He had an ideal well-paying managerial job at Bank of Uganda and did not need to give it up for what is generally seen as a high-risk business.Yet, Stephen Kaboyo thought time was ripe to try his hands at a business of his own, thus the establishment of the financial services firm –Alpha Capital Partners (ACP), dealing in foreign exchange trading, among others.Not even the high-risk nature of business could stop him from venturing into a territory he perceived to have huge potential.
“I used experiences, skills and professional networks that I acquired and developed over the years to carve a niche in a business that I enjoy doing. Everything I do at ACP is what I used to do at Bank of Uganda (BoU) because the principles are very similar,” the former director financial markets at BoU says.
Although forex trading is one of the largest financial markets globally, accounting for over $3.8 trillion in daily turnover, many people prefer to stay away from it because of the high risks associated with it.
Knowing the nature of business he was venturing into, his transition from public to the private sector was well-calculated so as to minimise the rate of exposure and generate reasonable profits. Thus, he diversified his business strategy to include sovereign asset management, forex trading, micro credit, markets aisory in financial markets, pensions and consulting and mobile money.
“Forex trading is very tricky as it carries a high level of risk currencies change very often and there is potential to lose substantial amounts of money,” he explains.
He adds that in forex trading, one needs to consider their investment objectives, level of experience and risk appetite.
“It is very easy to lose some or all of your initial investments so one should not invest money that they cannot afford to lose,” he notes.
When Kaboyo makes moneyWhile the currency markets are generally volatile in nature, it is during this volatility that traders make money.
“Forex traders normally make money when the market is in turmoil and less when the market environment is stable,” he notes, adding that a volatile market is, however, bad for policy makers.
Mr Kaboyo’s intuit at pursuing a mix of business portfolio did not deceive him as his investment has paid off in plenty.
Starting a forex trading businessAlthough he is reluctant to share the business’ monthly or annual turnover, the finance guru maintains that one doesn’t need huge sums of money to start a forex trading business, rather they should know how to buy low, sell high and also know when to get in and out of positions and trade on the leverage to magnify potential gains.
“You don’t need a lot of money to start a forex trading business, all you need is Shs20 million minimum paid-up capital requirements for retail forex trading and Shs50 million for a money remittance licence and this must be maintained in your books because you are required to do quarterly financial reporting to Bank of Uganda,” he notes.
Mr Kaboyo, however, adds that a forex trading licence on its own can’t guarantee wealth. Upon that background, he says players through the Forex Bureau Association have appealed to BoU to allow provide other services using the same license such as mobile money and introducing a commission on every forex trading to supplement forex trading incomes.
In sovereign asset management, Alpha Capital has a collaborative arrangement with the United States Fund Management and Investment Firm which has interests in Uganda, a business that largely supports Alpha Capital Partners’ financial muscle.
Consultancy servicesAlpha Capital Partners also does consulting on capital markets and pensions which are also lucrative business areas.According to Kaboyo, the firm was established to provide high quality financial services to the Ugandan market by promoting local content especially in the sovereign asset management space.
Who is Steven KaboyoStephen Kaboyo spent a great deal of his work life in the public sector where he rose up the ranks to a senior executive position at Bank of Uganda responsible for financial markets, and reserves management.
At the International level, he was exposed to the workings of many developing countries through numerous assignments he undertook with the International Monetary Fund to provide technical assistance in developing their financial systems.
He was recently named chairman, Uganda Telecom Limited. He previously served on the Board of the Capital Markets Authority Uganda. He is also a frequent speaker on business and financial matters at the international and local fora.
Among his major achievements is steering the business to greater heights and building a strong brand, which he says has opened up opportunities for the business.
He says: “I always send out a weekly forex commentary which goes beyond Uganda borders because international investors who come to invest in Uganda’s financial markets don’t make a decision until they have read my report – so I guide international investors and no value can be attached to that.”
He adds that he has also been able to establish business links with international financial institutions in the early years of the business, which he says has been a major breakthrough.
As business grows, Kaboyo intends to expand the operations of Alpha Capital Partners into East Africa and get involved in the oil and gas industry through training and skills enhancement.
“With the expected oil revenues, we are positioning ACP as a leader in developing local content in areas of investment and revenue management, using our sovereign asset management expertise.
“Our goal is to ensure that local competencies are developed and utilised,” he explains.
He also plans to become a strong aocate for capital markets development in Uganda in the area of markets aisory.
Transition from public to private sector
His transition to the private sector was seamless as he had made a proper plan. However, he adds that transition requires a lot of conviction and resilience.He says: “The only constant in life is change it is inevitable. So I listened to my intuition telling me to move on and I had to.” He adds that he didn’t find the transition hard as he had ample time to think through what he wanted to do and how he wanted to execute it.He says there is need to break the mentality of being employed, which most people have.
Instead, he urges them to think self-employment to reduce on the high unemployment levels in the country.
Kaboyo’s challenges while forex tradingAs with any other market, if you want to invest in currencies you need to do an analysis, which must focus on high-level macroeconomic factors like economic growth and inflation.
In forex trading, the interest rate and currency markets intertwine and influence each other. Higher interest rates can make a currency more attractive.
The other challenge is that of trading profitably. It is said that about 95 per cent of people who try their hand in forex trading fail as many turn out not to be profitable in the long run.
Ensuring Alpha Capital sustainability To ensure business continuity even in his absence, Mr Kaboyo teaches his children the operations and dynamics of the business whenever they are on holiday.
“My daughter who is joining University this year comes and works in the forex bureau while my son attends to all my phone calls in my office.”I want to teach them business skills and ethics at an early stage so that they can appreciate that hard work pays,” he says.
He adds: “When we are at work with my children – from 7am to 5pm, I am not daddy thay are employeee like others and have to learn how to get along with other employees. I am daddy after 5pm,” Mr Kaboyo, who employs five people in the forex bureau and mobile money business, says.
When he gets assignments such as research projects, Kaboyo usually hires temporary workers whom he works with for the duration of the assignment.
How forex trading works
Forex trading simply means exchanging one currency for another.The first currency quoted in a currency pair on forex is called base currency, which is generally the domestic currency. The second currency is called the quote currency and is usually the foreign currency but the volume of trade is expressed in the base currency.
Forex is highly volatile and most liquid and so one should follow certain ground rules here in order to manage risk.
Kaboyo’s aiceStart with what is available. Kaboyo urges the would-be entrepreneurs not to be discouraged from pursuing their goals.
“The main constraint in Uganda is lack of financial capital but I think capital should come in as a catalyst. You don’t need to have billions of shillings to start a business. Start small and grow,” he urges.
Have clear plan. He also adds that potential entrepreneurs should have clear investment objectives, a clear plan of action and should understand the sort of business they want to venture into.
He says: “One mistake that most entrepreneurs to be make is to venture into unknown territories. For instance, I wouldn’t have gone into the business of trading cars because I don’t understand it. It may look simple but I can’t do it because I don’t understand its dynamics.”Build networks. He adds that would-be entrepreneurs should create strong networks and surround themselves with positive people because they are key in creating successful businesses.
Surrounding himself with positive people who he admires and trusts, in addition to building professional networks are key in the survival of an enterprise.
He also says that to have a seamless transition, one needs to prepare and plan for exit on the very first day they are hired on job. Determination, drive and high energy are also key for a business to succeed.
SOURCE: Daily Monitor