This report is prepared by TERI for research and strategic-information purposes only. It is not investment, legal, tax or financial advice, and does not state the position of the Government of Tanzania, the Bank of Tanzania, the Capital Markets and Securities Authority (CMSA) or the Social Security Regulatory Authority (SSRA). Recommendations are analytical proposals; estimates, targets and calculations ("TERI calculation") may change and should be independently verified before use in decision-making. Two source working notes give materially different figures for several indicators — pension-fund exposure to government securities (≈45% vs over 85% of assets), total government securities outstanding (TZS 31–33.6tn vs TZS 37.9tn), corporate bonds outstanding (TZS 1.6–2tn vs TZS 1.9tn) and private-sector credit growth (15.1–18.4% vs ≈23% a year). Both figures are presented, clearly attributed, with every discrepancy flagged in Appendix A. R-codes refer to the Tanzania Policy Reform Agenda 2026–2031 register, in particular R12, R13 and R14.
This page is a deep-dive into the single biggest structural problem identified in Tanzania's Capital Market: Growing Fast, Still Shallow: crowding-out. That report showed DSE market capitalisation passing TZS 40 trillion while remaining under 11% of GDP; this report explains precisely why — the risk, liquidity, information and regulatory asymmetries that channel domestic savings toward government securities — and what would need to change for gold windfalls and services growth (TERI's other companion reports) to actually convert into long-term private investment.
01 — OverviewExecutive Summary
Tanzania's capital market is not small because the infrastructure is missing — DSE, CMSA, SSRA, 28 listed companies, ETFs, Sukuk, green and social bonds all exist — it is small because the market's structure channels nearly all domestic long-term savings toward one borrower: the government. This is crowding-out, and it is best understood as a structural outcome of risk, liquidity, information and regulatory asymmetries, not as government deliberately blocking private issuers.
The scale of the asymmetry is extreme by any measure, though the exact ratio depends on what is being compared. On outstanding stock, government securities are roughly 16–24 times larger than corporate bonds; on a single month's secondary-market trading activity (September 2025), the gap was closer to 737 times. Both measurements point the same direction — Tanzania's bond market is, overwhelmingly, a government bond market with a small private corner attached, not a true dual market.
Crowding-out is real but not the only cause, and not every form of government borrowing is harmful. Weak issuer pipelines, thin liquidity, narrow retail participation and disclosure gaps compound the problem; and government borrowing that finances productive infrastructure can crowd private investment in rather than out. The policy task is not to shrink government borrowing indiscriminately — it is to make that borrowing disciplined, productive, and structured so it builds the market infrastructure (yield curve, benchmark pricing, trading systems) that a private corporate-bond and equity market needs to grow alongside it.
Government securities should provide the market's benchmark — a reliable, liquid reference yield curve against which everything else is priced. They should not become the destination for nearly all domestic investment capital. The fix is not to borrow less for its own sake; it is to make borrowing disciplined and productively used, build the market infrastructure a corporate market can be priced against, and give institutional capital — especially pension funds — a deliberate, risk-based reason to diversify beyond government paper.
Headline numbers (with source discrepancies flagged)
| Indicator | Value | Source / status |
|---|---|---|
| Government securities outstanding | TZS 31–33.6tn (mid-2026) or TZS 37.9tn total domestic debt (end-2025) | Two TICGL/TERI working notes; different scope (bonds only vs total domestic debt) and period |
| Corporate bonds outstanding | TZS 1.6–2.0tn (mid-2026), up from TZS 757.1bn (2024) | TICGL/TERI working notes |
| Pension-fund assets in government securities | ≈45% (one source, citing World Bank) vs over 85% (second source) | Not reconciled in this report — see Appendix A |
| Treasury-bond secondary turnover, Sep 2025 | TZS 1.615tn | TICGL/TERI working note |
| Corporate bond trading, Sep 2025 | TZS 2.193bn — ≈737x smaller than Treasury turnover the same month | TICGL/TERI working note |
| Private-sector credit growth | 15.1% (Jul 2024–Apr 2025), down from 18.4% a year earlier, per one source; ≈23%/year per a second source | Two TICGL/TERI working notes — see Appendix A |
| FY2025/26 planned domestic borrowing | TZS 6.278tn (TZS 3.326tn refinancing, ≈TZS 2.953tn new borrowing) | TICGL/TERI working note |
Read this alongside TICGL/TERI's Capital Market report
That report shows the symptom — DSE market cap growing fast while staying shallow. This one is the diagnosis: precisely why government securities absorb nearly all domestic long-term savings.
