Tanzania: NICOL to Diversify Its Investment Portfolio

By Faustine Kapama

THE National Investments Company Limited (NICOL) is embarking in a process to diversify its investments portfolio mix to match with the ...

company's objectives and investment policy.

This was revealed by NICOL's Board Chairman, Dr Gidion Kaunda, in his report presented at the Company's Fifth Shareholders Annual Meeting held in Dar es Salaam last week.

Dr Kaunda explained that the diversification envisages selection of investment in less risky securities, so as to reallocate the Company's financial resources to achieve operational efficiency and enhance return on investments.

"We will continue to explore new investment opportunities both in Tanzania and globally, bearing in mind the need to maintain stability and create an environment for profitable, long-term returns to our shareholders," he stated in the report.

According to the report, during the year, the Board exercised caution while actively managing its investment portfolio in accordance with the Company's investment objectives and policy guidelines, in the best interests of the shareholders.

He stated that by way of hedging investment risks and in fostering diversification in tandem with the shareholders mandate and approval of the Capital Market Authority, NICOL was actively but prudently looking at greener pastures afield.

Dr Kaunda pointed out in the report that the overall strategy was to seek new avenues beyond listed securities with a view to enhancing profitability above what they now process.

He explained that as at December 31, 2018, the Company's investment portfolio in listed securities comprised of equity securities of 84.94bn/- as opposed to 98.57bn/- in 2017.

The Board Chairman was of the view that for the size, stature and opportunities at NICOL's disposal, this is by far diminutive.

"The Company has adopted and maintained a prudent yet proactive investment approach and is closely monitoring the performance of the existing investment portfolios," Dr Kaunda said.

He further state that as a business strategy of NICOL, efforts are constantly under way to identify suitable investment opportunities with growth potential in assets appreciation to boost the company's financial strength, thereby generating better returns for the company and the shareholders.

On his part, NICOL's Chief Executive Officer (CEO), Mr Kinoni Wamunza, pointed out that considering that a major proportion of the company's portfolio is in equity market, performance for the year was influenced to a large extent by the performance of the equity market.

"The year in general was a challenging one for the capital markets.

According to the Dar es Salaam Stock Exchange market performance report, trading value declined by 60 per cent despite the significant increase in the number of shares traded," he stated in his report.

On the other hand, he said, the banking sector where a large proportion of the company's portfolio is held, started to show positive signs of recovery, hence creating expectations for the coming years.

"To minimize the risk of unhealthy dependence on a single portfolio, the company strategically expected to diversify the portfolio into other securities, treasury bills and bonds and FDRs, which are a low risk mix that was expected to increase investment income and dividend payments to shareholders," he said.

When officiating the opening of the meeting recently, Assistant Commissioner in the Ministry of Finance and Planning Shogolo Msangi encouraged the Company to expand its investment in industrial construction either in partnership with investors, the private sector or the government.

He explained that looking at the history of NICOL since its inception in 2001, it was clear that the government and the public have taken advantage of the investment and there have been investments from various public entities especially the social security funds of approximately six billion shares.

Mr Msangi paid tribute to NICOL's current leadership and the people for the steps they have taken to bring the company back into good standing in line with the fivephase government's guidance.

"NICOL's company currently has more than 30,000 shareholders and its resources are close to 100m/-, so integrity and good governance should be the foundation, characteristics and criteria that are important for elected officials and must be satisfied," Mr Msangi pointed out.