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Tanzania stock exchange poised for initial public offering

Comments (0) Africa, Business, Featured

dar es salaam stock exchange

The East African nation will become one of only three on the continent that is owned by shareholders.

Tanzania’s stock exchange is poised to join an elite African club as it finalizes plans for an initial public offering by the end of March.

Only two other African exchanges trade their own stock. The Johannesburg Stock Exchange became self-listing in 2005, followed by the Nairobi Stock Exchange in 2014. But about a dozen more African countries are considering the change.

In Tanzania, the Dar es Salaam Stock Exchange (DSE) has an application for the initial public offering (IPO) pending before the Capital Markets and Securities Authority.

With approval, the stock exchange expects to conduct both its initial public offering (IPO) and self-listing before the end of the first quarter this year, according to Moremi Marwa, chief executive officer of the exchange.

Stock exchange will be owned by shareholders

In this process, the exchange will demutualize, which means it will change from a member-owned entity to become a public limited company that is owned by shareholders. Once the self-listing is completed, the name of the exchange will be changed to Dar es Salaam Stock Exchange Public Limited Company (PLC).

Conversion to a public limited company is expected to strengthen governance of the exchange and enable it to better ensure financial sustainability since it will be able to raise funds through rights issues or bond issues.

This translates into access to efficiently priced funds to finance the exchange’s growth, including investments in new trading technologies, products and services as regional financial markets become more competitive.

Ambitious plans for growth

The Dar es Salaam Stock Exchange has a market capitalization of 20.8 trillion Tanzanian shillings ($9.5 billion). The exchange has an ambitious goal: By 2017 it aspires to build more than double its market value to equal half of Tanzania’s gross domestic product, which was estimated at $40 billion in 2015.

Last year, the stock exchange scrapped controls on foreign ownership of shares in order to boost demand. As a result, the exchange was Africa’s best performer last year, when it gained 64 percent. Trading in November totaled more than $42 million, according to the African Securities Exchanges Association.

Marwa also said he expects the Tanzanian exchange to add at least five new listings of equities and corporate bonds this year.

Currently, 22 companies are listed or cross-listed on the exchange, which was founded in 1996 and began trading in 1998.

Self-listing trend grows

Self-listing by stock exchanges started when the Stockholm Stock Exchange made the change in 1993, followed by Helsinki (1995), Copenhagen (1996), Amsterdam (1997), the Australian Exchange (1998) and Toronto, Hong Kong and London stock exchanges in 2000.

Given the advantages of demutualization, Marwa said more than a dozen other exchanges in Africa are considering initiating the process. There are 29 stock exchanges on the continent.

Despite its growth in 2015, the Dar es Salaam Stock Exchange is dwarfed by Africa’s largest stock exchange, the Johannesburg Stock Exchange with a market capitalization of more than $1 trillion.

Tanzania’s economy is the 12th largest in Africa. It grew by more than six percent in 2015, with infrastructure construction and transportation projects in the run-up to national elections driving economic growth.

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The political stalemate in Zanzibar

Comments (0) Africa, Featured, Politics

zanzibar elections

As talks fail to produce a peaceful solution, the standoff between rival parties has disrupted trade and brought international concern about potential violence.

The government of Zanzibar has announced plans for new elections in February but the opposition, which claims it won a previous vote that the government annulled, is calling for a boycott.

The announcement is the latest development in a nearly three-month political standoff that has disrupted trade in the east African archipelago and prompted international concerns about potential violence.

At the center of the controversy are long-running tensions over the balance of power between Tanzania on the mainland and tiny Zanzibar, which is a semi-autonomous state within the larger nation.

The leading players are Zanzibar President Mohammed Shein of the Chama Cha Mapinduzi political party, which holds power in both Tanzania and Zanzibar, and Maalim Seif Sharif Hamad, secretary general of the Civic United Front, the main opposition party in Zanzibar.

Opposition declared election victory

Hamad, who is also first vice president of Zanzibar, ran against the incumbent Shein in an October 25 election. The day after the vote, the opposition leader claimed victory before the results were officially announced.

Despite strong objections from the opposition and international observers who said the election was valid, the government annulled the election after the Zanzibar Electoral Commission determined there were electoral law violations.

While incumbent Shein and the Chama Cha Mapinduzi party support a new election, Hamad and the opposition party favor completing talks that began after the opposition questioned the legality of Shein staying in office after his term expired in early November.

Despite eight closed-door meetings since the election, negotiators have not come up with an agreement. Those taking part in the former Tanzania mainland president Jakaya Kikwete, former Zanzibar president Abeid Karume, and former Tanzanian president Ali Hassan Mwinyi in addition to Shein and Hamad.

Zanzibar economy suffers

The announcement of a new election comes in the face of international and domestic pressure to end the political impasse, which is hurting Zanzibar’s economy.

Beans, potatoes and tomatoes, which are from mainland Tanzania, have become scarce and increasingly expensive in Zanzibar. Tanzania’s government said mismanagement by traders, poor infrastructure and red tape are to blame, but Zanzibaris fear traders are responding to the political uncertainty.

