01 — OverviewExecutive Summary

Tanzania's development plans assume that the private sector will carry most of the investment burden. Under Vision 2050 and FYDP IV, the private sector is expected to invest TZS 324.49 trillion of the TZS 477.75 trillion required over 2026/27–2030/31 — 67.9% of the envelope, the "70%" cited in policy discussion. That is about TZS 65 trillion a year, roughly 28% of 2025 GDP (TZS 234.1 trillion after rebasing). The practical question for every investor, banker and policymaker is therefore simple: where will the capital come from?

Commercial banks will remain essential but cannot be the only answer: bank loans are mostly short- to medium-term, collateral-heavy and priced near 15%, while factories, logistics, housing, hotels, energy and data centres need long-term, patient capital. A deeper capital market — equity, corporate bonds, infrastructure and project-finance instruments — is the logical complement.

Key findings

• Scale mismatch. The five-year private investment requirement equals about 8.0x the entire DSE market capitalisation, 4.4x the total assets of the banking system (TZS 74.5tn, Dec 2025), and roughly 200x the stock of listed corporate bonds.
• The market is growing, but not toward private financing. In the year to June 2026, listed government bonds increased by TZS 4.84tn while corporate bonds increased by TZS 0.25tn — a ratio of about 20 to 1. Secondary-market trading of corporate bonds was about 0.14% of combined turnover in one reported 2025 period.
• The headline "10.85% of GDP" ratio is out of date. On rebased 2025 GDP, DSE total capitalisation is about 17.3% of GDP (domestic 12.1%). The real gap is not index level but flow and instrument mix.
• Capital markets mobilise roughly 1–2% of annual private investment needs. The TICGL/TERI target of 7–9% by 2030 implies TZS 4.5–5.8tn a year — about five to six times the current corporate listing run-rate of roughly TZS 0.95tn a year.
• Peers show what depth requires. Malaysia's corporate bonds and sukuk are about 42% of bonds outstanding; Tanzania's corporate share of listed bonds is about 4.8%.
• A window has opened in 2026. Treasury securities opened to non-resident investors (17 Jul 2026); BoT launched a sovereign yield curve (7 Aug 2026); a record five corporate bonds were listed in H1 2026.
• Outcomes depend on reform. Three scenarios put cumulative capital-market mobilisation over 2026/27–2030/31 at TZS 7.8tn (business as usual), TZS 18.0tn (reform) and TZS 26.3tn (stretch). The reform path adds about TZS 10 trillion of long-term private capital relative to the base case.

What needs to change: eight priority actions

02 — The Core Question1. The Financing Question: Where Will the Capital Come From?

FYDP IV, themed "Transformation for Inclusive Economic Growth and Employment Creation", sets a total resource requirement of TZS 477.75 trillion for 2026/27–2030/31. The financing architecture is explicit: roughly 70% private, 30% public.

Table 1. FYDP IV financing envelope, 2026/27–2030/31

Memo: 2026/27 plan year (total TZS 86.3tn) — Private TZS 60.1tn (69.6%), Public TZS 26.2tn. Source: Ministry of Finance and Planning presentations to Parliament, June 2026, as reported by The Citizen, Daily News and AllAfrica; TICGL/TERI calculations. Annual averages are simple five-year means.

Two features matter for financial-sector policy. First, the annual private requirement of about TZS 65 trillion equals roughly 28% of 2025 GDP — an investment-to-GDP profile few economies achieve without deep long-term finance. Second, the plan assumes faster growth: government projects 6.3% growth in 2026 (up from 5.9% in 2025), while analysts note that reaching a USD 1 trillion economy by 2050 needs growth nearer 10% a year. The plan also targets 1.7 million new jobs in 2026, against 981,000 in 2024 — jobs created when firms can finance plant, inventory and expansion over multi-year horizons.

Sources: FYDP IV (requirement, a five-year flow); Bank of Tanzania (banking system total assets, Q4 2025; pension investment assets, 2025); DSE (market capitalisation, 11 Sep 2026); DSE/TanzaniaInvest Q2 2026 (bonds, end-June 2026). Flows and stocks are not strictly comparable; the chart shows orders of magnitude, not a funding identity. Reproduced exactly as prepared in the source report.

