DSE chief urges govt to float infrastructure bonds

Dar es Salaam Stock Exchange (DSE) Chief Executive Officer, Moremi Marwa told Deputy Minister for Finance, Economy and Planning, Dr Ashatu Kijaji in Dar es Salaam last Wednesday that governments at both levels should raise money at the bourse because it engages the private sector as well.

“Industrialization through capital markets puts the private sector at its rightful position at the centre of the country’s economy hence freeing government resources to be geared towards provision of social services,” Marwa said during a Mkombozi Bank Plc rights issue function.

He commended the Fifth Phase Government for supporting growth of capital markets saying such facilities help to bridge the gap between the haves and have-nots.

“We humbly urge the government (both central and local) to consider using the capital markets to mobilise domestic resources to finance the planned industrialization and infrastructure developments,” the DSE CEO noted.

Capital Markets and Securities Authority (CMSA) CEO, Nasma Massinda advised the government to make use of the bourse in raising funds for infrastructure development saying such a move also helps to sustain the stock market.

“CMSA will work closely with the government to ensure that funds for financing investments required to propel economic growth, like industrialization projects which are planned by the government will be raised through capital markets,” Massinda noted.

She stressed that stock markets are an avenue for inclusive economic growth hence the need for key sectors of the economy such as agriculture, communication and infrastructure are linked to it.

“It is in the interest of CMSA and all stakeholders to have a vibrant capital market which which drive the country’s economic growth,” the CMSA CEO emphasised.

Deputy Minister Dr Kijaji commended the roles being played by DSE and CMSA saying the government will continue to support them so that the bourse should be an avenue of inclusive growth.

She pledged government’s continued sensitization of the public on the importance of utilising stock markets saying a financial education strategy is already put in place to facilitate such sensitization.

“It’s my hope that this strategy will speed up the public’s knowledge of stock markets and especially stock markets,” Dr Kijaji noted.

In a recent study commissioned by Centre for Affordable Housing Finance in Africa titled, ‘ The Role of Mortgage Liquidity Facilities in Housing Finance: Lessons Learned from Egypt, Tanzania, Nigeria and Malaysia,’ it was observed that the country’s developers are not using the bourse to raise money for projects.

The report said compared to Egypt and Nigeria, Tanzania’s capital has less liquidity and still at infancy stage.
“There were almost 200 listed companies on the Nigerian Stock Exchange (NSE) as of December 2014.

In comparison, the Tanzanian capital market is still in its early stages of development and there are only a limited range of financial instruments and securities,” the report authored by Sarah Langhan of CAHFA said.

It further noted that although the government has succeeded in placing medium to long-term bonds on the market, many challenges remain and include having a very limited secondary market for government bonds.

“Securities are traded on the Dar es Salaam Stock Exchange which was established as a company limited by guarantee in 1996. The stock exchange is constrained by the limited number of stocks and low liquidity,” the CAHFA report dated February 2016 pointed out.

In comparison with Egypt, the report said, “Egypt is not a frequent bond issuer; the last internationally traded bond was issued in 2010 and had low liquidity. There is also low liquidity in the local debt-instrument market because banks tend to buy and hold treasury bonds and bills,” it noted.

The report also pointed out that whilst Nigeria has made a number of reforms which have made getting credit easier, including the improvement of its credit information system through a central bank guideline defining the licensing, operational and regulatory requirements for a privately owned credit bureau, Tanzania has done very little.

“Despite Tanzania’s very low private credit bureau coverage (0.6%) and no public registry coverage, the country has made getting credit easier by improving its credit information system through new regulations that provide for the licensing of credit reference bureaus and outline the functions of the credit reference bank,” the report noted.