According to the Bank of Tanzania (pdf), Zanzibar’s imports dropped by nearly half between October and November 2015, from nearly $40 million to $21 million.

At the same time, fears that the stalemate would affect tourism to the islands may have been unfounded. The bank reported that tourist arrivals increased in 2015, with earnings of $73.6 million, up from $55.2 million in 2014, a gain of more than 30 percent.

Maalim Seif Sharif Hamad

Maalim Seif Sharif Hamad, secretary general of the Civic United Front

Stalemate raises fears of radicalization

International observers declared the October election valid and called on the government to announce the results. They cited fears that the political stalemate could contribute to the radicalization of youths in Zanzibar, which is predominantly Muslim.

International observers also questioned the decision to annul the election, saying it appeared the election commission did not have a quorum when it made the findings of election violations. Nicodemus Minde, an election observer and adviser for Norwegian-based policy group International Law and Policy Institute, called the decision to annul “unilateral.”

The Chama Cha Mapinduzi party has long maintained power in Tanzania, while Zanzibar has chafed at what it considers mainland meddling. The opposition Civic United Front has called for full autonomy for Zanzibar.

After gaining independence from the British in 1961, Tanzania was formed in 1964, uniting the mainland Tanganyika state with the Zanzibar (also called Unguja) and Pemba islands.

Long history of political violence

Elections have been marked by clashes between the two parties since the 1990s, and hundreds have died in past elections. A unity government with the Civic United Front as the junior partner was formed in 2010, when Shein was first elected president, to diffuse tensions.

However, there were reports of police intimidation prior to the October election and two homemade bombs exploded in Zanzibar after the election was annulled. A third device was found and safely detonated in Stone Town, a popular tourist area.

In spite of the annulment, the ballots of 500,000 Zanzibar voters were counted in the election for Tanzania’s president. John Magufuli, the candidate of the Chama Cha Mapinduzi, received 58 percent of the total vote of 15 million and has been sworn into office along with Samia Suluhu Hassan, a Zanzibari who became Tanzania’s first female vice president.

New election “inevitable”

Meanwhile, the Zanzibar government said it had budgeted $3.4 million for a new election. Seif Ali Idd, Zanzibar’s second vice president, called a new election “inevitable.”

Idd said the ongoing talks with the opposition were aimed at keeping the peace but did not preclude an election.

Opposition spokesperson Ismail Jussa told supporters to ignore the government announcement, saying the talks should be completed before an election was scheduled.

It was not immediately clear when mediation talks would continue. Before the election announcement, former Nigerian president Goodluck Jonathan had been tapped to lead new talks and he was expected to visit the country early this year.

Renewed violence feared

The talks began after the opposition party raised questions about whether Shein could stay in office as president after his term expired in November. However, the government maintains that the Constitution allows him to remain in office until a successor is sworn in.

Hubertus von Welck, an election observer from the German Friedrich Naumann Foundation, said negotiations must continue to maintain the peace.

“If they cannot come to a diplomatic solution, we might once again see violence and deaths,” von Welck said.

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Tanzania’s Q3 2015 GDP growth boosted by construction, mining

Comments (0) Africa, Business, Latest Updates from Reuters

DAR ES SALAAM (Reuters) – Faster growth in the construction, mining and transport sectors pushed Tanzania’s growth higher in the third quarter of 2015 compared to the same period a year earlier, the statistics office said on Wednesday.

The economy grew 6.3 percent year-on-year in the third quarter compared with 5.4 percent in the same quarter in 2014, the state-run National Bureau of Statistics (NBS) said.

“Sectors that drove GDP growth in Q3 2015 include construction, mining and quarrying and transport,” Albina Chuwa, director general of NBS, told a news conference.

Tanzania’s total exports of goods and services during July-September 2015 rose by 3.3 percent, Chuwa added. Gold accounts for 89 percent of Tanzania’s mineral exports.


(Reporting by Fumbuka Ng’wanakilala; writing by Drazen Jorgic; Editing by George Obulutsa and Andrew Heavens)

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Rising food prices push Tanzania inflation higher to 6.6% in Nov

Comments (0) Africa, Business, Latest Updates from Reuters

DAR ES SALAAM (Reuters) – Rising food prices pushed Tanzania’s year-on-year inflation rate to 6.6 percent in November from 6.3 percent the previous month, the statistics office said on Tuesday.

The National Bureau of Statistics (NBS) said month on month inflation rose by 0.8 percent in November from an increase of 0.1 percent in October.

“The increase of the inflation rate in the year to November was mainly caused by faster rises in the price of food items such as rice, maize, meat, fish, beans… and sweet potatoes,” Ephraim Kwesigabo, a director at state-run National Bureau of Statistics, told a news conference.

The food and non-alcoholic beverages inflation rate increased to 11.2 percent in the year to November from 10.2 percent in October.


(Reporting by Fumbuka Ng’wanakilala; Editing by Drazen Jorgic)

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