Read: Tanzania's Capital Market →02 — Definition1. What Crowding-Out Actually Means
Crowding-out occurs when government absorbs a large share of domestic savings and investor appetite, leaving the private sector with less capital available, higher borrowing costs, or reduced ability to issue securities at all. It operates through a specific mechanism:
This happens through four channels: government bonds offer a safe, liquid return that competes directly for the same pool of savings; banks and pension funds reallocate portfolios toward government paper; Treasury yields become the benchmark against which corporate borrowing is priced, pushing up corporate borrowing costs; and investors have little incentive to hold less liquid, higher-risk corporate bonds when a comparable government alternative exists. IMF research on emerging markets has found that large bank holdings of government debt are associated with slower private-sector credit growth, and research specific to Tanzania has identified a long-run negative relationship between Treasury-bond issuance and private-sector credit growth.
1.1 Is this the government "blocking" private companies?
The government does not prohibit private companies from issuing bonds or listing shares. What happens is a competitive, portfolio-level effect: when an investor can hold a government bond offering a comparable or better risk-adjusted return, with far greater liquidity and simpler regulatory treatment, that investor has little reason to hold a less liquid, higher-risk corporate bond instead — even if the underlying company and project are sound. The practical effect on private companies is the same as a blockage (reduced access to affordable long-term capital), but the mechanism is competitive crowding, not legal restriction. This distinction matters because the fix is different: Tanzania does not need to lift a restriction that does not exist; it needs to change the competitive terms on which government and corporate securities compete for the same pool of savings.
03 — Snapshot2. The State of Tanzania's Capital Market
Tanzania has built real capital-market infrastructure. As of September 2025, the Dar es Salaam Stock Exchange had 28 listed companies (22 domestic, 6 cross-listed), 21 collective investment schemes, 1 REIT, 2 ETFs, 3 Sukuk, 3 conventional corporate bonds, 2 green bonds and 2 social bonds. Total market capitalisation reached TZS 23.995 trillion at end-2025 (domestic market capitalisation TZS 15.581 trillion) and, per TERI's companion Capital Market report, surpassed TZS 40 trillion for the first time in September 2026.
The debt side of the market tells a different story. Total domestic debt reached roughly TZS 37.9 trillion by end-2025 (up from TZS 32.649 trillion a year earlier), and government securities dominate this portfolio. Corporate bonds, by contrast, grew from TZS 757.1 billion outstanding in 2024 to roughly TZS 1.9–2.0 trillion in 2025–26 — a large percentage increase, but from a very small base. On outstanding stock, this puts government securities at roughly 16–24 times the size of the corporate bond market — already a stark imbalance, and before considering that most of that corporate-bond figure sits with a handful of repeat issuers rather than a broad market.
Ranges reflect different reporting dates/definitions across TICGL/TERI working notes (end-2025 vs mid-2026; bonds-only vs total domestic debt). On this basis government securities are roughly 16-24x corporate bonds. Reproduced exactly as prepared in the source report.
04 — Mechanism3. Why Does Government Borrowing Effectively Crowd Out Private Companies?
Government does not need to crowd out private companies deliberately — it does so as a structural consequence of four built-in advantages that government securities hold over corporate securities in Tanzania's market as currently structured.
1Risk asymmetry
- A government bond is backed by the state's tax base and revenue-collection power. A corporate bond depends on one company's profitability, cash flow, governance, management quality and project performance.
- A corporate issuer must therefore offer a higher interest rate to compensate investors for materially higher risk — raising its cost of capital relative to government borrowing by default, before any policy distortion is added.
2Liquidity asymmetry
- Government bonds are issued regularly, in standard sizes, with many buyers and an established secondary market.
- Most corporate bonds have few issuers, trade infrequently, lack market makers, offer little price discovery, and may be difficult to sell before maturity — pushing institutional investors to treat them as hold-to-maturity assets.
3Information asymmetry
- Government publishes an issuance calendar, debt reports, budget documents and a yield curve.
