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Geoffrey's avatar

Thanks Alex, and the investor for willing to share your story.

While this all looks great, there is a significant angle for a diaspora who earns in dollars/pounds/euros like your client investing in UGX unstable currencies like ours.

Let me share a brief story as a Ugandan diaspora

In 2016, while based in Nigeria a fellow expat colleague invested his $100,000 in Nigerian 10 year treasury bonds at 15%. The exchange rate back then was 1$=280 Naira

Unfortunately, since 2018, the naira has steadily lost value that it is now 1$=980 Naira barely 7 years down the road.

So, while he gets the Naira, it is rather worthless that he can't even get his $100,000 equivalent back again at the current rates. The same can be said of the Ghanaian Cedi, Angolan Kwanza etc

The current political & econommic climate in our country unfortunately makes it prone to a similar situation as above though we are currently doing much better than others in the region.

From my perspective, if i have huge stash of hard currency (USD/GBP/EUR), and willing to forget it for >10 years, with very minimal stress, i would seriously consider foreign currency investment options. A 5% on USD compounded over 10 yrs in a market like ours will yield far higher returns in 2032 compared the yield in USD terms from a 10% on UGX compounded over the same period. Geoffrey

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Simon's avatar

Thanks Alex. Qn for clarity for us: How did they buy a bond of 250m on the primary market, when the max u can get is 200m in non competitive rates as a person? I thought then u need to factor in that 50m was probably bought on the secondary market (if indeed in the same week), or on the re-opening, 3 months later. Either of these would mean a reduced rate bse that same bond was selling at a premium later on re-opening, and even high in the secondary market. Meanwhile are you factoring in the bond WHT?

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