Let us encourage more local investors to list with DSE

26Mar 2020
Editor
The Guardian
Let us encourage more local investors to list with DSE

​​​​​​​OVER the years the Tanzania Stock Exchange (DSE) has become an important scheme for improving income of individuals and firms. However, still only a few firms have listed shares with the DSE the majority of them being foreign investors.

But foreign investors dominated the market after injecting 99.1 per cent of all shares, whose value amounted to Sh522.59 billion, while locals bought shares worth Sh4.81 billion only.

The dismal number suggests for two propositions among others: firstly, that only few managements of firms do know the benefits for listing shares, and secondly, those individuals who have subscribed shares with the firms do not know the benefits articulated through listing shares with the DSE.

DSE Chief Executive Officer Moremi Marwa was recently quoted as saying apart from the reality that there are many benefits for listing securities with the Dar es Salaam Stock Exchange (DSE), some firms are hesitating to do it so and appealed to them to do so.

Generally there are three types of benefits. First, those related to the firms improving their financial status/capital, secondly the benefits resulting from waver of various taxes imposed by laws, and lastly the benefits of financial liquidity and improved market for goods and services produced by the listed firms.

It is understood the company can raise capital relatively cheaply from the public, while the normal practice for financial increases of the firms are raising capital through loan acquisitions from banks and other financial institutions, which culminate in the interest of about 16% to 23% in favour of banks and other financial institutions.

However the Stock Exchange does the same role of raising capital of the firm without subjecting the entire firm in interest charged against it. Thus the firm listing the securities with the DSE does so with minimum risk of losing its capital.

In addition the performance of the company is monitored by the market hence a listed company is likely to perform better to meet the expectations of the public.

Hence it is of paramount importance for the company to list its shares with the Stock Exchange, since it further helps the company to assess itself on whether it has a favourable future survival.

It is always held that listing of securities is a marketing tool for a company as it would be referred to frequently during the release of the market information to the public.

Currently the DSE is conducting about five tradings per week, hence a company listed, would be enjoying marketing benefits whenever trading results of listed companies are announced in either electronic or print media.