- Most Tanzanian companies lack a long audited financial history, regular public disclosure, a credit rating, or an investor-relations function — so corporate securities appear riskier even when the underlying business is sound, simply because less is known about it.
4Regulatory preference
- Pension funds, insurers and banks operate under risk-management and liquidity requirements, and government securities frequently receive more favourable regulatory treatment (e.g. lower risk weighting) than corporate, municipal or SME securities.
- The World Bank has reported pension funds holding roughly TZS 7.7 trillion in government securities — on either figure in circulation, institutional capital is concentrated overwhelmingly in government paper.
Both figures are carried over from TICGL/TERI working notes citing World Bank-sourced data; they are not reconciled in this report (see Appendix A) but both show institutional capital concentrated overwhelmingly in government paper. Reproduced exactly as prepared in the source report.
Why does government crowd out private companies? Because the deck is structurally stacked in government's favour on every dimension an investor cares about — safety, liquidity, information and regulatory treatment — not because any law prevents a private company from issuing a bond.
05 — Measurement4. Government Bonds "500 Times" Corporate Bonds — Where Exactly Is the Problem?
A widely used shorthand for this imbalance is that government bonds are "500 times" larger than corporate bonds. This figure is directionally right but methodologically imprecise — and the imprecision itself is instructive.
4.1 The ratio changes depending on what you measure
| Measurement basis | Approximate ratio | What it captures |
|---|---|---|
| Outstanding stock (government securities vs corporate bonds) | ≈16–24x | The total size of each market at a point in time — the most standard basis for international comparison |
| Secondary-market turnover, single month (Sep 2025) | ≈737x | How actively each market actually trades — arguably the more meaningful measure of market depth, since a bond that is never traded provides no liquidity regardless of its face value |
| Primary issuance in a given year | Varies | New borrowing in a single period — volatile and not reliably comparable year to year without a multi-year average |
The Ratio Depends on What You Measure
Source: TICGL/TERI working note, September 2025 secondary-market data. This single-month turnover snapshot is one of several ways to measure the gap; see Section 4.1 for how the ratio changes by measurement basis. Reproduced exactly as prepared in the source report.
4.2 So where is the problem, precisely?
The problem is not that one number ("500x") is wrong — it is that no single ratio fully describes the imbalance, because Tanzania effectively has two separate, poorly connected markets operating side by side: a large, liquid, actively traded government bond market, and a small, thinly traded corporate bond niche. The precise multiple (16x on stock, roughly 737x on one month's turnover) matters less than what both consistently show: by every available measure, the corporate bond market is a rounding error next to the government bond market, and the gap is at least as large on activity (turnover) as it is on size (stock) — meaning that even the corporate bonds that do exist are not providing much ongoing liquidity to the investors who hold them.
Not a single multiple, but the phrase: extreme and persistent asymmetry between government and corporate debt securities, confirmed across multiple measurement methods.
06 — Context5. Is Crowding-Out the Only Reason the Market Stays Small?
No. Crowding-out is the central structural problem this report focuses on, but it compounds with — and partly explains the severity of — several other constraints.
| Constraint | How it compounds crowding-out |
|---|---|
| Banking-sector dominance | Companies default to bank loans rather than developing a track record in the securities market, so even firms that could eventually issue bonds rarely build toward it |
| Small corporate issuer pipeline | Few companies have the governance, audited accounts and scale capital markets require — independent of how attractive government securities are |
| Low liquidity | Investors fear being unable to sell corporate securities before maturity, reinforcing the preference for liquid government paper |
| Institutional concentration | Pension funds and insurers already hold large government-securities positions, and risk-averse mandates make reallocation slow even where it is technically permitted |
| Limited product range | Infrastructure bonds, municipal bonds, SME bond pools and venture-finance vehicles barely exist, so there is often no private alternative even for an investor who wants one |
| High issuance cost | Smaller companies see public issuance as expensive and administratively complex relative to a bank loan |
| Weak disclosure | Investors apply a higher risk premium, or avoid corporate securities altogether, when financial reporting and governance standards are inconsistent |
| Narrow retail base | A small, undiversified domestic investor base limits demand for corporate securities even when the structural terms improve |
A 2025 assessment of Tanzania's financial-market infrastructure (TAIEX) concluded that the market is characterised by banking-sector dominance, low DSE liquidity, a limited product range and under-active institutional investors — consistent with crowding-out being part of a wider ecosystem failure, not an isolated cause.
