that you won the contract to set up the Diaspora bond in Kenya. How far have you got with the implementation of that initiative and what lessons can Uganda learn from your experience?