The comparison is deliberately stark and should be read carefully. Private investment is not all raised in financial markets — much comes from retained earnings, FDI, development-finance institutions, households and PPP sponsors. But capital markets are meant to supply precisely the part banks supply poorly: long-tenor, large-ticket and equity-like capital.

Table 2. Which private investment is naturally financed by which source

03 — Diagnosis2. Why Bank Finance Alone Cannot Close the Gap

This is not an argument against banks. Private-sector credit grew 23.5% in the year to December 2025 (Bank of Tanzania), and banks remain the main channel for working capital and SME lending. The argument is that banks cannot, and were never designed to, carry a transformation programme alone. Four structural limits explain why.

Table 3. Structural limits of bank-led financing

Sources: BoT Monthly Economic Review (Jan 2026); IMF (May 2025) and AfDB comparative measures as cited in TICGL/TERI working notes; BoT banking-system balance sheet. Credit-to-GDP measures differ by definition and GDP base (see Annex A).

There is a second, less obvious point. The same savings pool that banks and institutions invest is also being drawn on by the Treasury. The 2026/27 budget carries TZS 15.54tn of new borrowing, of which TZS 6.56tn is domestic, on top of TZS 7.84tn to repay maturing loans. Recent long-dated Treasury bonds carry coupons of roughly 15–16% (15.25% on the 20-year bond issued Feb 2025; 15.00% on the 25-year bond issued Aug 2025). A private corporate issuer must offer a premium over a risk-free benchmark that already matches the bank lending rate — making bank loans look cheaper even when shorter and more demanding. This is the pricing face of crowding out, explored further in Section 5.

04 — Data3. Where Tanzania's Capital Market Stands

3.1 Data snapshot

Table 4. Tanzania capital-market indicators, 2025–2026

Sources: DSE market reports (Sep 2026); TanzaniaInvest DSE weekly and Q2 2026 reports; Bank of Tanzania; Ministry of Finance GDP rebasing (2019 base); The Citizen; TICGL/TERI calculations. USD conversion at about TZS 2,650/USD. Turnover figures include block trades and so overstate retail liquidity; see Annex A.

3.2 Reading the numbers: growth in value, not yet in financing

The DSE rally is real: total capitalisation more than doubled in USD terms in about fourteen months, from roughly USD 6.5bn (mid-2025) to about USD 15.3bn (Sep 2026). But a rise in market capitalisation measures what existing shares are worth, not how much new capital firms raised. The rise reflects share-price appreciation in a small number of large, mostly bank, stocks; foreign investors were net sellers for four consecutive weeks to mid-September 2026; and equity trading is dominated by block trades in a few counters.

Source: DSE Q2 2026 performance, via TanzaniaInvest; TICGL/TERI calculations. Government listed bonds grew by TZS 4.84tn in twelve months; corporate bonds by TZS 0.25tn. Reproduced exactly as prepared in the source report.

Figure 2 contains the report's central statistic. In percentage terms, corporate and government bonds grew at a similar pace (about 18% each) over the year to June 2026 — encouraging on its face. In absolute terms, however, the Treasury added roughly twenty times as much new paper as private issuers. The market is deepening in the way governments borrow far faster than in the way firms raise capital.

3.3 Momentum in 2026: a window for reform

• Corporate bond listings accelerated. Five corporate bonds were listed in H1 2026, the highest number to date, including the EFTA leasing bond (TZS 33.6bn, listed 13 Apr 2026) and the iTrust Finance bond (listed 8 Jul 2026). Strong subscription rates indicate unmet investor demand for private paper.
• Foreign access has widened. The Foreign Exchange (Amendment) Regulations, 2026 (gazetted 17 Jul 2026) opened Treasury bills and bonds to non-resident investors of any nationality for the first time.
• A sovereign yield curve now exists. BoT launched a daily sovereign yield curve on 7 Aug 2026 covering maturities from under one month to 25 years, developed with the Ministry of Finance, CMSA, DSE and US Treasury technical support — the foundation for pricing corporate bonds.
• New product categories already exist. DSE reporting now tracks corporate, sustainable, sub-national, sukuk and infrastructure bond categories, and an ETF is listed. The architecture is in place; volume and diversity are not.