5.1 The evidence from Tanzania
Private-sector credit growth slowed from 18.4% (year to April 2024) to 15.1% (year to April 2025) per one TICGL/TERI working note, while a second cites growth closer to 23% a year — a discrepancy flagged in Appendix A. Tanzania-specific research has identified a long-run relationship in which rising Treasury-bond issuance is associated with falling private-sector credit growth, though the effect is conditional on liquidity, monetary policy, prudential regulation and the quality of public investment — not a mechanical, one-for-one crowding-out effect.
Tanzania faces a material crowding-out risk, and the available evidence supports a negative relationship between government-securities dominance and private-sector financing, conditional on these other factors — a more careful claim than asserting crowding-out as the single, deterministic cause.
07 — Nuance6. Crowd-Out or Crowd-In? Why the Use of Borrowed Funds Matters
Not all government borrowing has the same effect on private investment. The distinction is what the funds are used for.
| Use of government borrowing | Likely effect |
|---|---|
| Recurrent expenditure | Increases crowding-out without building repayment capacity or future productive capacity |
| Refinancing of maturing debt | Does not directly add to productive capacity, though it avoids a disorderly rollover |
| Power, ports, rail and digital infrastructure | Can crowd private investment in if projects generate a return that private firms can build around (logistics, manufacturing, agro-processing located near new infrastructure) |
| Industrial parks and irrigation | Can expand production and, over time, increase the number of firms with the scale and cash flow to become corporate-bond issuers themselves |
| Poorly selected prestige projects | Increases debt without increasing productivity — the worst combination for crowding-out risk |
| PPP preparation and guarantees | Can directly attract private capital rather than substitute for it |
Government securities should provide the market's benchmark — a reliable, liquid reference yield curve against which everything else is priced. They should not become the destination for nearly all domestic investment capital. The policy question is not "should government borrow less" in isolation; it is whether government borrowing is disciplined, productively used, and structured in a way that builds market infrastructure (a full yield curve, standardised issuance, reliable secondary trading) that a corporate bond market can then be priced against and grow alongside — rather than one that simply absorbs the savings pool a corporate market would otherwise draw on.
08 — Spillovers7. Second-Order Effects: How Crowding-Out Blocks Financial-Sector Evolution
- It reinforces banking dominance. When government absorbs a large share of savings through banks, the capital market faces less pressure to develop bond funds, equity research, credit-rating agencies, market makers, investment banks and specialised fund managers.
- It prevents corporate issuers from building a track record. A healthy corporate bond market needs repeat issuers that build credit history, investor trust, pricing precedent and disclosure quality over successive issuances. With government as the dominant issuer, private companies rarely get the chance to build this learning curve.
- It limits financial-product innovation. Government debt can remain active without requiring securitised receivables, infrastructure funds, SME bond pools, venture funds, municipal bonds or asset-backed securities — so the market stays concentrated in the simplest instruments: Treasury bonds, Treasury bills and a handful of listed shares.
- It constrains private investment directly. Where private capital is expensive or unavailable, firms delay expansion, postpone new facilities, reduce hiring, use short-term loans for long-term projects, depend on foreign parent financing, or remain informal — which also shrinks the pool of companies that could eventually list or issue bonds, reinforcing the thin issuer pipeline identified in Section 5.
