DAR ES SALAAM: THE GOVERNMENT’S move to open the capital market to investors from the East African Community (EAC) and the Southern African Development Community (SADC) two years ago is set to broaden the investor base and foster sustainable economic development.
By implementing these measures, Tanzania is poised to become a regional hub for capital market activities, attracting a diverse range of investors and driving sustainable economic growth.
This initiative was highlighted in the 2024/25 national budget tabled in Parliament in Dodoma last month, emphasising the importance of regional integration.
“Opening the capital market to regional investors from the EAC and SADC will broaden the investor base and foster economic cooperation,” said Beatus Mlingi, Research and Analytics Manager at Vertex International Securities Limited.
The Bank of Tanzania (BoT) Foreign Exchange Regulations, 2022, among other provisions, permit residents of the EAC and SADC to invest in treasury bills and treasury bonds.
The regulations also allow Tanzanian residents to invest in the prescribed territories.
Mr Mlingi added that strengthening regulatory frameworks, leveraging technology and promoting green finance are additional measures to enhance market efficiency and sustainability in the region.
Mr Mlingi said these initiatives reflect the government’s commitment to building a robust and resilient capital market that can drive economic growth and development.
“The increased participation from regional investors can also lead to greater diversification of the investor profile, reducing the reliance on domestic investors and mitigating market risks,” he said.
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Regional integration offers several benefits including attraction of investors from neighbouring countries, Tanzania can broaden its investor base, enhancing market depth and liquidity.
Mr Mlingi said that this move aligns with the broader goals of the EAC and SADC to promote regional integration and economic cooperation.
To achieve this, the government plans to streamline regulatory frameworks and remove barriers to crossborder investments.
This includes harmonising listing requirements, simplifying approval processes and enhancing investor protection mechanisms.
By creating a conducive regulatory environment, Tanzania aims to attract a diverse range of investors from the EAC and SADC regions.
He said further that a robust regulatory framework is essential for the smooth functioning of the capital market.
The 2024/25 budget outlines several measures to strengthen regulatory oversight and enhance investor confidence.
“This includes adopting international best practices in securities regulation, enhancing transparency and disclosure requirements and improving corporate governance standards,” he said.
One of the key initiatives is the establishment of a comprehensive investor protection framework that will ensure that investors’ rights are safeguarded, and their grievances are addressed promptly and effectively.
By enhancing investor protection, the government aims to build trust and confidence in the capital market, attracting both domestic and regional investors.
Additionally, Mr Mlingi said the budget emphasised the importance of financial literacy and investor education.
By raising awareness about the benefits and risks of investing in the capital market, the government aims to empower investors to make informed decisions.
This includes conducting investor education programmes, disseminating information through various media channels and collaborating with financial institutions to promote financial literacy.
Financial Markets Specialist at Orbit Securities, Ammi Julian said the increase of regional investors in the capital markets will drive up more market activities.
The increased activities at the capital markets will lead to the price discovery advantages like the true value for the listed shares in the stock market.
“The regional integration can foster economic cooperation and synergy among member states and by facilitating cross-border investments, Tanzania can tap into the financial resources and expertise of its regional partners, fostering economic growth and development,” he said.
The capital market strategies highlighted in this year’s national budget aim broadening the market’s accessibility to regional investors from the EAC and the SADC.
This is because the capital market serves as an important vehicle for channeling savings into productive investments, thereby supporting infrastructure development, corporate expansion and job creation.
Mr Julian said the increased participation of regional investors means that there will be more investment market opportunities for the local investors to grab.
Furthermore, he said as the market becomes more vibrant means more money to capital markets stakeholders as well as more revenue to the government.
Also, according to Mr Julian, the participation of regional investors from the EAC and SADC will increase capital markets efficiency because they will come with more experts that will involve transfer of knowledge and technology.
As a critical source of financing, Mr Julian said further that the capital market plays an essential role in driving economic growth and development.
Three weeks ago, insurance firm Sanlam introduced a mutual fund for local currency and dollar investments.
The Sanlam Unit Trust Scheme (SUTS) has been licensed by the Capital Markets and Securities Authority (CMSA) to operate in the country as a collective investment fund and is currently in its IPO phase.
SUTS comprises the Sanlam Pesa Money Market Fund and the Sanlam US Dollar Fixed Income Fund. The former is for investors in local currency, while the latter is
