Dar es Salaam Stock Exchange makes U-turn

The Dar es Salaam Stock Exchange has made a significant turnaround, with the Tanzania Share Index closing at 4,006.43 points last week, compared to 4,630.13 points at the end of 2015. This shift signals a restoration of investors' trust in local stocks following last year's general elections. In a surprising move, the Tanzania National Assembly has directed all telecom companies operating within the country to list a 25% stake on the Dar es Salaam Stock Exchange within a three-year timeframe. Alpha Marwa, an investment advisor and partner at Vervet Global, discussed these developments in an interview with CNBC Africa. Marwa highlighted the importance of this mandate and its implications for the local market. Telcos in Tanzania have expressed some concern regarding the abrupt nature of this requirement and the lack of prior warning. However, Marwa emphasized that the process of listing will involve thorough due diligence and discussions, particularly for foreign-backed telecommunications firms. While some telcos like Palo-Tel, which recently commenced operations, may be better positioned to list, others will need to navigate transition and structuring processes before listing... Marwa further explained that the listing mandate serves multiple purposes, including enhancing customer service, increasing revenue for the local market, and promoting financial transparency. By listing on the stock exchange, telcos will be more accountable to local stakeholders and demonstrate a commitment to the Tanzanian market. This move aims to prevent companies from repatriating profits and instead reinvesting in the local economy. The directive to list a 25% stake is intended to deepen the market and attract more investors to the Dar es Salaam Stock Exchange. In response to the recent positive momentum in the market, Marwa pointed to three key factors contributing to increased investor confidence. First, a growing number of both local and foreign investors are recognizing the benefits of investing in Tanzania. Second, the successful initial public offering (IPO) of the Dar es Salaam Stock Exchange has instilled confidence in the market's performance. Lastly, the overall stability of Tanzania's economy and governance has bolstered investor trust and interest. Marwa highlighted the government's commitment to enforcing regulations and ensuring a conducive investment environment... The resurgence in investor confidence and the push for telecoms to list on the stock exchange reflect a positive outlook for Tanzania's capital market. With a renewed focus on transparency, accountability, and local participation, the Tanzanian market is poised for further growth and development. As the three-year deadline for telcos to comply approaches, stakeholders will closely monitor the progress of listings and their impact on the broader economy. The move is expected to not only attract new investors but also foster a more robust and dynamic stock exchange landscape in Dar es Salaam.