09 — Comparators8. International Examples: Crowding-Out Is Common, But Not Inevitable
| Market | What's happening | Lesson for Tanzania | Caveat |
|---|---|---|---|
| Kenya | Treasury bonds account for roughly 99.98% of outstanding bond-market debt, with corporate bonds at just 0.02%, as of June 2026 (Kenya CMA) — despite Kenya having a more developed capital-market ecosystem than Tanzania in most other respects. | Deep government-securities dominance is a regional pattern, not a uniquely Tanzanian failure — but it also shows that building exchange infrastructure and investor sophistication alone does not solve crowding-out. | Kenya's extreme ratio partly reflects a specific 2025–26 Treasury-bond rally; the structural gap, while still very large, may not always be this extreme. |
| Uganda | Uganda's corporate bond market has had only nine issuers since its launch in 1998; Uganda's Capital Markets Authority directly attributes this to elevated government-securities yields making corporate bonds less attractive to both issuers and investors. | A persistently high-yield government securities market can suppress corporate bond issuance for decades without deliberate policy to counteract it. | Uganda's market is smaller than Tanzania's in absolute terms; direct scaling comparisons should be made with care. |
| Nigeria | Federal Government bonds have historically dominated market capitalisation (around 56% in an earlier period, with corporate bonds around 36%), and Nigeria's National Pension Commission caps individual pension-fund-administrator investment in corporate bonds and money-market/commercial paper at 35% each — a regulatory ceiling, paired with diversification requirements, rather than an open-ended preference for government paper. | A pension-allocation framework that sets explicit, risk-based ceilings (and, implicitly, minimum diversification) can be a more durable fix than relying on investor preference alone to shift. | Nigeria's equities market has itself reported being crowded out by aggressive government bond issuance in some periods — the same dynamic can recur even where pension rules exist, if issuance volumes grow faster than the rules anticipated. |
| Malaysia | Malaysia's Securities Commission streamlined the corporate-bond issuance process and introduced shelf registration (allowing repeat issuers to issue under a pre-approved framework), alongside a dedicated financial guarantee institution (Danajamin Nasional Berhad) for credit enhancement. The World Bank treats Malaysia's domestic bond market as a genuine development success story; research finds Malaysia's corporate-bond-market penetration roughly two-and-a-half times India's. | Deliberate, government-led market-infrastructure reform — shelf registration, credit-guarantee institutions, and a published capital-market masterplan with a defined time horizon — can shift a bond market's structure within a decade or two. | Malaysia built this on top of an already strong banking sector and a specific post-Asian-financial-crisis policy push; the sequencing (banking strength first, then bond-market reform) is part of the lesson. |
| India & South Korea | Reserve Bank of India-sponsored research found that, contrary to a simple crowding-out story, growth of the government bond market had a positive influence on corporate bond market development in India (as in South Korea) — because it built the yield curve, trading infrastructure and investor base the corporate market later used. South Korea's own bond-guarantee scheme had implementation problems worth learning from before copying. | A well-functioning government bond market is not inherently the enemy of a corporate bond market — it can be the foundation, if deliberate steps are then taken to extend that infrastructure to corporate issuers rather than leaving it exclusively government-only. | India's corporate bond market, despite these reforms, remains widely described in its own literature as "underdeveloped" relative to its banking sector — this is a multi-decade project even where reform is well-designed. |
Regional comparators combine figures verified in this research round with material carried over from earlier TICGL/TERI drafts; sourcing for each is given in Appendix B.
10 — Recommendations9. Policy Recommendations, 2026–2031
Recommendations are cross-referenced to the reform register in the Tanzania Policy Reform Agenda 2026–2031 (R1–R25) where a matching reform already exists, and to R14 (local-currency capital markets and capital-account opening) in particular.
1Build the diagnostic base
- Publish a quarterly crowding-out dashboard (BoT, Ministry of Finance, CMSA and SSRA jointly): government securities held by banks and pension funds; private-sector credit/GDP; corporate bonds outstanding; corporate-vs-Treasury yield spread; new corporate issuance; secondary-market liquidity for both markets, side by side.
- Reconcile the pension-fund allocation figure (≈45% vs over 85%) through a single, independently published SSRA/BoT statistic.
- Distinguish new borrowing from refinancing in every budget document, with project-by-project use-of-proceeds reporting for new development borrowing.
2Protect private-sector access, without arbitrarily restricting government
- Avoid unpredictable spikes in domestic issuance, excessive reliance on short-term borrowing, or yields set purely to attract funds quickly.
- Clear VAT refunds and domestic payment arrears promptly — arrears compress corporate cash flow in exactly the firms that would otherwise be credible bond issuers.
3Build the corporate issuer pipeline (Malaysia-style infrastructure)
- Introduce shelf registration for repeat or qualifying issuers, following Malaysia's approach, to cut the cost and time of each subsequent issuance.
- Establish an issuer-readiness programme (accounting, governance, disclosure, investor relations) and a simplified SME/mid-cap listing segment.
- Explore a partial credit-guarantee facility, modelled cautiously on Malaysia's Danajamin (and informed by South Korea's less successful guarantee-scheme experience).
