Dar es Salaam, July 2017: A steady rise in the number of listings and increased market capitalisation signal that the Dar es Salam Stock Exchange (DSE) is primed for growth, Moremi Marwa, CEO, Dar es Salaam Stock Exchange (DSE) has said.
Marwa told the global research and consultancy firm Oxford Business Group (OBG) that the introduction of the Electronic and Postal Communications Act of 2010, which was amended via the Finance Act of 2016 and then by the Finance Bill of 2017, as well as the Mining Act, whose implementing regulations were revised in February 2017 represented a key step forward for the exchange.
The legislations requires companies operating in the telecommunications and mining sectors to offload 25% and 30% of their shares respectively to the public and subsequently list on the DSE, the secondary market. “The impact of this move will be relatively very positive, as telecoms and mining sectors are strategic and tend to create a significant impact on markets,” he noted.
Marwa also highlighted the development under way within the Enterprise Growth Market (EGM), which was set up in 2013 to target small and medium-sized enterprises, new ventures and loss-making entities (but with plans for turnaround) looking to secure long term capital.
“The EGM has made some good progress and there is upside potential, if we are able to drum up enough public awareness and a matching response from the business community,” he said. “Currently, we have five companies listed on it with around TSh120bn ($54.6m) in market capitalisation. Given the size of the economy and population, there is the possibility of achieving much more.”
Turning to the challenges that the DSE faces in boosting liquidity levels, Marwa told OBG that the key issue remained one of listing volumes. “The fewer listings the DSE has, the higher the probability of liquidity continuing to limited,” he acknowledged.
He noted, however, that considerable progress had been made, with the number of listed companies now at 25, up from 17 in 2014, while market capitalisation had also increased, reaching TSh20trn ($8.9bn) from TSh17trn ($7.7bn) over the same timeframe.
For returning investors, there are two types of measurement. First, the price-to-earnings ratio is 11 times (11:1) and second, the dividend yield is 6% on average, which are relatively good indicators in terms of returns to investors.
Average annual turnover had risen sharply from TSh50bn ($22m) in 2013 to an average of TSh500bn ($220m), along with the increase in share prices, helping to significantly boost liquidity levels (albeit it started from the lower level), he added. The number of current listed bonds has also increased, rising from TSh4.5trn ($2bn) three years ago to TSh6.5trn ($2.8bn), with annual liquidity levels at TSh400bn ($178m).
Marwa noted that the number of investors had doubled from 250,000 in 2013 to 500,000 investors today. “Higher liquidity will be instrumental in driving growth,” he concluded.
The full interview with Marwa will appear in The Report: Tanzania 2017, OBG’s landmark publication on the country’s economy. The interview was carried out against a backdrop of heightened activity at the DSE, led by the Vodacom IPO in March and April, with two others – Tigo and Airtel – in the pipeline.
The Report: Tanzania 2017 will be a vital guide to the many facets of the country, including its macroeconomics, infrastructure, banking and other sectoral developments. The first-time publication will also contain contributions from leading representatives, including President John Pombe Magufuli; Philip Mpango, minister of finance and planning; Charles John Tizeba, minister of agriculture, livestock and fisheries; and Benno Ndulu, governor of the Bank of Tanzania. The report will be available in print and online.