We have to create variety of investment options, says Stanbic
Beyond equities and stocks, investors should be able to pick from a variety of financial investment products. Photo / File
What you need to know:
- Stanbic says there is need to create different investment vehicles to offer investors alternatives
Stanbic Bank has said there is need to create more financial instruments beyond unit trusts, bonds, and treasury bills.
While speaking on the sidelines of the ICT National Summit in Kampala, Mr Paul Muganwa, the Stanbic head of corporate investment banking, said while Ugandans are willing to invest in the financial market, the products are few to give investors sufficient alternatives.
Therefore, he said authorities in the financial markets should explore the possibility of creating a variety of financial products to allow investors to spread their investments, thus deepening the financial sector.
This, he also indicated, will enhance the financial markets role of providing necessary funds to finance mega projects that are capital intensive.
“There is need to introduce more financial instruments beyond just unit trust funds, treasury bills or bonds, a few corporate bonds and equities. These financial instruments are few and they limit the participation of the general public who want to invest,” he said.
Earlier, during a panel discussion, Mr Muganwa said there are many Ugandans who are looking for opportunities to invest in the financial market, but lack knowledge of existing instruments, while others do not feel that their needs will be served through the available options.
Uganda has seen an improvement in the saving culture, building potential for several savers to join the investment market.
A survey conducted by Financial Sector Deepening Uganda on behalf of Bank of Uganda last year indicated that at least more than 60 percent of Ugandans now save, which is an indication of built-up investment capital.
Other financial instruments include exchange-traded funds, certificates of deposit, mutual funds, and derivatives contracts, among others.
Meanwhile, Mr Muganwa also noted that whereas the banking sector remained sound and resilient, there were some risks resulting from loan default that presented challenges to both lenders and borrowers.