4Reallocate pension and institutional capital deliberately, not by quota
- Move pension-fund asset allocation toward an explicit risk-based framework with independent governance — not a politically mandated quota — that can accommodate rated corporate bonds, infrastructure bonds, green bonds, REITs and project-finance vehicles.
- Consider, following Nigeria's approach, an explicit ceiling on single-asset-class concentration to prevent default drift back toward government securities.
5Build liquidity directly
- Appoint market makers for both government and corporate securities; standardise bond sizes and maturities; consolidate benchmark Treasury issues to build a cleaner yield curve; develop repo and securities-lending markets; publish reliable, frequent pricing for both markets.
"Tanzania's capital market is not weak because its infrastructure is missing. The exchange exists, the regulator exists, the product range has genuinely expanded, and market capitalisation has grown faster than almost anywhere else in the region over the past two years. The market is weak because its structure channels domestic savings overwhelmingly toward one borrower — not because of any deliberate restriction on private companies, but because of how risk, liquidity, information and regulation interact. Until that structural shift happens, Tanzania's capital market will keep setting new headline records in market capitalisation while remaining, underneath, a government bond market with a small private corner."
— TICGL / Tanzania Economic Research Institute (TERI)
11 — Conclusion10. Conclusion
On every measurable basis — outstanding stock (≈16–24x) and secondary-market turnover (≈737x in the single month examined) — the result is the same: Tanzania effectively has one large, liquid government bond market and one small, illiquid corporate niche attached to it, not a single well-functioning capital market. The fix is not to borrow less for its own sake. It is to make government borrowing disciplined and productively used (Section 6), to build the market infrastructure — a yield curve, standardised issuance, reliable trading — that a corporate market can be priced and traded against (Section 9, following Malaysia and India's experience), and to give institutional capital, especially pension funds, a deliberate, risk-based reason to diversify beyond government paper. Until that structural shift happens, Tanzania's capital market will keep setting new headline records in market capitalisation while remaining, underneath, a government bond market with a small private corner — unable to perform the developmental role TERI's companion Capital Market report identifies as essential to financing services, manufacturing, infrastructure and the broader diversification away from gold dependence.
12 — Data QualityAppendix A: Data Reconciliation and Gaps
| Issue | Figures that differ | Recommended action |
|---|---|---|
| Pension-fund assets in government securities | ≈45% of assets (one TICGL/TERI working note, citing the World Bank, alongside TZS 7.7tn held) vs over 85% of assets (second working note, no original source cited) | Request a single, dated SSRA or World Bank figure before using either externally; treat the 45% figure, with its World Bank attribution, as provisionally more defensible pending that check |
| Government securities outstanding | TZS 31–33.6tn, described as "government bonds" mid-2026 (one note) vs TZS 37.9tn "total domestic debt" end-2025 (second note) | These may be measuring different things (bonds only vs all domestic debt instruments, including Treasury bills); confirm scope against a single BoT debt bulletin before combining them in any single ratio |
| Corporate bonds outstanding | TZS 1.6–2.0tn (mid-2026) vs TZS 1.9tn (2025), vs TZS 757.1bn (2024 baseline in the same note) | Broadly consistent directionally (strong growth from a small base); use the most recent CMSA/DSE figure available at time of publication |
| Private-sector credit growth | 15.1% (year to Apr 2025), down from 18.4% a year earlier (one note) vs ≈23%/year (second note, no period specified) | Likely reflects different reference periods; confirm against the most recent Bank of Tanzania Monthly Economic Review before citing a single figure externally |
| Treasury-bond vs corporate-bond turnover ratio ("500x") | ≈16–24x on outstanding stock vs ≈737x on September 2025 secondary-market turnover vs ≈500x cited as a round figure in TERI's companion Capital Market report (based on full-year 2025 turnover) | Treat "500x" as an illustrative order-of-magnitude figure, not a precise statistic; cite the specific metric and period whenever the ratio is used externally |
13 — SourcesAppendix B: Sources
This page is built directly from TERI's report "Government Securities Dominance: The Crowding-Out Problem" (October 2026), a companion deep-dive to Tanzania's Capital Market: Growing Fast, Still Shallow, and part of the series with TERI's reports on gold-export dependence, gold as development finance, and services receipts.
- TICGL/TERI, Tanzania Business Report, September 2026; Tanzania Policy Reform Agenda 2026–2031.
- TICGL/TERI, Tanzania's Capital Market: Growing Fast, Still Shallow (companion report, September 2026).
