Ugandans are increasingly turning to financial service products to save, according to new figures released by Old Mutual Investment Group Uganda. The company’s chairman, Prof. Samuel Sejjaaka, announced a 53% growth in fund size, reaching UGX 1.678 trillion in assets under management in 2023, up from UGX 1.098 trillion in 2022.
The Umbrella Trust Fund yielded an 11.76% return, the Money Market Fund 11.62%, the Balanced Fund 11.03%, and the Dollar Unit Trust Fund 5.48% for the year. Prof. Sejjaaka noted that the group launched Uganda’s first Dollar Unit Trust Fund, which grew to USD 11.86 million. The Balanced Fund experienced a 20% growth, while the Money Market Fund decreased by 25%.
The figures show that Old Mutual Investment Group Uganda ended 2023 with 30,165 unit holders, a 42.5% increase from 21,167 in 2022. This growth is attributed to the company’s investment strategy, which focuses on government securities, offering better yields than other assets and providing strong returns for unit trust holders.
“Ahead of 2024, we anticipate a smooth economic transition. We expect domestic growth to be supported by strong investments, particularly in preparation for Uganda’s oil production,” Prof. Sejjaaka said.
Prof. Sejjaaka emphasized the importance of time in saving, encouraging savers to be patient and keep their money invested for longer periods to earn more interest. “The longer you keep your money saved, the more you benefit. If you save today and withdraw tomorrow, your savings will be limited. We urge savers to be patient and keep their money invested for a long time. When you save, we invest, and the longer it’s invested, the more you earn.”
He noted that many people save for only a short time, like one or two months, but saving for retirement requires a long-term view. “As Ugandans, we’re moving beyond traditional savings methods like building houses or owning land to financial assets, which is where we specialize.”
However, unit trust fund holders have expressed concern over a proposal by the Ugandan government to introduce taxes on their investments. John Ggolooba Ngobi, Chief Financial Officer at UAP Old Mutual Uganda, addressed the issue at the Old Mutual Investment Group Annual General Meeting held at Kampala Serena Hotel.
“We are working closely with the Uganda Revenue Authority and the Ministry of Finance to find a middle ground that benefits both the economy and savers,” Ngobi said. “Our goal is to align the industry’s goals with the country’s ambitions towards saving and economic growth.”
The Uganda Revenue Authority has expressed concerns about taxing interest earned on unit trust funds, similar to taxes on bank interest and government securities. Ngobi acknowledged the concerns, saying, “We understand their concerns and are working to ensure competitive returns for investors, even if the tax is introduced.”
UAP Old Mutual Uganda is exploring diversification options to mitigate potential losses and remains committed to prioritizing client interests. Ngobi expressed optimism that discussions will yield a favorable outcome, thanks to existing regulations around collective investment schemes.
“We are committed to finding a balance between the government’s revenue goals and the need to protect investor value,” Ngobi said. “We will continue to communicate and update unit trust holders on the progress of our discussions.”