BoU appoints eight commercial banks as Primary Dealer Market Makers

KAMPALA, September 28, 2023 -The Bank of Uganda [BoU] has appointed eight commercial banks as Primary Dealer Market Makers [PDMM] effective October 1, 2023.

According to Kenneth Egesa, Director Communications at BoU, the banks appointed include ABSA, Centenary Bank, Citibank, DFCU Bank, Equity Bank, Housing Finance Bank, Stanbic Bank, and Standard Chartered Bank.

“This follows BoU’s request for Expression of Interest…to all commercial banks and the conclusion of an evaluation process,” Egesa said in a recent statement published in local media.

Uganda has over 20 commercial banks, although BoU in a statement published did not mention how many banks applied to be considered as PDMM.

According to Egesa, in 2020, BoU adopted a primary dealership system with PDMM banks being given exclusive access to the primary market for government securities where PDMM banks are required to provide liquidity and pricing in the government securities market.

“The PDMM system has been highly successful in increasing liquidity in the government securities market and attracting both institutional and offshore investors,” Egesa said, noting that secondary market turnover has grown from 40 percent to 160 percent of the total debt stock.

He said the government securities market has earned a notable listing on the FTSE Russell Frontier Markets Index, elevating Uganda’s presence, and recognition in the global financial markets.

“Further, the PDMM system and other market reforms have led to the improvement in Uganda’s ranking in the Absa African Financial Markets Index [AFMI], from 10th place in 2020 to 4th place in 2022, out of 26 African countries,” he said.

He said BoU is confident that the PDMM banks will continue to play a vital role in developing the government securities market in Uganda. Government securities are government debt issuances used to fund daily operations, and special infrastructure projects, among others.

According to the Performance of the Economy Monthly Report August 2023, all government securities auctions held in that month resulted in total issuance of Shs1,893.63 billion [at cost]. Of this Shs 976.45bln was used for the refinancing of maturing domestic debt [including those managed in the bond switch auction]; while Shs 917.18bln went towards financing other items in the Government budget

https://thecooperator.news/commercial-banks-continue-to-raise-lending-rates/

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