DSE Chief Executive Officer, Molemi Marwa.
Turnover at the Dar es Salaam Stock Exchange has grown more than fivefold over the past five years, as a result of measures taken to increase the frequency of transactions.
DSE chief executive officer Molemi Marwa said that stringent regulations had discouraged companies seeking capital from listing and investors from buying shares.
“The relatively low liquidity had in the past made it somewhat unattractive for issuers and some investors to participate, but things have changed significantly in the past few months,” Mr Marwa said.
The Tanzanian government last year reduced corporate tax from 30 per cent to 25 per cent and made flotation costs tax deductible in a bid to attract new issuers.
The reduction in corporate tax for five years for newly listed companies saw list six Kenyan companies — KenGen, Kenya Re, ScanGroup, Eveready, AccessKenya and Safaricom, — in 2006, but the new issues have since reduced to a trickle.
Mr Marwa said the incentives in Tanzania had yielded a few applications for listing, mostly from the financial sector. He said the recent listing of Swala Oil and Gas could herald a change in sentiment, especially from miners and telecommunications firms, who are targeted for compulsory listing.
The incentives were also extended to investors who now enjoy zero capital gains tax, zero stamp duty and 5 per cent withholding tax on dividends, half that for non-listed securities.
Other reforms include the introduction of the Enterprise Growth Market for companies that are not eligible for the main market, allowing foreign investors to own up to 100 per cent of listed companies and to move money freely in and out of the country.
These reforms have seen the price of key listed shares appreciate by more than 150 per cent in the past year, reflecting the wealth created for investors.
“The shares of CRDB Bank, NMB and almost all the companies listed on the bourse have risen considerably, which ultimately increases the turnover,” East African Business Council chairman Felix Mosha said.
The bourse, founded 15 years ago, had for years suffered from lack of an unclear privatisation policy and stringent legal requirements.
The rules discriminated put small and medium sized companies at a by allowing only established and profitable companies to raise capital for growth and expansion.
“The main objective of the Enterprise Growth Market segment is allowing small and medium-sized companies to start raising long-term capital from the public through issuance of shares,” Mr Marwa said.
Swala Energy and Maendeleo Bank raised more than Tsh11 billion ($6.4million) by listing on the segment. Only seven of the 300 companies that were privatised have listed on the exchange.
The DSE has in the past year reached out to investors, including through one-on-one meetings with target groups and media campaigns.
The East African
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