The government has not restricted local companies which intend to cross-list their shares on the other stock exchanges in the East Africa region, the Capital Markets and Securities Authority (CMSA) has said.
Speaking to The Guardian in an emailed interview, the newly appointed Chief Executive Officer Nasima Massinda said the CMSA Act does not bar Tanzanian companies from cross-listing their shares on the other exchanges, saying however that they have to follow the set procedures.
Massinda explained that restrictions on capital account may require the company to seek clearance from the Bank of Tanzania on capital repatriation.
So far in East Africa only companies in Kenya have taken the route of cross listing their shares in the other markets in the region. They are Kenya Airways, East African Breweries, Nation Media Group, Jubilee Holdings and Kenya Commercial bank.
“The decision to cross list shares of a company is solely a corporate decision and a choice of the shareholders and directors of the particular company,” she said.
Companies take the decision to cross list based on different reasons beneficial to the company.
She said the role of regulatory bodies is to provide conducive environment for the companies to take the route of cross listing once they consider it beneficial and in line with their strategic objectives.
Asked why there is little participation of local businesses in the capital markets, she said it was due to several reasons, citing some as the limited number of investible securities to diversify their portfolios, low income thus very little savings or no savings at all.
Other reasons are high inflation rate, unstable and high fluctuation of the Tanzanian shilling against the US dollar and low awareness of capital markets.
She said CMSA has a comprehensive Public Education Programme aimed at raising awareness on capital markets to different sections of the investing community and the general public.
Such progarmmes include sensitisation seminars and workshops to professional bodies and the general public, airing of capital market programmes in the television, radio and the print media, distribution of printed materials like booklets, brochures, leaflets and calendars containing capital market information, inclusion of capital market topics in the curricula of learning from primary schools to college levels and exhibitions in events.
On the aspect of attracting more companies to list on the Dar es Salaam Stock Exchange (DSE) she said CMSA was also conducting awareness programmes for directors, management and shareholders of potential companies on the benefits and the processes of issuing shares to the public; advising the government on policy issues regarding development of the industry and providing incentives to attract potential companies for listing.
At the moment the DSE has eleven local firms and five foreignones that have been listed.
Launching the National Committee on Common Market implementation protocol recently the Minister for East African Cooperation, Samuel Sitta was quoted as underscoring the need for the government to review the current CMSA Act to enable Tanzanians to invest in the region’s partner states.
He said it is irking to see Tanzanians barred from investing in other partner states while Kenyans, Rwandans, Burundians and Ugandans are freely investing in the bloc’s second largest economy.
According to him, Tanzanians are yet to benefit from the community because of several reasons, including absence of manufacturing industries to enable Tanzanians to sell value added products.