MARKET DATA REVIEW: Privatisation as vehicle for promoting capital market

There are two major encouraging statements that came to our attention recently, these statements came from the government: (i) the possibility of repossession of previously privatised state owned entities that were sold to some investors; and (ii) state owned entities, agencies and parastatals are now required to refocus on becoming more efficient and raise their financial needs from the local financial market.

At different phases of our socio-economic development agenda and objective, various policies, strategies and approaches have been chosen, for different purposes, some of the objectives relate to economic inclusiveness and empowerment to local citizens. I want to focus on the privatisation as a tool towards achieving inclusive economic growth.

>Back in 2010 two pieces of legislation (Mining Act of 2010 and the Electronic and Postal Communication Act of 2010) were passed by our Parliament and got signed by the president with all the optimism that these laws entailed to fulfill, including some of the dream of local citizens, especially the aspect of the requirement that companies with Special Mining Licences and those operating in the telecommunication sector will be required to offer shares to the public and subsequently list on...

Since the enactment of the Capital Markets and Securities (CMS) Act, Cap. 79 of 1994 and the establishment of the Capital Markets and Securities Authority (CMSA) in 1996, there has been several developments in the Capital markets in Tanzania.

>Over the past few months, we have informed and developed arguments as to why and how private enterprises and the public sector can access funding from the public through an organised local capital markets for their growth, development and welfare.

>Why does a company issue shares? Why would the founders of businesses be willing to share the business profits and business secrets with other people when they could keep these profits and secrets to themselves?

There are only 15 domestic companies listed in our local stock exchange; this number stands unfavourably when compared to over 30 companies listed in Ghana, over 60 companies in Kenya, over 250 companies in Nigeria, over 360 companies in Egypt and over 450 in South Africa.

If one takes a good look into our economy, it is relatively easy to notice that there are five main sources from which our finances for investment activities are ultimately derived from.

>Last week I talked of the need to consider local content, participation and economic empowerment in policies and laws we make, especially those involving key sectors of the economy or whenever we execute key policies that impact economic and social aspects of our people.