Tanzania wary of opening up her capital markets

By James AnyanzwaThe Tanzanian government has remained non-committal over opening up its capital markets to regional investors.The latest position means investors from Kenya, Uganda, Rwanda and Burundi who have since been locked out of the country’s equity and bond offerings, will remain sidelined for a while.Tight controlTanzania’s Prime Minister Mizengo Peter Pinda acknowledged that it is still an issue allowing foreigners to buy shares in the country’s state-owned corporations.Pinda said there are fears that the move was tantamount to relinquishing the control of the Tanzanian economy to foreigners."Yes, for a while it is an issue. But we hope to overcome part of these fears," Pinda said. "My feeling is that we are soon reaching a stage where we will say Kenya is not a foreigner to Tanzania."Pinda was speaking during his tour of the Nairobi Stock Exchange (NSE) in Nairobi yesterday. He was accompanied by Kenya’s Deputy Prime Minister and Finance Minister Mr Uhuru Kenyatta, the Capital Markets Authority (CMA) chief executive Ms Stella Kilonzo and NSE chief Executive Mr Peter Mwangi.Mwangi appealed to the Tanzanian authorities to reciprocate Kenya’s gesture by treating all citizens of the East African Community (EAC) as locals during initial public offerings (IPOs)."We as market players would like to see what we Kenyans have extended to our partners. Tanzanian can reciprocate this by allowing Kenyan investors to participate in Tanzanian equity and bond offerings," said Mwangi. Besides restricting participation in IPOs, it is understood that Tanzania also appears uncomfortable with cross-listing of shares in the region’s bourses.Share offerTanzanian Government has also barred citizens of Kenyan, Uganda, Rwanda and Burundi from taking part in one of its most promising share offer in National Microfinance Bank (NMB), the country’s second largest bank. The unwillingness by Tanzania to open up its capital markets to foreigners stems from the fear that trading would destabilise the country’s foreign exchange position since the country still relies on restricted currency movements as a macro-economic tool.

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