By John Kusolo
Collective Investment Schemes (CIS) in Uganda have gained significant attention for their positive impact on savings and investment. Over the past five years, an impressive amount of 1.75 trillion Ugandan shillings has been mobilized from savers for investment purposes, representing an annual growth rate of 79%. Additionally, more than 60,000 Ugandans have opened CIS accounts, as reported by Keith Kalyegira, the CEO of Capital Markets Authority Uganda. These numbers highlight the growing interest in CIS and the potential they hold as investment channels for individuals.
The substantial growth in CIS assets is a testament to the hard work and dedication of CIS operators in mobilizing savings and attracting investors. However, it is important to note that the average account balance per saver is approximately 40 million shillings per year. This amount may be considered high, especially considering the average saving potential of the majority of Ugandans. Recognizing this, CEO Keith Kalyegira aims to see the number of savers grow tenfold over the next three years. To achieve this ambitious goal, he emphasizes the need for increased education, awareness, and commitment from various stakeholders, including CIS industry players, the media, government, and the public.
Several key drivers have contributed to the growth of CIS as attractive investment options in Uganda. Firstly, there has been a notable increase in the number of CIS managers from two to six over the past five years. This expansion has provided individuals with a wider range of options and expertise when it comes to managing their investments. The presence of multiple CIS managers enhances competition, improves service quality, and offers investors a greater variety of investment strategies to choose from.
Another significant factor driving the growth of CIS is the increased sensitization of the public. Efforts have been made to educate individuals about the benefits and opportunities associated with CIS. By raising awareness and providing information about the advantages of investing through CIS, more people are becoming interested in exploring this investment avenue. The public’s growing understanding of CIS has played a crucial role in attracting savers and encouraging them to consider these schemes as part of their overall investment strategy.
A supportive regulatory framework has also played a vital role in the growth of CIS in Uganda. The Capital Markets Authority ensures that CIS operators comply with regulations that safeguard savings and protect the interests of investors. This regulatory oversight promotes transparency, instills investor confidence, and provides a secure environment for individuals to invest their savings. The presence of a robust regulatory framework is essential for the long-term sustainability and credibility of CIS as investment options.
Additionally, the tax-exempt status of distributions to unit holders has been a significant driver of growth for CIS in Uganda. This favorable tax treatment enhances the attractiveness of CIS as an investment option. It allows investors to maximize their returns and retain a larger portion of their earnings, making CIS a compelling choice for those seeking tax-efficient investment opportunities.
In conclusion, the remarkable growth of Collective Investment Schemes in Uganda demonstrates their effectiveness in mobilizing savings and providing investment opportunities for individuals. The concerted efforts of CIS operators, coupled with increased education, awareness campaigns, and a supportive regulatory framework, have contributed to this success. However, there is still work to be done to further expand the number of savers and make CIS accessible to a wider segment of the Ugandan population. Continued efforts in education, awareness, and commitment from CIS industry players, the media, government, and the public are essential to realizing the full potential of CIS and its contribution to the development of Uganda’s investment landscape.