Tanzania Economy Potentially Boosted by New Listing Process

The Tanzania economy could receive a boost as its bourse is preparing to list the Enterprise Growth Market Segment (second tier market) at the Dar es Salaam Stock Exchange (DSE), thus changing some of the qualifications and easing some of the restrictions for interested investors.

A bill to introduce the second tier market has been recently introduced to the Attorney General’s Chamber for approval prior to beginning the process of listing the second tier market.

In contrast to the primary market segment for investment, where the criteria for a nominated advisor is optional in the case of firms who are looking to list at the DSE, with regard to the second tier market, the requirement for listing requires all companies who are looking to list on the DSE to have a nominated advisor at the time of listing.

According to a recent interview with the Guardian, the Chief Executive officer of the DSE, Jonathan Njau, said that the current laws, which were designed to direct the operations of the DSE, lack the stipulation of having a nominated advisor.

Mr. Njau went on to explain that the revised bill had already been finalized and submitted to the Attorney General’s chamber for final approval, after which it was sent to the Parliament to be read.

“We had expected that during the just ended parliamentary sessions the bill could have been read,” said Mr. Njau, “but it was not the case, probably it will be read in the April sessions.”

The original concept of the Enterprise Growth Market Segment was promoted by experts who felt that the current requirements for listing on the primary investment market segment were too strict and should, therefore, be modified in order to attract more firms to the bourse.

As reported by the Guardian, according to these experts, such a move could help to boost the productivity of the DSE by providing more investment opportunities to interested investors.

Unlike the previous investment market segment, the new Enterprise Growth Market segment would not require a minimum of three years performance before receiving consideration for listing on the DSE; instead, without a track record, the applicant would be required to demonstrate that funding was required in order to support a fully researched and appropriately assessed project.

In addition, the requirements for net tangible according to the main investment market stipulations indicate that the applicant company have at least Tshs 500 million; however, in order to meet the requirements for the Enterprise Growth Market Segment, the company will be required to have at least 50 percent of its nets assets located within Tanzania.

Following the finalization of the bill and the subsequent passing of the law, the Enterprise Growth Market Segment is expected to positively affect the Tanzania economy as it will help to make more of the country’s citizens aware of the benefit of investing in stocks, as evidenced by the National Micro finance (NMB), whose shares recently appreciated from Tshs 600 during the Initial Public Offer (IPO) to Tshs 900 at the secondary market on the DSE.