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Tanzania Capital Markets Report Print E-mail
Sunday, 27 July 2008
The securities market in Tanzania emerged in the 1990s as a result of the government policy to liberalize the Tanzania financial sector, which included a 1990 study on monetary issues.

One of the recommendations outlined in the study was that there should be a Tanzania capital market in order to assist in mobilizing Tanzanians to save and to channel them into long-term investments.

tanzania-capital-marketWithin such framework, the Capital Markets and Securities Authority (CMSA) was established in Tanzania in 1994 under the Capital Markets and Securities Act.

Currently, the Dar es Salaam Stock Exchange is the only formal trading place for securities in Tanzania.

Eight companies are listed: Tanzania Oxygen Limited (TOL), Tanzania Breweries Limited (TBL), Tanzania Cigarette Company (TCC), Tanzania Tea Packers Limited (TATEPA), Swissport (formerly DAHACO), Tanga Cement Company (SIMBA), East African Breweries (EABL), and Kenya Airways (KA).

Treasury and corporate bonds are also listed at the Dar es Salaam Stock Exchange (DSE).

Nevertheless, the number of companies listed at the Dar es Salaam Stock Exchange is still considered to be too limited and far below the original expectations.

Furthermore, of the eight companies listed, some are parastatal companies listed for privatization.

The presence of such parastatals at the Dar es Salaam Stock Exchange is the result of the privatization initiatives undertaken by the government.

In that sense, the Dar es Salaam Stock Exchange has proven to be a success.

However, in regards to the overall number of Initial Public Offerings (IPOs) since 1998, Mr. Mboya, the CEO of the Capital Markets and Securities Authority, confirms that “Although the reason behind the need for efficient capital markets was for long-term financing of an emerging economy like ours, it is right to say that the capital markets in Tanzania have not played a major role in the mobilization of resources for investment.”

But Mr. Mboya also adds: “

The privatization of the parastatals [is] a proof that the market has the capacity to mobilize resources

.”

With such a challenging background, trading activities are increasing slowly but steadily at the Dar es Salaam Stock Exchange as the general public in Tanzania is gaining confidence in capital markets.

“The attitude toward the capital markets in this country is changing fast. When we started […] investors had a wait and see attitude [and] the amount of shares available were not entirely absorbed by the marketplace,” says Mr. Njau, CEO of the Dar es Salaam Stock Exchange.
 

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