Tanzania 2014 | FINANCE | INTERVIEW

TBY talks to Moremi Marwa, CEO of the Dar es Salaam Stock Exchange (DSE), on capital markets growth and East African integration.

Moremi Marwa
Moremi Marwa joined the Exchange in May of 2013, prior to which he had held the position of CEO at the Tanzania Securities Limited brokerage firm since 2010. Moremi holds a Bachelor’s degree in Commerce and Accounting and an MBA in Finance, both from the University of Dar es Salaam. He has also been a Certified Public Accountant since 2003, and is Financial Markets Association certificated.

Since the Dar es Salaam Stock Exchange (DSE) began trading in 1998, what changes has it brought about in the business environment in Tanzania?

The establishment of the DSE in 1998 was part of a broader government initiative to move from a state-owned economy to a market-oriented one. A large part of that was the privatization of government-owned entities, which led to the subsequent impetus to establish a bourse. This allowed the country to widen the ownership of those companies. Seven companies that have been privatized through the stock exchange rank among the top taxpayers in the country. Their performance is solid in terms of revenue, profitability, tax payment, and efficient employment. There are also four private companies listed on our stock exchange. There are 11 domestic listed companies and six cross-listed entities. These are the companies that are listed on other stock exchanges, five on the Nairobi Stock Exchange, and one on the London Stock Exchange. In total, we have 17 listed companies. Our total market capitalization today is around TZS14 trillion ($8.5 billion). All government bonds are also listed on our market. Once issued in the primary market at the Bank of Tanzania, they are listed on our exchange to provide a platform for investors to exit if they want, and for others to enter. We also have some corporate bonds, which corporate entities use to raise capital. They each cooperate with the investment community and become listed on the exchange to allow the entry and exit of those bonds as well.

The exchange has been quite successful in recent years, with market capitalization doubling between May 2011 and May 2012. Going forward, how can the exchange continue to see strong and stable growth and provide a positive investment environment?

Market capitalization doubled because we cross-listed African Barrick Gold, a sizable company. If you exclude that, the investment community has a solid appetite. The attractiveness of the supply side in terms of products and the availability of products traded here are the main reasons why market capitalization is growing in terms of the prices of listed securities. If you look at some counters, especially for some of those that I have just mentioned, the prices almost doubled when you compare 2012 to today. TCC, Swissport, TBL, NMB, and Twiga Cement almost doubled in growth over that period. That was prompted by the good financial performance of those companies in terms of revenue, the efficient use of their resources, both financial and human, and as a result of relatively good profitability and dividends payments, which is also key for investors. Of the top 15 top taxpayers in Tanzania, seven are listed here in our market. That indicates that if you prioritize bringing a company into the stock exchange, with all the benefits that go with it, including transparency, disclosure, and efficiencies, it provides better results for the company, with the wider economy benefiting too, the government included. For long-term capital growth, we would like private enterprises, including small, medium, and large companies to make use of the stock exchange, be it for debt or equity capital raising, or to finance their long-term growth and development. We are taking initiatives to incentivize such companies to participate.

At what stage are the current discussions regarding an integrated East African force including the Ugandan Securities Exchange, the Nairobi Securities Exchange, and the DSE?

We are part of the East African Stock Exchanges Association (EASEA). We are implementing protocols that have been signed by our heads of government and the ministries directed at this integration process. There are a variety of initiatives that are in different stages of being implemented, but as country and a stock exchange we are part of that initiative. Part of the equation is to allow the free movement of capital among the stock exchanges. For Tanzania to achieve that, we need to change our capital account, at least partially, to allow Tanzanians to invest in East Africa and East Africans to invest here as if they were local investors.