The risk is that these gains are absorbed mainly by government securities, as institutions respond first to the sovereign curve. Sections 7 and 8 are designed so the new foundations widen private access, not only cheapen sovereign borrowing.

05 — Comparators4. What Other Markets Show: Global, African and East African Comparisons

This section compares capacity and, more importantly, how markets operate to channel savings into private capital. Because published ratios differ by source, date and definition, Figure 3 shows ranges rather than single points (Annex A explains the differences).

South Africa (~313–321%) and Malaysia (~210%) are off the scale and not shown. Sources: World Bank WDI and CEIC; TICGL/TERI working notes drawing on exchange data; DSE and Ministry of Finance for Tanzania. Reproduced exactly as prepared in the source report.

Table 5. How selected markets support private-sector capital

Sources: World Bank WDI and CEIC; OECD Africa Capital Markets Report; JSE, EGX, NGX and Rwanda FRA disclosures; Malaysia Capital Market data, as compiled in TICGL/TERI working notes. Figures for different years are indicative, not strictly comparable.

4.1 The African pattern

Africa's capital markets are highly concentrated: South Africa, Egypt and Nigeria account for more than 80% of African equity-market capitalisation, and together with Mauritius hold about 60% of the continent's corporate debt outstanding. The binding problem is not a shortage of African savings — pension funds and insurers held an estimated USD 775 billion in assets in 2025, including about USD 455 billion in pension assets (Tanzania's social-security assets of TZS 27.0tn are roughly USD 10 billion of that). The OECD points to a consistent reason savings do not reach private firms: banks and institutions prefer sovereign debt because it carries lower risk, lower capital charges and more liquid secondary markets than private loans or bonds — precisely the Tanzanian pattern.

4.2 What the leading markets have in common

06 — Root Causes5. Why the Private Segment Stays Small: Structural Diagnosis

The evidence points to a market constrained on both sides: investors lack suitable private assets, and firms lack the readiness, incentives and low-cost routes to issue them. Seven constraints interact.

5.1 Sovereign dominance and the pricing of risk

Government securities are the safest, most liquid assets in the system, carrying low regulatory risk weights — banks, pension funds and insurers have rational reasons to hold them. Crowding out here does not mean private firms are legally barred; it means portfolio competition: every shilling placed in a 15–16% risk-free coupon must be matched by a corporate instrument offering a credible premium. In 2026/27 the budget plans TZS 6.56tn of new domestic borrowing — about seven times the annualised corporate listing run-rate (≈TZS 0.95tn). A government yield curve is essential for pricing private securities, so the objective is not to shrink the government market but to prevent it from absorbing nearly all institutional capital.

5.2 Institutional portfolios lack suitable private assets

Tanzania's social-security funds held TZS 27.04tn in assets in 2025, of which TZS 24.05tn were investment assets. World Bank-cited data put pension holdings of government securities at about TZS 7.7tn — roughly 32% of that investment-asset base (about 45% on the narrower base used in one dataset; estimates vary with definitions, reconciled further in the companion pension report). The key point is not that pension funds hold government bonds — they need safe, liquid assets. It is that the market offers few alternatives. Even a modest reallocation is large relative to the current private bond market: 5% of pension investment assets is about TZS 1.2tn and 10% is about TZS 2.4tn, compared with TZS 1.6tn of listed corporate bonds outstanding.

5.3 A thin and narrow issuer pipeline

Only 28 companies are listed, and recent debt issuance has come largely from banks and financial institutions. Many firms that could issue lack audited financial statements, formal governance, independent directors, credit ratings, reliable cash-flow projections, succession arrangements and continuous-disclosure systems. The Enterprise Growth Market, launched in 2013 with lower listing requirements, has not produced a stream of growth-company issuers because SMEs still face compliance cost, limited investor awareness and weak reporting.

