So you think you can enter Forex trading in Uganda?

If you are Ugandan, you have probably heard all about Forex trading and how it seems to be the hottest “new” business in Uganda.

I wanted to invest $ 10,000 with a cousin in a company that I think is one of the leaders in Forex trading. While recently in Uganda (May) I even visited their offices and saw a huge number of computers with a lot of graphics and a TV turned to Bloomberg TV or another business channel. (Analysts, however, did not look as busy as I expected from watching many Wall Street movies).

Anyway, I went back to the UK and started saving to invest the bare minimum. Recently (November) I called a good friend in Uganda and casually mentioned the idea to him. He casually replied, “I just invested $ 2,500, which Ms. warned me not to invest in this company. For the second time, they missed my monthly payments, which are supposed to be 20.4% interest and the principle per month!” ” He pointed out that this company is a ponzi scheme, commonly called a “pyramid” in Uganda.

So is Forex trading the real deal? I presented my observations.

Disadvantages (first of course).

1. Unregulated sector in Uganda

According to an article published in the New Vision newspaper:

“…. Mr. Stephen Caboyo, Director of Financial Markets at the Bank of Uganda, has also neglected business, although he is in charge of the country’s foreign exchange markets.

“This is not a regulated business. It is really outside our regulatory regulations when it comes to the Forex market,” he said in an interview on Friday. “It’s like any other business. If you’re interested, you go in. If you go there and lose your money, you don’t complain.” Source: All

As an unregulated sector, this creates a risk, especially for the cautious investor (as everyone should be!), Especially when, for example, compared to Switzerland, which seems to be the center of online commerce and has a well-regulated sector.

This, of course, may not be a major problem for a typical Ugandan, as hardly anything is effectively regulated anyway! It seems that in Uganda many regulations remain on paper and the director of the Bank of Uganda (BOU) may just be realistic, because in Uganda is her world “a dog eats a dog”.

2. Experience / reputation of traders

The sector has recently been taken over in Uganda, and with countless “traders”, how do you check who is “legitimate” and who is a charlatan? How to find out who is well experienced and who is not? This is compared to established players, such as HSBC, who will clearly tell you how the sector is performing. At HSBC, for example, if you want to invest in exchange traded funds (ETFs), which are financial investment products that are not too different from Forex trading, you will get an investment profile, a comparison with similar other funds, and the history of that particular investment from this particular fund manager.

3. High initial capital. A good Forex trader or investment broker will usually ask you to have a start-up capital of $ 10,000. This is because Forex trading relies on narrow margins (called “pips”), so in order to bring you a decent return, they need to invest a fair amount of money. At today’s exchange rate (November 2011) $ 10,000 is about $ 28 million!

And now the pros

1. Liquidity. The market is huge. Forex trading is the largest type of market in the world and if you open an account, say an FX pro account on or a similar other self-traded or managed brokerage account, you will find that you can easily buy and sell.

2. Good income on the market of investments and securities. I’m not sure if there is any other business model that gives better liquidity, especially at the moment with challenging global markets. Of the various investment manager websites I’ve researched, it’s not uncommon to find ones that give a return of usually 6%. Compare this to a high savings rate at Barclays Uganda or Crane Bank, which gives a maximum return of 5%.

Of course, you should know that like any securities trading, returns are usually not guaranteed and many traders post losses, especially those who trade for themselves on trading platforms promoted by so many online Forex trading companies.

3. It can be an easy sector to deal with Like many investment products such as stocks and other securities, if you have a managed account, then you have a broker who manages the business for you. Yes, they charge fees (check their fees and compare with others), but that means you don’t have to keep track of the position, as brokers do this and usually send you statements from your wallet, or you can even see them online and as such. you can choose to liquidate if you wish.


The numbers first

Based on my analysis:

* Capital investment (A): Shs 28,000,000

* Income per year: (upon acceptance of 3.44% interest per month): Shs 11 558 400

* Profit per year (assuming that the fees for the investment manager are 1% of the initial capital) (B) is 11,278,400 Swiss francs.

* Return on equity (years of return on capital or A / B) is 2.48 years

Now the basics you need to get just before you invest.

* The regulated investment manager / broker is mandatory.

* Foreign currency account to protect yourself from Forex fluctuations.

* Return on investment cannot be guaranteed, especially in the current economic climate. Prepare for profit or loss.


In today’s world of unpredictability in the stock markets, everything seems to work out, no matter how the market presents itself, but you do your research well and unless you are ready to learn how to be a Forex trader (for example on this site) , you should seriously consider investing in Forex trading through a reputable investment broker / bank who will manage the account for you.

If necessary, open a foreign currency account in one of the Ugandan banks to deal with this aspect and deal with a foreign player who is regulated. For example, select companies that are regulated in the UK by the Financial Services Authority (FSA). There are a few scams and I don’t think it’s worth investing a significant amount of money in someone who hasn’t been tested and tested and doesn’t have quality control mechanisms in place to protect your money from scammers or just inexperienced people.