Tanzania throws its bond market wide open to the global investors

• Tanzania has given the nod to foreigners to buy government securities.
• New law expected to increase foreign exchange through sell of government securities. 
• Analysts anticipate high diaspora participation.

Tanzania has finally permitted sell of government securities to foreign investors from across the world. The country has removed restrictions that previously limited investors from parts of Africa and Tanzanians living abroad from accessing government securities.

The announcement comes as President Samia Suluhu Hassan looks to diversify the country’s funding sources as the continent faces a decline in financial support from some international development partners. The Central Bank said by expanding access to its government securities, Tanzania hopes to attract more foreign capital, strengthen its public financing options and reduce its reliance on traditional external funding.

The Bank of Tanzania announced the lift of restrictions  as part of amendments to the country’s foreign-exchange regulations. “Non-resident investors from other countries can now participate through registered market intermediaries,” announced the government statement from BoT.

Before this change of law, direct access to Treasury bills and government bonds was limited to residents of the East African Community and Southern African Development Community, as well as Tanzanians in the diaspora

In a media statement released at the start of the week, the Tanzania Central Bank said; “…the reform is intended to expand the investor base for government debt, increase market liquidity and attract more international capital.”

The move comes as Tanzania seeks to broaden its financing sources and diversify its domestic capital markets. This change of law is also expected to help the country attract a more diverse capital portfolio into its local-currency debt market.

The new law; The Foreign Exchange (Amendment) Regulations, 2026, issued under the Foreign Exchange Act, Cap. 271, through Government Notice (G.N.) No. 206 of 2026; provides that, “…all non-resident investors are now permitted to invest in Treasury Bills and Government Bonds issued by the Government of the United Republic of Tanzania.”

The reform is expected to among other things, expand access to Tanzania’s government securities market, deepen the country’s domestic financial market, and strengthen Tanzania’s position as an attractive destination for international investment

The law further provides that; “Non-resident investors will be able to participate in the Government securities market through approved Central Depository Participants (CDPs), in line with the Foreign Exchange (Amendment) Regulations, 2026 and other applicable laws and operational requirements.”

To support the new law, last month, Tanzania introduced a sovereign yield curve that is meant to give investors a benchmark for pricing government securities.

When put together, Tanzania’s new sovereign yield curve and larger investor access ought to work together smoothly. The former improves price information while the latter increases the number of potential buyers of the country’s securities.

Tanzania now follows the likes of Kenya, Nigeria, Ghana and Egypt which already allow foreign investors to participate in their domestic government debt markets. However, for each of these countries, rules and levels of participation differ considerably but all share the common denominator; need to attract foreign direct investment.

“The move is part of Tanzania’s wider effort to liberalize its financial system while increasing the role of domestic markets in government financing,” reads the government statement.

The statement goes on to explain that whether the move works will depend on “…investor demand, available yields, currency expectations and the ability of foreign investors to move funds into and out of the country.”

“Opening Tanzania’s government debt market does not guarantee a surge of foreign investment, but it removes one barrier that kept global bond investors out,” it details.

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Pros and cons of selling Tanzania government securities to foreign investors

Notably, African governments face higher costs for borrowing in dollars and so, growing their foreign currency reserves plays a key role in stabilizing their accounts.

According to analysts, international funds usually consider three factors when buying local-currencies, first is the interest rate they can earn, the risk that the currency loses value and whether they can move their money out when they sell.

On one hand, a larger pool of investors could increase demand at Treasury auctions, improve trading in existing bonds and give the government more options when raising money.

On the other hand, it could serve to reduce the anchoring weight caused by foreign-currency debt, which becomes more expensive to repay when the local currency weakens.

However, analysts also warn that, foreign portfolio capital is usually siphoned out when global interest rates, currency expectations or risk sentiment change, creating pressure on exchange rates and bond yields.

“The longer-term test is whether the country can build enough liquidity and confidence for foreign investors to remain active rather than participate only when yields are high,” cautions

Tanzania’s government debt market does not guarantee a surge of foreign investment, but since it removes the participation barrier that previously kept global bond investors out.

A larger pool of investors could increase demand at Treasury auctions, improve trading in existing bonds and give the government more options on foreign-currency access.