The DSE Chief Executive Officer, Moremi Marwa.
According to the Finance Bill, 2016, the
electronic and communication companies registered in the country are
required to float their shares to the public and subsequently list its
shares on the DSE within six months from July 1, this year.
The DSE Chief Executive Officer Mr
Moremi Marwa said in an interview in Dar es Salaam the idea that the
local market does not have the required liquidity was misguided as the
25 per cent of share offering is not as significant relatively to market
liquidity.
“Our current market capitalisation is
22tri/- and annual market turnover is exceeding 750bn/-. Treasury Bonds
and Bills issued per annum at DSE normally exceeds 2.5tri/- and they are
normally oversubscribed, meaning there is more liquidity to investment
less risky assets than instruments available,” he said.
He said the companies are meant to offer
25 per cent of their shareholding to the public and list into the local
exchange. So the amount of money to be raised is not 100 per cent of
these companies share capital. “The combined 25 per cent of all
telecommunications companies’ balance sheets is about 1 billion US
dollars.
If we factor in the data above and
project the potential savings that are not yet in the formal financial
system or that may be reallocated across assets classes, one should get a
sense that the argument for lack of liquidity is somehow faulted,” he
said.
He said DSE already has the necessary
legal and regulatory framework and the infrastructure particularly the
Automated Trading System and Central Depository Systems that are capable
to facilitate capital raising and listing of telecoms companies. Mr
Marwa said listing of telecom companies is meant to facilitate the
vibrant capital market in the country by increasing its depth and
liquidity.
He said the spirit of Electronic and
postal communication act is also in line with country’s policy on
economic empowerment, financial inclusion and financial literacy. The
law is also meant to encourage transparency and good corporate
governance which then encourages business sustainability.
In Kenya for example, when Safaricom off
loaded it’s shares and listed in the Nairobi Securities Exchange (NSE)
it increased the number of shareholders in the NSE by 100 per cent as
well as market liquidity significantly and market capitalisation
significantly.
“So listing of Safaricom was a catalyst
for market growth and liquidity growth. We need also to have this
framework of thinking and not the other way round,” he added
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