- TICGL/TERI, Gold Dependence Policy Report, Gold Is Finance Not Growth, and Services Receipts reports (companion analyses, September 2026).
- TICGL/TERI, two working research notes on government-securities crowding-out supplied for this analysis (headline debt-market statistics, mechanism explanation, evidence review, policy recommendations).
- TAIEX assessment of Tanzania's financial-market infrastructure, as cited in TICGL/TERI working notes.
- World Bank, pension-fund holdings of government securities data, as cited in TICGL/TERI working notes.
- Serrari Group / Financial Literacy, "Corporate Bonds in Kenya: Market Challenges and the Dominance of Government Securities" (2025–26).
- The East African, "Uganda fights to save dormant corporate bond market" (2026), citing Uganda Capital Markets Authority 2025 Annual Report and Kenya CMA data.
- Oxford Business Group, on Nigeria's bond market and National Pension Commission investment limits.
- World Bank, "Malaysia's Domestic Bond Market: A Success Story"; Milken Institute, "Malaysia's Capital Market Masterplan, 2001–2010: A Case Study."
- Reserve Bank of India, "A Study of Corporate Bond Market in India: Theoretical and Policy Implications" (Development Research Group study).
Request the Full Report or a Briefing
This page summarises TICGL/TERI's crowding-out report. Institutions, investors, government agencies and development partners may request the full report or a tailored briefing — including the dashboard concept and a reconciled pension-allocation estimate — directly from TERI.
✉️ Request via economist@ticgl.com →14 — Quick AnswersFrequently Asked Questions
How much bigger is Tanzania's government bond market than its corporate bond market?
It depends on what is measured. On outstanding stock, government securities are roughly 16–24 times larger than corporate bonds. On a single month's secondary-market trading activity (September 2025), the gap was closer to 737 times (TZS 1.615tn in Treasury-bond turnover vs TZS 2.193bn in corporate bond trading). Both measures point the same direction: Tanzania's bond market is overwhelmingly a government bond market with a small, thinly traded private corner attached.
Does the Tanzanian government block private companies from issuing bonds?
No. There is no legal restriction preventing private companies from issuing bonds or listing shares. What happens is a competitive, portfolio-level effect: when an investor can hold a government bond offering a comparable or better risk-adjusted return, with far greater liquidity and simpler regulatory treatment, that investor has little reason to hold a less liquid, higher-risk corporate bond instead. The practical effect is similar to a blockage, but the mechanism is competitive crowding, not legal restriction — which means the fix is different too.
Why does government borrowing crowd out private companies in Tanzania?
Four structural asymmetries favour government securities: risk (backed by the state's tax base vs one company's performance), liquidity (regularly issued, actively traded vs thinly traded corporate bonds), information (government publishes an issuance calendar and yield curve, while most companies lack audited history or credit ratings), and regulatory treatment (government securities often receive more favourable risk-weighting for banks, pension funds and insurers).
Is all government borrowing bad for private investment?
No. The effect depends on how the funds are used. Borrowing for recurrent expenditure or poorly selected prestige projects increases crowding-out without building productive capacity. Borrowing for power, ports, rail, digital infrastructure, industrial parks and irrigation can crowd private investment in rather than out, by creating the conditions for private businesses to build around.
How have other countries reduced crowding-out in their bond markets?
Malaysia introduced shelf registration and a dedicated credit-guarantee institution, building what the World Bank calls a genuine bond-market development success story. Nigeria's pension regulator caps individual pension-fund investment in corporate bonds and money-market instruments at 35% each. India's and South Korea's experience shows a well-functioning government bond market can be the foundation for a corporate bond market, if deliberate steps then extend that infrastructure to private issuers.
Muhtasari kwa Kiswahili
Utawala wa Hati Fungani za Serikali: Tatizo la Crowding-Out — Soko la mitaji la Tanzania si dogo kwa sababu miundombinu haipo — DSE, CMSA, SSRA, makampuni 28 yaliyoorodheshwa, ETFs, Sukuk, hati fungani za kijani na kijamii, vyote vipo. Ni dogo kwa sababu muundo wa soko unaelekeza karibu akiba zote za muda mrefu za ndani kwa mkopaji mmoja: serikali.
