Dar es Salaam Stock Exchange

The government has been urged to enact a law which would push profit making companies into listing on the Dar es Salaam Stock Exchange (DSE) to make the bourse more vibrant.

A stakeholder identified as Seti Chale, told The Guardian that there are many firms which are performing well but were not listed on the bourse.

“We have a good number of profit making privatised firms which are not listed on the bourse for no apparent reasons,” he said.

He said many developed countries are using their bourse for development activities.

According to him time has come for the firms to raise capital through the bourse for the nation’s development.

Another stakeholder identified as Santulo Sanga, urged the DSE to provide more information and educate Tanzanians on the benefits of investing in the stock market.

"Trading at the DSE only benefits a few people, especially those residing in Dar es Salaam. People from the rest of the country seem completely unaware of the importance of participating in the bourse," he noted.

Direct benefits in investing in the stock market include earning dividends, selling and buying stocks and using shares as collateral to access bank loans.

"This is a long-term investment that shareholders should focus on for their own economic benefits," he said.

One of the objectives of establishing the DSE was to facilitate the privatisation process of over 300 firms.

But, the reality on the ground shows that only seven privatised firms have been listed on the bourse.

The plan was for the public to own the firms through public listing on the DSE after being privatised.

However, the bourse admits that few privatised firms are listed, saying the main reason was that most were yet to make profits.

Another reason for the few listings was that a firm was required to conform to the bourse regulations, among which is making a profit for three years in a row, a prerequisite which most of the privatised parastatals are yet to attain.

Currently the bourse offers zero capital gain tax as opposed to 10 per cent for unlisted companies; zero stamp duty on transactions executed at the DSE compared to 6 per cent; and withholding tax of 5 per cent on dividend income as opposed to 10 per cent.

The number of companies listing on the bourse might increase in two years to come following the passing of the Communication Bill that makes it mandatory for mobile companies to be listed on DSE.

Once the bill becomes law, telecommunication companies will be required to offer shares to the public. Subsequently, they will also be required to list with the DSE within three years after the Act comes into force, but subject to requirements of the Capital Market and Securities Act.