Tanzania’s stock market is set to connect electronically to the stock exchanges of Uganda and Rwanda by the end of 2020.
This was announced by Celestin Rwabukumba, CEO of the Rwanda Stock Exchange (RSE), during a recent interview with CNBC Africa.
To achieve single market trading, the Dar es Salaam Stock Exchange (DSE), the Uganda Securities Exchange (USE), and the RSE will combine their trading systems and connect to the information technology platform, EAC Capital Markets Infrastructure (CMI). The software developer is the Pakistani company InfoTech Private Ltd.
This is part of a project funded by the World Bank (WB) and approved in March 2011. The aim of the project was to lay the foundation for the financial sector integration among the EAC member states ahead of the implementation of a single currency regime.
Investors in the three countries will buy and sell shares of companies listed in any of the countries without going through different stockbrokers.
Of the three countries, Tanzania has the largest market capitalization standing at USD 6.5 billion with 27 listed companies, followed by Uganda (USD 5.1 billion; 17 listed companies), and Rwanda (USD 3.5 billion; 10 listed companies).
The potential upside for the 54 companies listed at the three exchanges is that they would be able to attract a larger pool of capital and investors.
As of September 2020, the DSE market capitalization stood at TZS 15,183.09 billion (USD 6.5 billion), compared to TZS 17,906 billion (USD 7.7 billion) at the end of 2019, representing a decrease of 18%.
The DSE All Share Index (DSEI), which comprises all listed companies at DSE, reached TZS 1,828.80 on 9th of September 2020, down 14% from its peak for the year at above TZS 2,000 in February of the same year.