Ukubwa wa tofauti unategemea kipimo: Kwa hisa zilizopo (stock), hati fungani za serikali ni takribani mara 16–24 kubwa kuliko za makampuni. Kwa mauzo ya mwezi mmoja (Septemba 2025), tofauti ilikuwa karibu mara 737 (TZS trilioni 1.615 dhidi ya TZS bilioni 2.193). Vipimo vyote viwili vinaonyesha jambo moja: soko la hati fungani la Tanzania kimsingi ni soko la serikali lenye kona ndogo ya sekta binafsi.
Je, serikali inazuia makampuni binafsi kisheria? Hapana. Hakuna sheria inayozuia kampuni binafsi kutoa hati fungani au kuorodheshwa sokoni. Kinachotokea ni ushindani: mwekezaji anapoweza kushikilia hati fungani ya serikali yenye faida nzuri, ukwasi mkubwa zaidi, na masharti rahisi zaidi, hana sababu ya kushikilia hati fungani ya kampuni binafsi yenye hatari kubwa zaidi — hata kama kampuni hiyo ni imara. Matokeo yanafanana na kuzuiwa, lakini chanzo ni ushindani wa soko, si zuio la kisheria.
Kwa nini hii inatokea — sababu nne: (i) Hatari — hati fungani za serikali zinategemea uwezo wa kodi wa taifa, za makampuni zinategemea kampuni moja; (ii) Ukwasi — hati za serikali zinauzwa mara kwa mara na kuwa na soko la pili imara, za makampuni ni chache na hazibadilishwi kwa urahisi; (iii) Taarifa — serikali inachapisha kalenda ya utoaji na curve ya riba, makampuni mengi hayana historia ya ukaguzi au alama ya mkopo; (iv) Upendeleo wa kisheria — mifuko ya pensheni na bima mara nyingi hupewa masharti mazuri zaidi ya kuwekeza kwenye hati za serikali.
Si kila mkopo wa serikali ni mbaya: Mkopo unaoenda kwenye matumizi ya kawaida unazidisha tatizo bila kujenga uwezo wa baadaye. Lakini mkopo unaoenda kwenye umeme, bandari, reli, na miundombinu ya kidijitali unaweza "kuvuta ndani" uwekezaji binafsi badala ya kuuzuia — kwa kujenga fursa ambazo makampuni binafsi yanaweza kujenga karibu nazo.
Mapendekezo ya TICGL/TERI (hatua tano): (i) kujenga msingi wa takwimu — dashibodi ya robo mwaka ya crowding-out; (ii) kulinda upatikanaji wa sekta binafsi bila kuzuia serikali kiholela — kulipa marejesho ya VAT kwa wakati; (iii) kujenga mfumo wa makampuni yanayotoa hati fungani (mfano wa Malaysia — shelf registration na dhamana za mikopo); (iv) kuhamisha mgao wa mifuko ya pensheni kwa mfumo unaozingatia hatari, si kwa amri tu; (v) kujenga ukwasi moja kwa moja — market makers, viwango sanifu vya hati fungani, na curve safi ya riba.
Hitimisho: Soko la mitaji la Tanzania si dhaifu kwa sababu ya ukosefu wa miundombinu. Ni dhaifu kwa sababu muundo wake unaelekeza akiba za ndani kwa mkopaji mmoja. Suluhisho si "serikali ikope kidogo" tu — ni kuhakikisha mikopo ya serikali ina nidhamu, inatumika kwa uzalishaji, na inajenga miundombinu ya soko ambayo sekta binafsi inaweza kukua pamoja nayo, badala ya kumeza akiba zote ambazo soko la makampuni lingetegemea.
- Hati fungani za serikali dhidi ya makampuni (hisa zilizopo): mara 16–24
- Hati fungani za serikali dhidi ya makampuni (mauzo ya mwezi mmoja): mara 737
- Fedha za pensheni kwenye hati za serikali: 45%–zaidi ya 85% (vyanzo viwili tofauti)
- Mkopo wa ndani uliopangwa 2025/26: TZS trilioni 6.28, kiasi kipya ≈TZS trilioni 2.95
Chanzo: TICGL/TERI, ripoti ya Utawala wa Hati Fungani za Serikali: Tatizo la Crowding-Out, Oktoba 2026. Kwa maelezo zaidi wasiliana na: economist@ticgl.com.