Jan. 3, 2018

Moremi Marwa


Moremi Marwa

CEO, Dar es Salaam Stock Exchange (DSE)

TBY talks to Moremi Marwa, CEO of Dar es Salaam Stock Exchange (DSE), on how to best improve the regulatory framework, fiscal incentives, and bringing the fruits of finance to as wide a swath of the population as possible.


Moremi Marwa joined the DSE in May of 2013, prior to which he had been CEO of the Tanzania Securities Limited brokerage firm since 2010. Moremi holds a bachelor’s in commerce and accounting and an MBA in finance, both from the University of Dar es Salaam. He has been a Certified Public Accountant since 2003 and is certified by the Financial Markets Association.

What have been the main factors leading to the recent success of the DSE?

In 1Q2017, we made great advances, the result of efficiencies in investing our financial resources in relatively high-return financial instruments. Indeed, the balance sheet improved significantly from July 2016 following our IPO, the funds from which were invested in short-term financial assets. We have also earned significant income from listing activities, especially on fixed-income instruments. On the transaction income front, things have slowed somewhat, with a decline in trading activity in the market, for both fundamental as well as sentimental reasons. Total market capital-to-GDP ratio is still less than 20% of GDP. We recorded 7.2% growth in GDP in 2016; however, that was not reflected in the market cap—actually there was a drop in the listed companies' market cap despite the growth in GDP.

What diversified financial instruments does the DSE plan to roll out to create a more robust financial portfolio for the country?

The government's five-year development plan, and its emphasis on industrialization and human development will require considerable financial resources that can be mobilized in both the public and private sectors, either domestically or with foreign capital. It is estimated that in five years the economy has to mobilize close to TZS107 trillion for spending on capital investment on development plans, programs, and projects. Part of those funds will come from FDI; however, a significant part will also come from the local market. These funds will partly emanate from actions taken both from the fiscal side and from the monetary side. This is where the DSE comes in. Our role is to create an environment in which the government as well as private enterprises will see the benefit of using the capital market for mobilization of savings, and invest them productively in our economic development.

What is the timeframe for offloading these instruments onto the market?

There are almost 15 of these instruments we have in mind, and we thus need a staggered approach. The low-hanging fruit—which will focus on consolidating what we have already—includes enhancing issuance, liquidity, and performance of the existing cash-based products such as equities and bonds. The next stage is to enable lower-income individuals to participate in specific sectors, such as real estate development through the issuance of REITs or other specific sector via issuance of crowd funding products, and collective investment schemes that are subsequently listed in the stock market. For this, we need to work on the regulatory framework and fiscal incentives in order for these kinds of products to gain the necessary traction and appetite.

What has been the impact of the obligatory listings for mining companies and telecoms on the DSE?

The Electronic and Postal Communication Act (EPOCA) of 2010 was amended by the Finance Act of 2016, while the Mining Act of 2010, whose regulations in relations to conducting IPOs and listings were issued in October 2016, was then amended in February 2017. These require companies in these strategic sectors such as telecommunications and mining to offload 25% and 30% of their shares, respectively, to the public. These pieces of legislation have four key objectives. The first is economic empowerment and financial inclusion. There is no point of having GDP growth of 7% and above while the majority of citizens are excluded from it. The second objective is to facilitate the growth of the local capital market industry. Currently, the latter is not deep or liquid enough to be attractive for private enterprises or industrialists to consider raising capital or using it as an exit mechanism. The third objective is to encourage more transparency in Tanzania's corporate world. The fourth is increasing competition in the market in the long term, boosting tax revenue for the government.