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DSE integration into NPS, WAN needed
2008-05-07 09:09:00
By Editor
The Dar es Salaam Stock Exchange (DSE) currently experiences two major problems that hinder its operations as a pan territorial business entity.
One, is that it is not integrated into the national payment system (NPS) to enable it operate as a one stop centre, just like the Tanzania Investments Centre where an investor can accomplish everything under one roof.
This has been a serious limitation in that besides confining the bourse into a mere trading facility for a tiny group of small capital holders locally, it has also hindered the possible expansion of the entity by the fact that it has not been able to attract many share buyers.
Economic analysts see this as going against the business precepts of the exchange, which among other things, has to lure capital from wherever it is in the world.
May be this has more to do with the very reason for which it was established—that at first it has to deal with the local economy and avoid the possible intervention of international sharks, who might plunge the economy into disarray before even the bourse takes off.
This was the main idea at the very inception of the exchange, which may not have been bad at the time.
But currently this could be taken as an obsolete notion because the bourse is in operation and has since then experienced no major hitches.
The other major hindrance to the expansion of the exchange is the delayed implementation of the wide area network system (WAN).
Correctly as the bourse Chief Executive Officer Jonathan Njau observes in a recent interview, the integration of DSE into the national payment system would reduce the cycle of receiving cash after selling of the shares.
``Currently it takes up to five days for an investor to get money after selling shares…this system discourages investors, particularly foreign ones. It would be wise for the DSE to be integrated in the system so that it can hasten the process to one day,`` he observes.
At present, the bourse uses what is known as the Local Area Network (LAN) system.
Its demerit is that it only enables brokers to operate just within the bourse.
With the WAN system, nevertheless, Njau is optimistic that the trading of shares even in the country’s remote area would be possible provided such areas have internet services.
It is encouraging to learn that the bourse management has discovered this and it is working on it to see that the exchange becomes vibrant nationally and regionally.
We believe that the implementation of the business plan would enable more citizens to access this new concept business.
This would in turn attract more marketing skills, which would lure more foreign investments.
May be it is also necessary that to jack up the bourse, banks, financial institutions and even pension funds, should now buy stakes in the bourse so that the latter can begin to be integrated into the wider system of payment in the country.
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