The reasons the banks are turning to government bond could be manifold. First, shareholders returns from the high yields. Second, many of Uganda's private sector can hardly absorb as loans all the funds that the banks have. More so the private sector is very nascent, largely family owned with weak business models, poor management practices and low lifespan.
My key worry is why unlike in the past, BoU now want citizens to buy these bonds through the banks who will cream off at least 2.5% management fees? This secondary market transaction is both a sign of syndicated bond trade and rip off to local investors in the bond market.
And as you noted, it's time the CMA intensify Investment education (as you do here) to the increasing middle class Ugandans so that overtime we can crowd-in more citizens on the bond market (citizens lending to their own government and enjoying both the services and financial returns).
The reasons the banks are turning to government bond could be manifold. First, shareholders returns from the high yields. Second, many of Uganda's private sector can hardly absorb as loans all the funds that the banks have. More so the private sector is very nascent, largely family owned with weak business models, poor management practices and low lifespan.
My key worry is why unlike in the past, BoU now want citizens to buy these bonds through the banks who will cream off at least 2.5% management fees? This secondary market transaction is both a sign of syndicated bond trade and rip off to local investors in the bond market.
And as you noted, it's time the CMA intensify Investment education (as you do here) to the increasing middle class Ugandans so that overtime we can crowd-in more citizens on the bond market (citizens lending to their own government and enjoying both the services and financial returns).