DAR ES SALAAM Stock Exchange (DSE) needs to organise sensitisation programmes for municipal bonds to councillors to attract investments in the local government debt securities, the Deputy Minister for Finance and Planning, Ashatu Kijaji has said.
She said in Dar es Salaam over the weekend that DSE should reach out to the councillors and educate them on the benefits of investing in the envisioned municipal bonds which are used to raise funds for capital expenditure including construction of public projects such as roads, schools, hospitals and infrastructure related repairs.
“Go out of Dar es Salaam to councillors and tell them the benefits of investments in municipal bonds,” she said at the listing of DCB Commercial Bank rights issue at DSE.
DCB Bank listed its 36.6 million additional shares obtained when they opened rights issue late last year surpassing their target of selling 33.9 shares.
The bank is expected to raise 9.6bn/- from the earmarked 8.9bn/- that will boost its capital from 16.9bn/- to 26.7bn/-, equivalent to 57 per cent increase.
The Deputy Minister said DCB Commercial bank success in their rights issue proved the financial sector was strong and stable and called upon other banks and financial institutions to list at the stock market so as to shore up their capital. “DCB has proven the financial sector is strong if you are well prepared.
This sector is still strong and has performed better than in any other period,” she said. The financial sector is safe and DCB has proven all these. It planned to raise 33.9bn/- through rights issue but got 36.9m/- .
She said it was high time banks and financial institutions boosted their capital by listing at the Dar es Salaam Stock Exchange noting that only eight per cent of the banks had listed at the bourse so far which did not bode well with modern running of banking and financial sector.
“We have no reason of suspending bank licence for lack of capital while it can be obtained in the stock market,” she said.
The Bank of Tanzania (BOT) revoked banking license of Covenant Bank, Efatha Bank, Njombe Community Bank, Kagera Farmers’ Cooperative Bank, and Meru Community Bank last year after they were deemed to be critically undercapitalized.
The Deputy Minister challenged banks and financial institutions to go rural to serve about 75 per cent of the population who are living in rural areas.
“Tanzanians money is in the rural areas. You must go out of Dar es Salaam to reach out to our cattle keepers and our farmers.
Earlier, the Mayor of Dar es Salaam city, Isaya Mwita also called on the CMSA and DSE to educate them on the importance of municipal bonds saying what make them drag their feet on investing in the bonds was lack of education. “On municipal bonds the main issue is education.
You have the responsibility of reaching out to us to educate them about it and build our capacity. We see in Nairobi Stock Exchange municipal councils are doing better,” he said.
“The problem is lack of understanding. When we understand it we will certainly go for that. Dar es Salaam has six municipal councils. “These are the richest councils in the country.
If you reach to us and explain there is another window for raising funds which is stock exchange we will go for municipal bonds,” he said.