Kampala – Kabuye Sugar Works’ sister company in Uganda, Kakira Sugar Limited, has announced a $30m (about Rwf20.5b) corporate bond on the Uganda Stock Exchange to raise long-term capital for expansion.The sugar maker recently received approvals from Capital Markets Authority for the issuance of an unsecured 10-year corporate bond valued at $30m. Kabuye Sugar Works, Rwanda’s sole sugar maker, and Kakira Sugar are owned by the Madhvani Group, a Ugandan-based firm. Kakira Sugar’s offer, which opened on Thursday and runs up to Novemeber 27, is arranged by Stanbic Bank Uganda, acting through the investment banking division of East Africa.SBG Securities Limited is the sponsoring broker, while the note trustee is Deloitte Uganda Limited.Capital Markets Authority (CMA) outgoing chief executive officer Japheth Katto said on the sidelines of the Uchumi cross-listing event on Tuesday that Kakira Sugar’s move to raise funds from the bond market is a positive development as businesses have realised that capital markets are the cheapest avenue of raising cheap long-term capital."The biggest challenge we have in this country is the mismatch in financing needs. Businesses borrow short-term from commercial banks to finance long-term projects and banks start demanding for the money before the project is even complete,” Katto said.He added: "Banks and other financial institutions are already tapping into the bond market because they are smart; they know you can raise money from capital markets at a relatively lower price and be able to on-lend it and do other projects.” Katto further noted CMA intends to roll out a sensitisation campaign to ensure that the bond market is tapped.The Madhvani Group managing director, Mayur Madhvani, said the money will support the firm to complete its $75m sugar factory and the co-generation power production business.Farhan Nakhooda, the group’s projects director, said the rest of the money was already raised from various commercial banks and the bond issue will supplement in the completion of the project.Fast growing demand for sugar in the local and regional markets has put pressure on Uganda’s sugar producers to increase output so as to exploit the supply gap.Integrated value chains that currently generate both ethanol and electricity from sugarcane waste have unlocked opportunities in the spirits and energy sector.When the expansion is complete, Kakira Sugar will have capacity to crush two million tonnes of sugar cane per crop season, with 7,500 tonnes of cane expected to be crushed per day.The firms’ co-generation capacity is expected to generate 52MW of power.Nakhooda, however, said the interest rates will be determined depending on the bids that will be received.The Madhvani Group’s move to mobilise debt capital from the Uganda Securities Exchange highlights challenges faced by local firms in securing cheap-long term capital, especially from commercial banks.