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Law on profit-making firms listing welcome

26th September 2012
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Editorial Cartoon

The Capital Markets and Securities Authority (CMSA) says it is working on a new law to ensure that all profit-making companies list on the Dar es Salaam Stock Exchange (DSE).

CMSA chief executive officer Nasima Massinda explained last week that the move is chiefly meant to make the bourse, where very few firms have listed, become more vibrant.

Records show that Tanzania’s economy is not doing as badly as some people believe it is and most companies boast a reasonably sound capital posture.

But CMSA finds it disconcerting seeing that not that many companies have seen cause to list on the only bourse in the country. Those that have listed so far include Tanzania Oxygen Limited, Tanzania Breweries Limited, Tanzania Tea Packers Limited, Tanzania Cigarettes Company Limited, Tanga Cement Company Limited, Swissport Tanzania Limited and Tanzania Portland Cement Company Limited, National Microfinance Bank, Dar es Salaam Community Bank, CRDB Bank, Precision Air Services and African Barrick Gold.

No wonder, the bourse’s total capitalisation is still very slim, standing at a relatively lowly 12,914.66bn/- as of mid last week, with Tanzanian firms far from running the show.

This trend appears to be vindicating fears that the government and most Tanzanians once have for long expressed that, inevitable as it might be, excessive exposure of their economy to the outside world could might end up wreaking havoc on the economy’s fragile basis particularly in times of global crises.

The local scene however points to the existence of a business-friendly environment, with the Business Registrations and Licensing Agency reporting that the number of registered business enterprises in Tanzania is now in the hundreds of thousands.

All things considered, this should be evidence that prevailing conditions are conducive enough to enable private enterprise operate at some profit.

CMSA’s recommendation of the enactment of legislation demanding that all profit-making firms list on the DSE is commendable for a number of reasons.

First, if the law is indeed passed, not only will more list on companies in the bourse but would the entire Tanzanian market would know greater vibrancy.

Secondly, the level of capitalisation at the bourse would rise, which would in turn attract more capital and avail the same to more companies for investment.

Thirdly, it would get easier to monitor track records and facilitate tax payment and regulation of activities of companies.

Fourthly, and most importantly, more companies fond of moving wealth accumulated in Tanzania to other countries would find it better to retain it and spend it right here.

There are a number of international companies based in, and operating from, Tanzania that are listed on foreign exchange markets but not on the DSE. Ready examples include those engaged in mining.

It is both sad and ironical that these companies should feel comfortable making their riches in one country when the eventual big-time beneficiaries are foreign countries.

This situation paints an ugly scenario, particularly considering that many Tanzanians still languish in abject poverty, gaining little from the resources the country is blessed with.

It is our sincere hope that all those concerned will have this anomaly at the back of their minds when the time to work on the new law comes.

SOURCE: THE GUARDIAN
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