24 February 2014

Tanzania: DSE Chief Calls for Increased Foreign Participation

LIMITED foreign investors' participation at the Dar es Salaam Stock Exchange (DSE) has been constraining the bourse from expansion.

DSE Chief Executive Officer Mr Moremi Marwa said the decision to raise the share of foreign investors' participation was still under consideration by the regulator.

"Throwing the fledging bourse open to foreign investors could be an important milestone that would attract more wealth and make the market vibrant," he said.

Under the current framework, foreign investors are allowed to purchase only up to a maximum of 60 per cent of shares floated at the exchange while the remaining 40 per cent is being reserved for local investors.

The Nairobi Stock Exchange (NSE) foreign participation is over 70 per cent, while in Uganda it is 100 per cent, thus putting the bourses in the position to attract substantial investments from outside the country.

By allowing more foreign investors to chip into the DSE, he said, immediate impact would be seen in the shares by gaining their true value.

"Most of the shares were currently undervalued despite registering outstanding performance at the bourse," he noted.

The bourse that opened its doors to the public in 1998 is currently having the total market capitalization of around 16tri/-, of which the domestic market capitalization amounting to 6tri/- from 18 listed companies, constituting of 12 locals firms and six cross-listed.

Statistics reveal further that the DSE depth of domestic market capitalization ratio to Gross Domestic Product (GDP) stands at 12 per cent and 33 per cent for total market capitalisation respectively.

The investors base at the bourse is only 185,000, the figure which is marginal compared to total population of 45 million and economic activities.

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