Xeno Technologies takes action to generate investment opportunities for investors

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Aeko Ongodia

Kampala, Uganda | JULIUS BUSINGE | Xeno Technologies Uganda Limited is an indigenous investment fund management company that officially launched its activities on January 03. Company CEO Aeko Ongodia spoke to Julius Businge of The Independent about their plans.

What does your core business look like?

Xeno Technologies is a newly licensed and regulated company by the Capital Markets Authority to manage funds for both individuals and institutions. We got the license in June 2017 and started taking clients in October. We are the first Aboriginal business to obtain such a license. Investment management is all about helping people invest their money for specific purposes – retirement, wealth creation, income generation, child rearing, and emergency funding. Xeno will take around 2% of the total ROI for each customer.

What’s your reading of the market so far?

This is a start. We have so far mobilized Shs1 billion in assets under management. We serve around 250 clients including two institutions. We have ideas for giving people access to professional investment advice. I was a fixed income portfolio manager for the National Social Security Fund and controlled around 4.5 billion Shs. There is a significant demand for professional investment management in Uganda.

What makes someone trust you to trust you with their hard earned money?

Xeno is a licensed and regulated entity; our team has potentially the best experience and training and we respond ethically.

What management philosophy do you use to deliver tangible results for investors?

I use research and empirical evidence as well as sound theoretical principles to serve and make investment decisions. My team and I prioritize ethical conduct as well as talent development.

How do you describe the asset management market in Uganda at the moment?

We don’t have people based locally who have the training and experience. We don’t have as many skills to serve in this market. The other players don’t have real asset management offices here… they collect assets, support them and manage them elsewhere. Xeno’s investment team will be based in Uganda and will make decisions from there.

What safeguards do you have to deal with the significant risks associated with macroeconomic shocks that could jeopardize investors’ money?

We operate in an environment that presents challenges related to the economy, politics and external shocks. We make sure that our investors have a diversified portfolio – this means that one person owns a number of assets which may include fixed income, cash and bonds, national and regional stocks. They say not to put all your eggs in one basket. You allocate your assets so that in the event that one of them does not perform well in a given year, it is offset by the other performing assets. We have designed our execution strategy to include this diversification strategy.

How do you plan to survive in the face of the liquidity problems that often plague this market?

There are many risks, including liquidity, political, economic and market risks. As part of market risk, you will have currency, inflation, liquidity and credit risk. When liquidity is reduced in the economy, it will impact many of these assets, but differently. When there is a lot of money in the economy you will see interest rates skyrocket and for you to borrow lenders will charge you dearly. But from an investor’s perspective, it’s interesting because lending to the government with the best credit rating would pay off – yields on government securities will go up and that means you, as an investor, will earn a lot. .

With the arrival of oil and gas and the optimism that the economy will be better in the years to come… how will this benefit investors for Xeno?

I am very positive about this economy and the region. First, Uganda is growing in terms of population (3.3% growth per year), which is about 1.2 million additional people per year. It means more demand for products, food, clothing. What we need to work on is the offer. Can these people have a job? can they significantly engage in economic activity. There will be some positive shocks if they do occur, which will help propel the growth of our economy – including significant infrastructure spending that will face structural bottlenecks. There is the integration of trade within the EAC, the development of the pipeline and other related oil and gas infrastructure as well as the standard gauge railway, among others. If these come to fruition, they will stimulate the economy and certainly, if someone has the money to invest to oil that productivity, there will be a return to be made. For political risk, it will always be there and cyclical in the region. What we hope is when this will happen; it doesn’t get out of hand.

What lessons can Uganda learn from other advanced markets to improve performance?

Openness to innovation is one of them. The other is; our regulatory structure within industries is a bit more rigid and less responsive to technological advances, science and people are receptive to it. This is something that needs to change. We also believe that you can build a career ethically without cutting corners.

How to use technology to achieve results in a context of low Internet penetration?

To use our platform you need internet which is really expensive. What gives me hope is that a lot of people are no longer texting, they are using Whatsapp. We have over 14 million people using the internet in Uganda which is lower than in Western countries but quite a few. We’re going to hope that penetration is growing faster than we are growing. If that doesn’t happen, we’ll think creatively to give people access to the platform using, for example, USSD code for cellphones, among other means.

Where do you want to see Xeno in its first 5 years of existence?

We will expand this service across the country and region.

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