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Tanzania: Lifting Capital Market Controls

29.04.2014

Tanzania will ease controls on foreign ownership of its stocks and bonds by next year, and is looking at attracting investment to finance infrastructure projects that will cost billions of dollars, Tanzanian President, Jakaya Kikwete has said.

Tanzania will ease controls on foreign ownership of its stocks and bonds by next year, and is looking at attracting investment to finance infrastructure projects that will cost billions of dollars, Tanzanian President, Jakaya Kikwete has said.

The East African Community (EAC), which includes Kenya and Uganda, is putting in place a common market agreement, which will liberalise the Dar es Salaam Stock Exchange by 2015.

The country’s infrastructure building plan includes new ports, power plants and roads, for a cost of around 42.9 trillion Shillings ($26.3 billion) over five years. The goal is for Tanzania to become a middle income nation by 2025. Its national income per capita is currently about half the level required to be classified in this category.

Easing capital controls will help satisfy investors’ interest in the country’s bonds, which had reached five times the amount sought last year, Mr Kikwete said. Yields on Tanzania treasury bills are still the highest in Africa, however dropped to 12.2 per cent on April 9, from 13.8 per cent at the last sale of 2013.

The country has also asked Fitch and Moody’s to rate the country’s long-term risk ahead of its Eurobond offering. The offering has been postponed to the next financial year, starting in July, awaiting Citigroup’s risk assessment. Dr Servacius Likwelile, Permanent Secretary in the Tanzanian Ministry of Finance, expects the country will receive at least a BB rating.