Smatta
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- Nov 5, 2008
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The Tanzania government is set to remove restrictions on movement of capital across its national borders freeing the hands of its citizens looking for higher returns on their investments to put their money in foreign markets.
Enjoyment of this primed fruit of integration starts in January next year when the country's stringent exchange control rules come to a close allowing Tanzanians to buy equity in listed companies in other EAC member states.
The move marks a significant step in the 12 year integration project whose progression continues to be shackled by remnants of Tanzania's past socialist policies and a growing wave of nationalism that has sustained the fear of swamping by foreigners in a free market economy.
Two years ago, Tanzania used these restrictions to bar its citizens from buying shares in East Africa's biggest share sale - Safaricom - blocking attempts by the Kenya government to roll out a region wide initial public share offering (IPO).
Safaricom – the region's most profitable company – had allocated 65 per cent of the shares issued under its highly publicised IPO to local (EAC) subscribers but got no takers from Tanzania.
A few months later, the country's capital markets regulator also blocked East Africans from participating in the public share sale involving the National Micro-finance Bank of Tanzania.
Analysts said removal of the restrictions is the clearest signal yet that Tanzania is slowly stepping back from its protectionist policies in favour of a free market offering hope that the country will also let go of its nationalistic policies on land ownership and movement of labour.
The clause indicates that East Africa's biggest nation by size and population is set to begin the task of phasing out its exchange controls restriction in December this year ushering in a new era of doing business in the region.
Tanzania's tight grip on its capital markets bars citizens from investing outside their national borders, a restriction that has diminished the benefits that accrue to its citizens from the regional integration project.
Tanzania's capital markets regulations not only prohibit citizens from participating in foreign IPOs but also bar its companies and citizens from buying or selling of shares in foreign markets.
The decision by Tanzania to initially ring-fence her capital markets during the initial phase of the implementation of the common market protocol in July has raised eyebrows among its partners.
Free movement of capital and other factors of production are the key pillars of a common market that the region evolves into from July this year.
Appetite for investment cash is expected to grow phenomenally as companies seek to expand production to meet rising demand from an integrated regional market. "It will not be possible initially to issue instruments that target EAC as a single region until all these restrictions are removed," said Jimnah Mbaru, the chairman of Dyer and Blair Investment Bank and former Nairobi stock exchange.
He however remained positive about the integration project saying Kenyan companies that move into Tanzania will be able to raise money from banks in case they choose not to come back home – the region's deepest capital market -- to float security and debt instruments."
Kenya has the most advanced capital market in the region with Uganda and Rwanda as the only countries with fully open capital markets that allow for free movement of capital.
The Uganda Stock Exchange is the smallest in the region with only 11 listed firms compared to Kenya's NSE which has 55 and Tanzania with 15 listed firms.
Some Kenyan companies like Kenya Airways, East Africa Breweries, Kenya Commercial Bank and Jubilee Holdings are cross-listed in the three markets to sidestep hurdles in movement of capital.
We are waiting for the movement of labor bit, you can postpone and cry all you want, but some things you just cant evade. One day soon, pen and paper will meet and E Africans will be crossing each others birders with minimal restrictions. watch this space.
http://www.businessdailyafrica.com/-/539552/851466/-/item/1/-/md64kjz/-/index.html
Enjoyment of this primed fruit of integration starts in January next year when the country's stringent exchange control rules come to a close allowing Tanzanians to buy equity in listed companies in other EAC member states.
The move marks a significant step in the 12 year integration project whose progression continues to be shackled by remnants of Tanzania's past socialist policies and a growing wave of nationalism that has sustained the fear of swamping by foreigners in a free market economy.
Two years ago, Tanzania used these restrictions to bar its citizens from buying shares in East Africa's biggest share sale - Safaricom - blocking attempts by the Kenya government to roll out a region wide initial public share offering (IPO).
Safaricom – the region's most profitable company – had allocated 65 per cent of the shares issued under its highly publicised IPO to local (EAC) subscribers but got no takers from Tanzania.
A few months later, the country's capital markets regulator also blocked East Africans from participating in the public share sale involving the National Micro-finance Bank of Tanzania.
Analysts said removal of the restrictions is the clearest signal yet that Tanzania is slowly stepping back from its protectionist policies in favour of a free market offering hope that the country will also let go of its nationalistic policies on land ownership and movement of labour.
The clause indicates that East Africa's biggest nation by size and population is set to begin the task of phasing out its exchange controls restriction in December this year ushering in a new era of doing business in the region.
Tanzania's tight grip on its capital markets bars citizens from investing outside their national borders, a restriction that has diminished the benefits that accrue to its citizens from the regional integration project.
Tanzania's capital markets regulations not only prohibit citizens from participating in foreign IPOs but also bar its companies and citizens from buying or selling of shares in foreign markets.
The decision by Tanzania to initially ring-fence her capital markets during the initial phase of the implementation of the common market protocol in July has raised eyebrows among its partners.
Free movement of capital and other factors of production are the key pillars of a common market that the region evolves into from July this year.
Appetite for investment cash is expected to grow phenomenally as companies seek to expand production to meet rising demand from an integrated regional market. "It will not be possible initially to issue instruments that target EAC as a single region until all these restrictions are removed," said Jimnah Mbaru, the chairman of Dyer and Blair Investment Bank and former Nairobi stock exchange.
He however remained positive about the integration project saying Kenyan companies that move into Tanzania will be able to raise money from banks in case they choose not to come back home – the region's deepest capital market -- to float security and debt instruments."
Kenya has the most advanced capital market in the region with Uganda and Rwanda as the only countries with fully open capital markets that allow for free movement of capital.
The Uganda Stock Exchange is the smallest in the region with only 11 listed firms compared to Kenya's NSE which has 55 and Tanzania with 15 listed firms.
Some Kenyan companies like Kenya Airways, East Africa Breweries, Kenya Commercial Bank and Jubilee Holdings are cross-listed in the three markets to sidestep hurdles in movement of capital.
We are waiting for the movement of labor bit, you can postpone and cry all you want, but some things you just cant evade. One day soon, pen and paper will meet and E Africans will be crossing each others birders with minimal restrictions. watch this space.
http://www.businessdailyafrica.com/-/539552/851466/-/item/1/-/md64kjz/-/index.html
