CAPITAL TO MOVE FREELY IN THE EAST AFRICAN COMMUNITY

IN SUMMARY

MORE ON THE PROTOCOL

• As it was the original Foreign Exchange (Listed Securities) Regulations 2003 that set the 60 per cent limit for foreigners, its amendment effectively means that the foreigners’ limit in the DSE does not apply now.
• Under the amendment, residents can now deal in any other securities freely, but only within the EAC Region.
• “This partial opening of the capital account should be a welcome development for Tanzania’s Licensed dealing members, banks, pension funds and High-net-worth individuals,” says George Fumbuka of CORE Securities Limited.

The move will also allow Tanzanians to invest in the EAC region without requiring prior permission from the BoT

Dar es Salaam. Tanzanians who wish to move their capital and invest in any of the East African Community (EAC) member countries are now free to do so, thanks to the government decision to partly liberalise the capital account.

A statement issued yesterday by the Ministry of East African Cooperation, says that the change will also allow foreigners to participate on the Dar es Salaam Stock Exchange (DSE). However, foreigners will have limited allowance to participate  in government securities.

The move will also allow Tanzanians to invest in the EAC region without requiring prior permission from the Bank of Tanzania (BoT).

This is a significant move towards fulfilling the requirements of the EAC Common Market as annexed in its Schedule on the Removal of Restrictions on the Free Movement of Capital by 2015, says the ministry statement.

Commenting on the development, the deputy minister for East African Cooperation Dr Abdulla Juma Saadalla, said the move was one of the government’s deliberate efforts to open up opportunities for Foreign Direct Investments (FDIs) and wealth creation through Tanzanians’ investments abroad.

“This is yet another milestone for Tanzania in its quest to attract more FDIs and allowing its people to invest abroad,” said Dr Saadalla, adding that the country was already moving in the right direction in attracting investors.

Liberalisation of capital account has been necessitated by BoT’s recent amendments of two key regulations namely; the Foreign Exchange (Listed Securities) (Amendment) Regulations 2014, and the Foreign Exchange (Amendment) Regulations 2014.

The two regulations were availed through Government Notice No. 132 and were published in the Government Gazette on May 2, 2014.

Before this amendment, foreigners were not allowed to participate in government securities at all.