Chief Executive Officer of Capital Market and Securities Authority (CMSA), Nicodemus Mkama made the call yesterday in Dar es Salaam at the one-day meeting organised by Orbit Securities Company Ltd and involved insurance stakeholders.
Mkama said through the capital markets, insurance sector can pool resources jointly and underwrite risks that are currently reinsured by foreign insurance companies.
The CEO added that as evidenced by their size, the capital markets are capable of bridging the finance gap in the insurance sector.
Citing the recent amendment of laws, he said it had created the golden opportunities for local insurance companies to increase their capital by leveraging on capital markets.
“Our recent amendment of the laws requiring extractive companies (the contractors) to source material and services inputs locally and increase the local content of their value chains,” he said.
“On so doing it had created golden opportunity for local insurance companies to increase their capital by leveraging on capital markets,”he added.
Mkama hinted that the insurance sector can also make use of the insurance linked securities such as catastrophe bonds (CAT bonds)
He explained that the use of capital markets to capitalise companies was not a new phenomenon, saying many cases exist including emerging markets where insurance companies had used capital markets to capitalise their businesses.
In Kenya, a for instance, the CEO said insurance companies such as Jubilee Holding Ltd, had used capital markets to strengthen their capital adequacy and they are listed on the Nairobi securities exchange (NSE).
HE named some of the companies raised adequate capital through the capital markets as Tanzania Breweries Ltd(TBL), that raised 297.6 bn/- compared to the plan of 121.5bn/-, which was a subscription rate of 245 percent.
The CEO mentioned NMB bank Plc that raised 224.9 bn/- compared to the plan of 63bn/-, which was subscription rate of 357 per cent.
According to him, CMSA remains open to support any endeavour geared towards development of the capital markets and insurance industries, and the economy at large.
He assured the “We are committed to ensuring conducive environment for the development of sustainable financial markets in Tanzania,”
The Orbit Securities Companies Ltd Chief Executive Officer Gerase Kamugisha said the aim of the meeting was to give room for insurance stakeholders to discuss opportunities available in the sector.
Furthermore, it provides means in what industry could work with markets by taking recently legislative opportunities passed by the Parliament two years ago.
He urged them to strengthen their capital adequacy through issuance of shares or corporate bonds to the public and list on the Dar es Salaam Stock Exchange utilising the opportunities by listing.
Kamugisha explained that by so doing, they can utilise the recently amendment of law enacted by the government (Petroleum Act of 2017) requiring the extractive companies to be insured by local companies.
“There was no way, local companies could work effectively in the sector without issuance of shares or corporate bonds to strengthen their capital base, “he said.