MOODY’S TZ B2 RATING: Samia open policy pays off

TANZANIA is the only East African country to get B2 Positive credit from Moody’s rating, thanks to the on-going business environment improvements, which has been welcomed positively by the bourse.

The country received a B2 Positive rating that was higher than Kenya, Rwanda and Uganda, which were rated B2 Negative.

Tanzania rating was only behind five African countries, among the 23 countries whose reports were released by Moody’s last week, when the bourse went to the green.

In a nutshell, B2 credit rating implies to a credit rating given to a prospective borrower that’s not of investment grade and suggests a company or government is able to meet its financial commitments, but may be left highly exposed to adverse economic conditions. The rating is applied to the bonds issued by an organisation.

Alpha Capital Head of Research and Financial Analytics, Imani Muhingo, said yesterday that the positive report showed the government’s reconciliatory tone and improvement of the investment climate have the potential to fuel an already fast-growing economy and substantially attract increased Foreign Direct Investments (FDIs).

“The report highlights a positive outlook for the Tanzanian economy as a result of the on-going reformations to improve the business environment and implementation of IMF’s programme, which focuses on improving institutional capacity and government revenue generation,” Mr Muhingo said.

Traditionally, stock markets are the barometer of the economy thus CRDB and NMB banks’ stellar performance on DSE in terms of returns and turnovers since the beginning of the year cements the positive report for the country.

“The positive outlook is reflected in the capital markets as the banking sector’s capital gains make waves into investors’ pockets,” Mr Muhingo said,” and (also) a booming banking sector.”

The stock market researcher said they also wait to see the quarter one banking results relative to the on-going global headwinds and uncertainties to cement the country rating further.

“Investor confidence speaks volumes,” Mr Muhingo said.

The two banks, collectively, accounted for 96 per cent of the total equity turnover for quarter one, while registering 39.2 per cent and 17.9 per cent on capital gains since the beginning of the year.

Following the positive rating by Moody’s, it accelerated the equity turnover during the week to over 264 per cent to 2.48bn/-, attracting a foreign net inflow of 46.06m/-. The market was still dominated by local investors who accounted for an average of 68.8 per cent participation.

Vertex International Securities Advisory and Capital Markets Manager, Ahmed Nganya said the positive credit rating portrayed a huge potential of attracting further FDIs.

“Moody’s positive credit rating is a huge stride towards attracting foreign investors as the country continues to open up,” Mr Nganya said.

In the first three months of this year, the country’s FDIs ballooned 50 per cent to 1.2 billion US dollars (2.8tri/-) thanks to President Samia Suluhu Hassan’s efforts in making the country the best investment destination in the continent.

The Tanzania Investment Centre (TIC) Monthly Investment Bulletin for March shows that the projects are expected to generate more than 16,400 job opportunities for Tanzanians from 93 projects.

TIC Executive Director, Gilead Teri, said in the report that the two high-level engagements led by President Samia recently in discussing bilateral investment with the South African President, Cyril Ramaphosa and the US Vice-President, Kamala Harris are some of the efforts geared at attracting more investments.

“Reforms are happening and the impact is reflected in our monthly numbers,” Mr Teri said.

Another factor that led to the ballooning of investments was the country return to international arbitration following changes in the Tanzania Arbitration Act (RE 2020).

“[This] marked another important step in the country’s reform journey aiming at cementing Tanzania’s place as a top investment destination on the continent,” the TIC head said.

Furthermore, the leading gainer on DSE year-to-date was CRDB with 7.84 per cent to 550/- followed by NICOL closing at 5.06 per cent to 420/-, NMB also closing at 3.49 per cent to 3,560/- , while DSE came fourth with 3.41 per cent 1,820/-, and DCB making fifth with 3.03 per cent to 170/-.