DAR ES SALAAM STOCK EXCHANGE WANTS PRIVATISED ENTITIES TO GO PUBLIC

DSE Chief Executive Officer, Mr Moremi Marwa

The Dar es Salaam Stock Exchange (DSE) continues to engage the government to consider listing the remaining privatizations to broaden ownership of key sectors of the economy.

Raising capital and listing into the equity market apart from increasing the level of transparency and good governance it is also one of the effective and tested approach of economic inclusiveness and citizen empowerment.

The stock market fulfills a central function in the economy, bringing together savers and investors (providers of capital) on the one hand with companies and the state (borrowers) on the other.

The DSE Chief Executive Officer Mr Moremi Marwa told the Business Standard in Dar es Salaam yesterday that listing of the privatized entities would also lead to improving financial literacy within the economy.

“It is not feasible and sustainable for the country to continue operating a financial system that is wholly bank based,” he said.

“We thus continue engaging the government to implement some legislative actions meant to broaden ownership of key sectors of the economy like mining, telecommunication and financial services.”

He said one of the challenges that the bourse has been facing the slow move by stakeholders in particular the private sector seeing the need to use the bourse for long term capital mobilisation.

For example, the introduction of the Enterprise Growth Market (EGM) segment has enhanced the exchange’s mandate, increased and broadened the financial products competitiveness at the bourse.

This has given small and medium enterprises a great opportunity to access long term capital in the capital markets. It is the most outstanding initiative at the capital markets and the economy in general.

The EGM has the potential to transform many businesses in our economy. It will also increase a number of listings at the Exchange which in turn attract more investors and hence financial and economic inclusiveness/empowerment and literacy.

Similarly, the one year period has witnessed a significant increase in liquidity at the market place particularly in the equity segments that rose by 5 folds.

Previously, the average turnover per annum was in the range of between 40bn/- and 50bn/-, but in the past one year, we have seen turnover of more than 200bn/-.

The indices and market capitalization have witnessed significant growth where the domestic index and market capitalization, from May 2013 to date, the Tanzania Stock Index (TSI) and domestic market capitalization grew by more than 100 per cent.

“It is very good news for the investors (especially institutional investors) as they have literary managed to book significant growth in the investment in the asset class that sometimes require a passive investment approach,” said Mr Marwa.

The improvement is a result of our decision to reduce the securities and cash settlement cycle, allow the trading platform (Automated Trading System – ATS) and our Central Depository System to be accessed remotely through a Wide Area Network (WAN), thus extending the trading hours to four instead of two.

Also the bourse embarked on the DSE Scholar Investment Challenge initiative to give back to the community as well as enhancing public education. As the Exchange, it has the obligation to encourage the listed members to consider issues of Corporate Social Responsibility, to demonstrate how to lead by example.

Through this initiative DSE try to positively influence the next generation through equipping them with the knowledge to enable them plan wisely for their finances.

With the project, over 3,000 students have accessed the equity market’s platform and almost half of these are actively participating in buying and selling of securities listed into the Exchange.

This challenge is informative, educative and entertaining which makes it ideal for these future business leaders and entrepreneurs.

The beauty about the challenge is that students register for the challenge through mobile phones among other online platform.

At the end of the challenge, winners are awarded with cash prize and various internship opportunities. Also DSE will soon or later introduce more demand driven products such as Real Estates Investment Trusts (REITs), Municipal Bonds, Exchange Traded Funds, Derivatives and Futures Contracts and Retail Savings Bonds.

Through this new system it is intended to use as a platform to join the National Payment System and will also enable our CSD integration with the Central’s CSD for government bonds.

The stock exchange is an organized market, in which supply and demand for securities are brought together. A differentiation is made between the cash and forward markets.

Equities and bonds are traded on the cash markets by offering investors the opportunity to take part in the economic progress of corporations.

Without this “mediator”, the capital providers and borrowers would have to negotiate directly, which would generate heavy search and information costs.

Thus, the robust and vibrant equity market is an important instrument that could be used to bring about economic empowerment of the citizens in the effort to lift masses from abject poverty.