Uganda's Stock Exchange Grows Up

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An American in Uganda

But the market has its fans. William Augustus stands outside the velvet rope looking at the prices, jotting down a few notes in a small notebook. The former New Yorker says he put about $10,000 into the market in 2004, and today owns shares worth $70,000. A favorite stock is Uganda Clays, a maker of roof tiles and other ceramics. After a 10-for-1 split, his shares are now worth about eight times what he paid for them. "Effectively, it's been a straight rise since I got in," Augustus says. Other strong performers are New Vision, a government-controlled newspaper publisher, and Stanbic Bank, the local affiliate of South Africa's Standard Bank Group (SBKJ.F).

As an American, Augustus is a rarity at the exchange. Most of the 40,000 or so shareowners are Ugandans and Kenyans. Diana Angulo, who trades for Kampala-based brokerage MBEA, says she has about 2,000 clients, largely individuals, but also some insurance companies and other institutional investors from Uganda and a smattering of African countries. "It's a smart place to put your money," she says after taking an order on her cell phone. "This market is slow in reacting. If a company announces bad results, it takes a few days before it's reflected in the share price. It won't fall immediately."

That may change once the USE shifts to electronic trading. Nairobi and Dar es Salaam already use computerized systems, and Lutamaguzi says Kampala has the hardware it needs to create a digital registry of shares—the precursor to electronic trading. The problem is that Uganda's legal system doesn't recognize the validity of computerized records of share ownership. "We need to change our laws to enable electronic share trading," Lutamaguzi says. Uganda's Parliament is currently debating a measure that would allow an electronic share registry, but it's unclear when it might actually pass.

At about 11:45 a.m., things start to pick up a bit. Four brokers line up at the whiteboard to report trades to Lutamaguzi, who goes into overdrive erasing offers and bids and recording trades. Then at noon sharp, he picks up a six-inch-tall hand bell and shakes it vigorously, marking the end of the trading session. "It happens every day," he says. "The last five minutes everyone wants to come clean. They want to get their deals done."

Rocks is the senior editor, Global Business, for BusinessWeek. He traveled to Uganda on a Gatekeeper Editor's fellowship from the International Reporting Project, based at Johns Hopkins University.