5.4 High fixed costs and slow processes

Legal fees, audit and rating costs, prospectus preparation, listing fees and approvals are largely fixed costs. For a mid-sized firm raising TZS 10–30bn they weigh heavily relative to a bank loan, even if the loan is shorter and dearer. Importantly, no public data series currently reports the all-in cost or time to issue in Tanzania — creating that baseline is a first-year priority.

5.5 Limited liquidity and price discovery

Corporate bonds are treated as hold-to-maturity. In one reported 2025 period, Treasury-bond secondary turnover reached TZS 1.615tn while corporate-bond trading was about TZS 2.19bn. Investors who cannot exit demand a liquidity premium; issuers pay more; fewer firms issue; trading stays thin. Equity liquidity is also concentrated: sampled daily turnover in early September 2026 averaged about TZS 16bn (≈0.04% of market capitalisation a day), with large block trades in a few bank counters.

5.6 Weak project preparation

Savings cannot finance projects that are not investable. Before a pension fund or insurer can participate, a project needs feasibility studies, demand forecasts, legal and ownership structures, revenue models, environmental approvals, risk allocation, procurement plans, financial models, credible sponsors and independent appraisal. Tanzania has capital but too few bankable transactions, particularly in PPPs, municipal revenue assets and housing.

5.7 Product, ecosystem and integration gaps

Credit-rating coverage is thin, market-making is limited, and there is no deep repo or securities-lending market. Few infrastructure, green, social, municipal or securitised instruments exist. The financial system remains bank-led, with banks not yet fully acting as underwriters, guarantors, market makers and distributors for private securities.

Table 6. Constraint, evidence and reform response

07 — Outlook6. Five-Year Outlook: Three Scenarios to 2030/31

To show what is at stake, TERI models annual capital-market mobilisation (net new private equity and bond capital raised through the market) as a share of the annual private-investment requirement — TZS 60.1tn in 2026/27 and TZS 66.1tn a year thereafter. Shares are TICGL/TERI assumptions anchored on current mobilisation of about 1–2% and the 7–9% target for 2030.

Table 7. Scenario assumptions and results (TZS trillion)

Source: TICGL/TERI calculations. Requirement base: TZS 60.1tn (2026/27) and TZS 66.1tn a year for 2027/28–2030/31. Figures are illustrative targets, not forecasts.

Source: TICGL/TERI calculations. Reproduced exactly as prepared in the source report.

Jobs follow finance. The plan's ambition to create 1.7 million jobs in 2026 depends on firms having the long-term capital to build plant and expand payrolls. TERI does not attach a jobs multiplier to the scenarios because credible, Tanzania-specific estimates were not available, but the dashboard proposed in Section 8 includes a metric on firms financed and jobs supported by capital-market issuance.

08 — Agenda7. Policy and Structural Reform Agenda

The agenda is organised around eight pillars plus cross-cutting enablers. It is designed to be risk-based and fiduciary, not quota-driven: the objective is to create assets that institutions want to hold and issuers that investors want to fund, rather than to compel allocation.

Table 8. Reform pillars at a glance

Abbreviations: MoF Ministry of Finance; BoT Bank of Tanzania; SSRA Social Security Regulatory Authority; TIRA Tanzania Insurance Regulatory Authority; CMSA Capital Markets and Securities Authority; DSE Dar es Salaam Stock Exchange; BRELA Business Registrations and Licensing Agency; TRA Tanzania Revenue Authority; LGAs local government authorities; PPPC PPP Centre; PO-PIP President's Office, Planning and Investment.

7.1 Rebalance sovereign and private paper

Government borrowing should anchor the market, not exhaust it.

• Publish a rolling annual issuance calendar with indicative quarterly auction sizes and tenors, and stick to it.
• Distinguish refinancing from new development borrowing in public reporting; keep using concessional external finance (TZS 6.55tn in the 2026/27 plan) to ease pressure on the domestic market.
• Concentrate issuance in benchmark maturities to build liquidity and a reliable yield curve; avoid long-end issuance spikes that reprice the whole curve.
• Use the new sovereign yield curve as the official reference for corporate pricing, and publish daily corporate spreads over it.
• Pair the July 2026 opening to non-resident investors with FX-hedging access (Pillar 7.7) and clear settlement rules.

