Building Wealth, One Bond at a Time: Alex Kakande’s Story.

On 26th March 2024, there was a poll on X (formerly Twitter) in which 3,794 people voted. The poll was a vote between building a home or buying bonds. At the end of the poll, buying a home edged buying bonds by two percent. About 1,860 on the poll voted to buy bonds instead of building a home. If this poll was held a couple of years back, bonds would probably not get 10% of the vote and if there was a third option of “What are bonds?”, it would score more than buying bonds itself.

Whereas a Twitter poll may certainly not be the most bulletproof measure, it is a testament to the hard work Alex Kakande has done in sensitizing Ugandans, at least on Twitter, about alternative investments like treasury bonds and Unit Trusts in a country that is obsessed with real estate.

Alex has become the go-to mouthpiece of treasury bonds in a way that not even intermediaries like Xeno (Xeno was founded by Aeko Ongodia, a member of Orion) or UAP could have pulled off. His substack newsletter, on which he writes regularly, has clocked over 4,000 subscribers, while on Twitter, he has amassed a following of about 15,000 with a monthly average read of close to 75,000 of his Treasury bonds and Alternative Investments newsletters.

But Alex certainly didn’t get thrust into this position by mistake. It is a carefully curated and intentional journey that started on the dusty murram roads of Mateete in Ssembabule, where he was born and grew up under tough circumstances. “I went to a UPE school and did my PLE in 2005. But attending my primary school, I used to sell pancakes and daddies in those weekly markets called “omuburo,” which was my first initiation into money matters and how finance works early on in life.

When I got older, I started taking them to school and selling them at break time. It taught me a lot about managing finances because I was accountable to my mum.”

When Alex finished P7, his village had become too small for his dreams, so he hit the road, ending up at St. Francis School in Nansana, Wakiso, for his O’Level and then Lubiri SS for his A’Level. “I used to still sell my daddies. I used to carry two backpacks, one with my books and another with the daddies. We used to break even regularly because my classmates supported me a lot.”

Alex then joined Makerere University to pursue a bachelor’s degree in Statistics. After graduating, he began a journey working in finance joining one of the big four accounting firms in 2016 “I was fortunate enough to be placed in the financial services department, and also fortunate enough to be inquisitive and working alongside some of the best minds in Kampala that have directly and indirectly shaped the person I have become and the knowledge I have gained. I noticed that banks and insurance companies made billions of shillings from Treasury bills and bonds, which was on par with their loan portfolio. However, banks would have about 20 employees working on the bills and bonds while the loan portfolio would be managed by hundreds of people.”

This is when I started reading heavily about bonds and Treasury bills. Alex discovered that they were a global product, prevalent in almost every country. He soon moved to Manchester to take a new job and started making heavy bets in Uganda’s bonds. “When COVID hit in 2020, many countries significantly issued bonds as governments sought ways to finance COVID fighting strategies, the yields globally increased but in Uganda, they remained the same, and information flow on Treasury Bonds was everywhere as it became the go-to product for economies to raise funding through Treasury Bonds and Bills. The USA alone issued $3 trn worth of bonds to fund the COVID payslips.” This is when I started talking to friends about investing in bonds.

In 2021, Alex decided to move from telling friends about it to the wider Ugandan audience. He wrote proposals to various media houses, but none were willing to host him because, at the time, they viewed it as a topic that wouldn’t interest Ugandans. Dejected, he decided to build his audience.

“I started posting slowly on Twitter, weekly performances of Treasury bonds and unit trusts in early 2022 and even hosted a Twitter space that wasn’t well attended, though I wasn’t consistent enough. However, in 2023, I decided to talk about bonds religiously and saw my Twitter following grow. On October 1, 2023, I launched my Substack Newsletter where I could write long-form articles about finance directly to people’s inboxes which also started gaining new subscribers daily, with the more articles I published on it. Since then, the reception has been incredible”

Alex summarises the reception of his message in three ways. “At first, people were resistant to learning. Now they have learned, but are still resistant to investing in it. Lately, they are appreciative of bonds, but investing in a risk-averse manner.”

I asked Alex why it is important to him for Ugandans to know about these investment options. For someone who grew up with an entrepreneurial mindset, his answer surprises me.

“In Uganda, we glamorize the hustle or entrepreneurial mindset a lot. From a young age, we are taught about entrepreneurship and we celebrate being ranked as one of the world’s entrepreneurial countries.” Whereas Alex has no qualms about being an entrepreneur, he emphasizes something very important.

“At the end of the day, you need to earn something instead of simply being the most entrepreneurial person or country. Less than 1% of Ugandans earn over Ugsh 1.5m a month, so expanding our income streams is important. Bonds are also very good for earning passive income. Everyone knows about investing in land, but few know about bonds. And all you have to put in is financial capital. It is a more accommodative means of investment, and this is what this awakening is all about.”

Treasury bonds, in their nature, are issued by the government. In Uganda, the Bank of Uganda issues treasury bonds to the public for long-term investment periods of 2, 3, 5, 10, and 15 years. Interest is paid semi-annually, and the principal is paid at maturity. However, many Ugandans do not trust the ability of the government to do a great job, especially when investing in a product for such a long period. Alex quells these fears with a simple analogy.

“Everyone is in business with the government. In every sector of the country, stakeholders directly or indirectly benefit from government contracts. Even with the distrust of the government and its ability to keep the ship steady, people are still bidding for government contracts even when late payments are normal. If we can trust ourselves to do business with the government, why can’t I invest in its product?’ Alex ponders.

He adds, “The technical arm of the government is not the same as its political arm. The political arm may interfere with the technical arm from time to time, but the technical arm is competent and steadfast in what they do. The Bank of Uganda has some of the most competent people managing the bond system. Since 1969, the Central Bank has never defaulted on its bond payments despite seven presidential changes, with some being coups. Every two weeks, people are cashing out their bond coupons!”

Alex is proud of the impact his newsletter and tweets have had on Ugandans. “I have so many people that have reached out to me to confess how this newfound knowledge about bonds has changed their financial outlook and planning for the future. These messages have completely humbled me. I was also humbled to be featured on a Twitter space with the Bank of Uganda, and these are some of the highlights that I hoped for when I was starting the journey. Every time I want to move on from this, I get a message that pulls me back in and motivates me to keep going.”