Dar to lower foreign investor limits

• The DSE chief executive, Gabriel Kitua, said in an interview Tuesday that the bourse is awaiting publication of new ratios by the Bank of Tanzania that will set the percentage of ownership between Tanzanian and foreign investors.
• The move by Tanzania is expected to increase liquidity of stocks, making it easier for Kenyans, Ugandans, Rwandans and Burundi investors to buy and sell shares in the DSE’s 17 listed firms.
• Kenyan, Ugandan, Tanzanian, Rwandan and Burundian market regulators, under their umbrella body, the East African Member States Securities Regulatory Authority (EASRA), have targeted to have one regional exchange that will allow for seamless transactions amongst investors in the region.

Tanzania’s Central Bank is set to relax the rule that bars foreigners from owning more than 40 per cent shares of companies listed at the Dar es Salaam Stock Exchange (DSE), expanding investment opportunities for Kenyans eyeing stakes in the country’s firms.

The DSE chief executive, Gabriel Kitua, said in an interview Tuesday that the bourse is awaiting publication of new ratios by the Bank of Tanzania that will set the percentage of ownership between Tanzanian and foreign investors.

“Being a policy issue the matter is handled by the Central Bank. Once finalised the ratios will be published,” Mr Kitua told the Business Daily in a statement.

The DSE’s plan to soften its policy of reserving at least 40 per cent shares of its listed firms for Tanzanians is in line with ongoing efforts to harmonise capital market regulations for East African Community (EAC) countries.

Kenya has set the minimum reserved stake for locals at 25 per cent, and has gone a step further by classify citizens of EAC member countries as “locals” for investing purposes.

The move by Tanzania is expected to increase liquidity of stocks, making it easier for Kenyans, Ugandans, Rwandans and Burundi investors to buy and sell shares in the DSE’s 17 listed firms.

Four of these, Kenya Airways, East Africa Breweries, KCB and Nation Media Group are Kenyan firms also listed on the Nairobi Securities Exchange (NSE).

In its July 2012 market report, the Capital Markets Authority Uganda said it expected the relaxation of investing limits to be reached by the end of this year.

“The DSE plans to ease restrictions against foreign investors before the end of 2012 as part of steps aimed at preparing the bourse for integration of securities exchanges within the East African region,” said the Ugandan market regulator’s July report.

“The bourse is working towards increasing the participation of foreigners by relaxing restrictions that limit foreign ownership in listed companies to 60 per cent with the remaining 40 per cent being reserved for Tanzanian nationals,” added the Uganda market authority.

Kenyan, Ugandan, Tanzanian, Rwandan and Burundian market regulators, under their umbrella body, the East African Member States Securities Regulatory Authority (EASRA), have targeted to have one regional exchange that will allow for seamless transactions amongst investors in the region.

READ: Regional bonds plan opens capital pool to EA firms

A proposal to smoothen trading is cross-listing and initial public offers to be made in domestic currencies to vaccinate investors against the vagaries of foreign currency fluctuations.

NIC Capital managing director Wilson Irungu said that the country’s minerals resources, big populations and arable land makes it a prime destination and easing entry rules will allow neighbouring investors to share in potential gains.

Mining firm, Richland Resources, which is listed on the London Stock Exchange, plans to place a 20 per cent stake on the DSE.