HOPE AS FOREIGN INVESTORS' LIMIT AT DAR ES SALAAM STOCK EXCHANGE IS LIFTED

The Dar es Salaam Stock Exchange is set for a boom in business after the government lifted controls on foreign- share ownership, making the burse more enticing for companies to consider initial public offerings.

The new development published in a government gazette last week effective revokes the 2003 Regulation on foreign investors limit of 60 per cent of shares in companies that trade on the DSE.

It allows East African Community investors to buy as much as 40 per cent of Tanzanian government securities.

Foreigners were previously not allowed to invest in government securities. Treasury bills were subjected to separate regulations under the central bank, whereby the main investors are Tanzanian-based commercial banks and pension funds.

The easing of restrictions is part of Tanzania's commitment under the East African Community (EAC) common market to open up its capital markets and free up movement of capital. It is expected to make the DSE, described as Africa's best-performing stock market, more attractive to investors.

"Revoking the 2003 Regulation on foreign investors Limit is envisaged to increase the investor base in our local exchange", the DSE Chief Executive Officer, Moremi Marwa told Business Standard.

"With such increment we anticipate better price mechanism for the listed securities (equities and bonds) and also better valuation which is a key attraction for capital raising and exit mechanism for some investors in non-listed companies once they get listed in the Exchange.

"We are upbeat this new development will increase the level of capital markets contribution into the Tanzania's economic activities and growth," he said.

According to him easing of foreign investors participation would also put the Dar bourse at the same level in terms of attracting portfolio capital from external markets into our capital which will supplement the current strategic and industrial capital and foreign direct investments.

"It will be one of the vehicles for channelling foreign currency into our local economy as well." The Dar es Salaam Stock Exchange, which has a market capitalization of 21.9 trillion shillings ($13 billion), is targeting a market value equal to 50 per cent of Tanzania's gross domestic product by 2017.

Tanzania's $33-billion economy, the largest in East Africa after Kenya and regional fastest growing, will expand 7.2 per cent this year, according to World Bank estimates.

It has indicated more robust growth after expanding by 7.4 per cent in the first quarter of 2014 compared to 7.1 percent a year on the back of increased gold production and power generation. Tanzania is Africa's fourth-largest gold producer after South Africa, Ghana and Mali.

The country has made massive discoveries of natural gas reserves offshore the Lindi and Mtwara coastline which are expected to spur investment boom and boost the economy.

Estimates of discoveries indicate recoverable offshore gas resources of at least 50.5 trillion cubic feet by latest figures potentially sufficient for a four-train Liquid Natural Gas plant.

Total investment during the development phase could amount to $20 billion-$40 billion, depending on the scale of the project which will be the largest investment ever in Tanzania, according to International Monetary Fund estimates.

Major global oil and gas companies including Norway's largest energy company Statoil, U.K.-based BG Group, and Exxon Mobil are planning to build the first liquefied natural gas plant in the East African nation to export natural gas. It is expected gas production will start in the 2020s.