7.2 Mobilise institutional capital through prudent-person rules

This is the highest-impact lever. Pension, insurance and collective-scheme capital is the natural buyer of long-dated private paper.

• Move pension and insurance investment rules from asset-class ceilings and implicit preference for government paper to risk-based, prudent-person frameworks with explicit, rated buckets for corporate bonds, infrastructure and PPP instruments, REITs, private equity and venture funds, and SME pools.
• Set a voluntary, fiduciary glide path: at least 10% of pension investment assets in rated non-government instruments by 2030/31 (≈TZS 2.4tn on the 2025 base), reviewed annually by the regulators.
• Require independent valuation, custody, minimum credit ratings and conflict-of-interest controls so private-asset exposure does not repeat earlier governance weaknesses.
• Align solvency and capital rules for insurers and banks so rated corporate and infrastructure paper is not penalised relative to government paper beyond what risk justifies.
• Give pension funds co-investment rights in guaranteed or credit-enhanced structures, so early deals are safer.

7.3 Build the issuer pipeline

• Launch a National Issuer-Readiness Programme covering IFRS reporting, audit, governance, tax compliance, ratings, investor relations and board development, with time-limited, capped co-funding for first-time issuers.
• Reform the Enterprise Growth Market: lighter disclosure tied to a nominated-adviser or sponsor model, lower fees, a clear graduation path to the main market.
• Introduce shelf registration and medium-term-note programmes, standard trust deeds, term sheets and documentation to cut repeat-issuance cost.
• Create a single digital approval window across CMSA, DSE, BRELA and TRA with statutory timelines, and publish the all-in cost and time to issue as a headline KPI.
• Build a deliberate pipeline of real-sector issuers (manufacturing, logistics, energy, hospitality, property, agro-processing) alongside banks, including selective listings of large state-owned and family firms.

7.4 Create investable products

• Infrastructure and project bonds linked to revenue-generating PPP assets.
• Municipal and sub-national bonds secured on market, terminal, water and energy revenues, building on the sub-national bond category already tracked at the DSE.
• Green, social and sustainability-linked bonds (South Africa and Rwanda precedents) and sukuk.
• REITs, mortgage-backed securities and housing-finance instruments tied to the national housing deficit.
• Securitisation of leases and receivables, pooled SME bonds with first-loss support, and low-cost ETFs and index funds for retail investors.

7.5 Strengthen the ecosystem and market structure

• Require ratings for public bond issues above a size threshold, and incentivise a competitive rating industry.
• License market makers with incentives (fee rebates, access to repo), and introduce a quote-driven corporate-bond trading platform with price transparency.
• Develop repo and securities-lending markets so bonds can be financed and held more easily.
• Encourage sponsored research, trustee and custody competition, and retail digital access with investor protection.

7.6 Prepare projects for markets

• Establish a revolving project-preparation facility that funds feasibility studies, financial models, legal structures, environmental approvals and independent appraisal, recovering costs at financial close.
• Standardise PPP-to-bond structures so projects passing the PFSR and full feasibility-study stages arrive at investors with consistent documentation.
• Create a public pipeline of bond-ready municipal and PPP assets with their revenue models, so pension and insurance funds can plan allocations.

7.7 Add credit enhancement and risk-sharing

• Set up a transparent, priced partial credit guarantee and first-loss facility, subject to independent risk assessment, portfolio caps and public contingent-liability reporting.
• Use viability-gap funding and anchor investments sparingly, only for projects with clear economic returns.
• Offer a local-currency hedging window (or BoT-supported swap line) for foreign investors; consider anchoring the facility with a ring-fenced share of resource windfalls (see TERI's companion gold-dependence reports) and development-partner capital.

