How to buy shares on the Uganda Securities Exchange
Buying shares lets you own part of listed companies and share in their profits. Here is how investing on the Uganda Securities Exchange works, step by step.
When you buy a share, you buy a small part of a company. If the company does well, you can benefit in two ways: through dividends, the part of profits paid out to shareholders, and through a rise in the share price, which you collect when you sell. If it does badly, the price can fall and dividends can be cut. That mix of reward and risk is what makes shares different from a savings account. This guide explains how to buy shares on the Uganda Securities Exchange, step by step, and what to understand before you invest.
The Uganda Securities Exchange
In Uganda, shares of listed companies are traded on the Uganda Securities Exchange (USE), which is supervised by the Capital Markets Authority (CMA). Listed companies include banks, utilities and other large businesses, and some companies are cross-listed from Kenya. Government bonds are also listed on the exchange, which gives investors another way to buy and sell them.
Opening a broker and securities account
You cannot buy directly from the exchange. Instead you open an account with a licensed broker, also called a securities dealer, and a securities account at the central depository, where your shares are held electronically in your name. Brokers handle both. You will need your national ID or passport, a TIN, a passport photo and bank details. The CMA publishes the list of licensed brokers, so check that yours is on it before you hand over any money.
How to buy shares on the USE
Once your account is open, you tell the broker which company's shares you want, how many, and the most you are willing to pay. That price limit protects you on a thinly traded market, where prices can jump if few shares are on offer. You pay for the shares and the broker's commission, plus small exchange and regulatory fees. Because fees take a bigger bite out of small purchases, buying less often in larger amounts usually works out cheaper.
Your shares then appear in your securities account. Dividends are paid to the bank account you registered, usually after withholding tax has been deducted. Keep your contact and bank details up to date with your broker so that dividends and company notices reach you.
Buying shares in an IPO
Sometimes companies sell new shares to the public through an initial public offering (IPO) or a rights issue. These are announced with a prospectus, which explains the company's business, finances and the price of the shares. Read the prospectus carefully, and apply through a licensed broker or the receiving banks named in it. An IPO is not automatically a bargain; judge it on the company's prospects and price.
Things to understand before investing
The USE is a small market, and some shares trade only occasionally. That means it can take time to sell, and you may have to accept a lower price if you need cash quickly. Shares are therefore best for money you can leave invested for five years or more, not for emergencies or school fees due next term.
Before buying, read the company's annual report: is it profitable, does it pay a steady dividend, and how much debt does it carry? Spread your money across several companies rather than betting on one. And ignore tips that promise a quick doubling of your money; nobody can guarantee share prices.
Shares or a unit trust?
If choosing individual companies feels daunting, a unit trust that invests in shares spreads your money across many companies and is managed by professionals, for a fee. Unit trusts also let you invest smaller amounts regularly. Read our guide to unit trusts in Uganda to compare.
Where shares fit in your plan
For most people, shares sit on top of an emergency fund and safer savings such as government bonds. A small, regular investment in a few solid companies, held for many years with the dividends reinvested, is the way most long-term investors build wealth. Our savings calculator shows how regular investing can add up over time, and our guide to building an emergency fund covers the first step.
Frequently asked questions
Can I buy shares directly from the Uganda Securities Exchange?
No. You buy through a licensed broker, who also opens your securities account.
What do I need to open a share account in Uganda?
Usually your national ID or passport, a TIN, a passport photo and bank details.
How are dividends paid?
Into your registered bank account, usually after withholding tax.
Sources
This article is general information, not financial advice.