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Wednesday, 27 January 2016

DSE BOSS TOUTS USE OF INFRASTRUCTURE BONDS

DSE CEO, Moremi Marwa
Tanzania should finance infrastructure development through their local capital markets to close the transportation gap in a timely fashion.

The country is expected to start debt-bond-markets where domestic savings are intermediating and be able to finance infrastructure projects. The Dar es Salaam Stock Exchange (DSE), Chief Executive Officer Mr Moremi Marwa said the move may leverage efforts of closing infrastructure deficits in Tanzania and Africa as whole.

“Our markets (despite being relatively small) need to be developed slowly by central governments, municipals, parastatals issuing bonds in local markets where both domestic and international players freely access them,” Mr Marwa said in a statement.

The CEO said recently some Africa countries accessed international markets “with total disregard of the local markets”.

For instance, in the last past seven years more than ten African countries have raised considerable amount from international capital markets in the form of Eurobond.

“Traditionally,” Mr Marwa said, “most African countries, with exceptional of South Africa, have not consciously seen the capital market as a capital source of finance.”

Yet, the expert urged, raising debt financing in the exchanges is one of the most potent sources of finance for rapid infrastructure development.

Report on the implementation of 2015/2016 budget showed that development plan as of last month, only 1.8 tri/- out of 5.9tri/-was released to carry out various development projects.

That gap could have been taken care with funds from capital markets. According to Africa Development Bank (AfDB) reports road access in Africa is only 34 per cent as compared to 50 per cent in other developing regions.

Not only that total electricity generated by Africa’s 52 countries for its billion people is equivalent to what is being produced and consumed by a single nation-Italy.

There are cases where the total electricity generated in an African country, such as Tanzania, is not enough to power even a single airport such as Schiphol’s Airport in Amsterdam, in Netherland.

Mr Marwa said the country’s balance sheet in often cases lacks the fiscal space to accommodate the substantial financial outlays required for infrastructure development.

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