7.8 Govern by targets

• Create a Capital Market Development Council at senior level to coordinate MoF, BoT, CMSA, SSRA, TIRA, TRA, BRELA and PPPC.
• Embed capital-market indicators in FYDP IV monitoring (Section 8) and publish a quarterly capital-market financing dashboard.
• Commission annual independent reviews that test whether pension and insurance flows, cost and time to issue, and corporate-bond liquidity are moving in the right direction.

Cross-cutting enablers: tax, law and regional integration

• Tax: predictable, neutral treatment of dividends, interest, capital gains, collective schemes, REIT distributions and pension investments; review withholding-tax and stamp-duty rules so corporate bonds are not disadvantaged relative to government paper; clarify green and social bond treatment.
• Legal and investor protection: faster insolvency procedures, stronger collateral enforcement, minority-shareholder protection, related-party and insider-trading enforcement, beneficial-ownership transparency.
• Regional: EAC cross-listing and mutual recognition of funds, regional bond issuance, common disclosure standards, cross-border settlement, diaspora bonds, integration with other East African exchanges.

09 — Implementation8. Implementation Roadmap, Targets and KPIs

Table 9. Five-year roadmap

Table 10. Proposed KPI framework (baselines and 2030/31 targets)

Source: TICGL/TERI proposals; baselines from DSE, BoT and Ministry of Finance data cited in this report.

10 — Safeguards9. Risks and Safeguards

11 — Conclusion10. Conclusion

Tanzania's capital market is not missing institutions. What is missing is depth and a private-sector orientation. Government securities absorb the bulk of long-term domestic savings; corporate bonds are about one-twentieth of the listed bond market; listed corporate paper barely trades; and only a handful of firms have the readiness, incentives and low-cost routes to issue.

That matters because the Vision 2050 and FYDP IV arithmetic leaves no alternative. About TZS 65 trillion a year of private investment, roughly 28% of GDP, cannot be financed by a banking system whose total assets are TZS 74.5 trillion and whose loans are short, collateral-heavy and priced near 15%. A capital market that works for private firms is therefore a central economic-policy instrument, not a secondary financial-sector issue.

The strategic task is not "grow the DSE". It is to restructure the market so private companies can raise long-term capital at scale, as deeper markets in South Africa, Mauritius and Malaysia do. The 2026 opening of Treasury markets to foreign investors, the new sovereign yield curve and record corporate-bond listings create a window. The reforms in this report — rebalance sovereign and private paper, enable institutional capital, build the issuer pipeline, create products, strengthen the ecosystem, prepare projects, share credit risk and govern by targets — could lift capital-market mobilisation from about 1–2% to 7–9% of annual private investment needs and add roughly TZS 10 trillion of long-term private capital over the plan period.

12 — Data QualityAnnex A: Data Notes and Reconciliation

Public sources use different definitions, dates and GDP bases. The table lists the main discrepancies encountered and how this report treats them.

13 — SourcesAnnex B: Principal Sources

• Bank of Tanzania: Monthly Economic Review (January 2026); Annual Report 2024/25; sovereign yield curve launch (7 August 2026).
• Dar es Salaam Stock Exchange: daily market reports (July–September 2026).
• TanzaniaInvest: DSE Q2 2026 performance; DSE Week 37 of 2026 report; sovereign yield curve; Bank of Tanzania economic reviews; Tanzania economy key figures 2024–2025.
• Ministry of Finance and Planning / PO-PIP: Fourth Five-Year Development Plan 2026/27–2030/31; National Development Plan 2026/27; State of the Economy 2025 (as reported by The Citizen, Daily News and AllAfrica, June 2026).
• The Citizen: "Tanzania corporate bond market crosses TZS 2 trillion" (EFTA bond), May 2026.
• World Bank World Development Indicators; CEIC; OECD Africa Capital Markets Report; IMF; AfDB; JSE, EGX, NGX, Rwanda Financial Reporting and Capital Markets data (as compiled in TICGL/TERI working notes).
• TICGL/TERI working notes on Tanzania capital markets (2026), and companion reports: Tanzania's Capital Market: Growing Fast, Still Shallow; Government Securities Dominance: The Crowding-Out Problem; Pension-to-Investment Gap.

14 — Quick AnswersFrequently Asked Questions

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