DAR ES SALAAM: THE value of capital market investments has grown by 7.6 per cent in a year, thanks to the country’s favourable investment environment.
According to the Chief Executive Officer (CEO) of the Capital Market and Securities Authority (CMSA), Mr Nicodemus Mkama, the value has reached 36.13tri/- by the end of last month, up from 33.59tri/- recorded in November 2022.
Mr Mkama argued that the sharp increase was due to the country’s favourable investment environment, brought about by inclusive business policies and laws implemented by the Sixth Phase Government under President Dr Samia Suluhu Hassan.
“The government’s implementation of the economic diplomacy policy in pursuit of good multilateral relations has been the catalyst for local and foreign investment,” Mr Mkama said.
He stated that the open economic policy has significantly boosted the investment value of the capital markets, attracting other countries to come and learn best practices in Tanzania.
Mr Mkama revealed this on Wednesday when addressing delegates from Burundi’s Capital Markets Authority (CMA) who visited the CMSA to share experiences and learn from Tanzania’s capital markets operations.
He said the Burundi CMA’s delegation included members of the board of directors, management, and a team of experts who visited Tanzania’s CMSA, Dar es Salaam Stock Exchange (DSE), investment companies, and other stakeholders in the capital markets.
He added that the visit would enable the Burundi CMA delegates to effectively run their capital markets while identifying critical areas that can enable their country to have stable capital markets.
“Stable capital markets are resilient and efficient enough to bring positive results in stimulating the development of the financial sector and the entire economy of Burundi, just as they do in Tanzania,” Mr Mkama said.
He attributed the visit of the Burundi CMA delegation to the recent stunning returns from the CMSA, brought about by new products and innovations in the capital markets that attracted investment from both the public and private sectors.
Mr Mkama mentioned the new products, including green bonds, social bonds and Sukuk bonds, stating that their presence positioned Tanzania on the world’s capital markets stage.
The Sukuk bond is an Islamic financial certificate, similar to a bond in Western Finance, for instance, Europe, that complies with Islamic religious laws known as Sharia.
He said Tanzania’s capital markets are among the best-performing markets in Africa in recent days due to the CMSA delivering in line with the government’s commitment to boosting investment.
According to the World Bank (WB), Tanzania scored 157 per cent on the ranking of the East Africa Common Market Protocol Scorecard on the movement of capital, goods and services. The country scored 18 marks out of a total of 20 marks, emerging as the best- performing country in the East Africa Common Market Protocol Scorecard.
“As of today, in Tanzania, there are no barriers for foreign investors to participate in the stock exchange, corporate bonds and investment funds,” Mr Mkama hinted. Furthermore, he said the CMSA has been utilising both local and foreign capital market opportunities by authorising Stock Exchange Rules to the Dar es Salaam Stock Exchange (DSE) in order to generate funds for Environmental, Social and Governance (ESG).
He said the improvement has boosted sales and further facilitated companies and institutions in accessing funds for their business and overall development. Likewise, Mr Mkama said the CMSA has implemented a special strategy for providing Municipal and Subnational Bonds to Local Government Authorities (LGAs) and Public Institutions for various bankable projects that can bring returns.
He said the introduction of bonds adhered to the government’s Alternative Project Financing Strategy, which was launched by the Minister for Finance Dr Mwigulu Nchemba to strengthen the availability of financial resources for building a competitive economy for people-centered development in Tanzania.
“The new strategy has enabled the Tanga Urban Water Supply and Sanitation Authority (Tanga-UWASA) to be the first entity in the country to qualify for the requirements of providing the Sub- National Water Infrastructure Green Revenue Bond for the construction of critical water infrastructures and environmental conservation.
In embracing the technology revolution, Mr Mkama said the CMSA approved smart tech systems known as Sim Invest and “Shares on the Hand” that allow the provision of services to the capital markets using Information Communication Technologies (ICTs).
He said ICT has been used in buying and selling shares.
“This move has increased the participation of rural and urban residents in investment funds and the stock market,” he said.
On the other hand, he said the CMSA, in collaboration with all stakeholders, has prepared guidelines on coordinating crowdfunding to increase the availability of finance for start-ups, micro, small, and medium enterprises.
Mr Mkama said the CMSA will continue to create a conducive climate for the effective participation of both the public and private sectors in capital markets, where they can secure funds through infrastructure bonds, green bonds, blue bonds and subnational bonds for development projects.