The capital market in Tanzania.
- Total Investment:
- Increased by 9.3% to TZS 37,410.1 billion by the end of 2023, from TZS 33,998.4 billion in the previous year.
- Trading Activities:
- Equity and bond market trading activities rose by 31.4%, reaching TZS 4,154.6 billion by the end of 2023.
- Collective Investment Schemes:
- Net Asset Value (NAV) increased by 50.2%, reaching TZS 1,841.7 billion from TZS 1,226.3 billion in the previous year.
- Equity Market:
- Total equity turnover at the Dar es Salaam Stock Exchange (DSE) increased by 68.5% to TZS 255.2 billion from TZS 133.7 billion the previous year.
- Growth driven by significant transactions, including the acquisition of 68.3% of shareholding in Tanga Cement Plc by Scancem International.
- Market Capitalisation:
- The equity market's depth, as measured by the ratio of total market capitalization to GDP, decreased to 9.8% from 11.9% in the preceding year.
- Foreign Participation:
- Foreign investor participation was significant, with local investors accounting for 42.7% on the buy side and 30.8% on the sell side.
- Primary Market:
- Government securities depicted discounted prices, increasing yields for investors.
- Bond auctions were on average undersubscribed by 9.0% in 2023 compared to an oversubscription of 27.0% in the previous year.
- Weighted average yield to maturity increased across all maturities.
The growth and resilience of the capital market are critical for Tanzania's economic development. Increased investment and trading activities indicate a robust financial environment conducive to economic growth. The significant rise in equity turnover and NAV of investment schemes highlights growing investor confidence and a conducive regulatory environment. The substantial foreign investor participation reflects Tanzania's improving attractiveness as an investment destination, which can further stimulate economic activities and development.
Insights on Tanzania's Economic Development from the Capital Market
The performance and trends in Tanzania's capital market provide valuable insights into the broader economic development of the country:
1. Investment Growth
- Total Investment Increase: The capital market saw a significant increase in total investment by 9.3% to TZS 37,410.1 billion by the end of 2023, compared to TZS 33,998.4 billion in the previous year. This growth indicates a strong flow of capital into the market, which is essential for funding economic activities and projects.
2. Increased Trading Activities
- Rising Trading Volumes: The increase in trading activities by 31.4% to TZS 4,154.6 billion signifies a more active and liquid market. Higher trading volumes reflect investor confidence and provide businesses with better access to capital for expansion and development.
3. Collective Investment Schemes
- NAV Growth: The substantial growth in the Net Asset Value (NAV) of collective investment schemes by 50.2%, reaching TZS 1,841.7 billion, highlights an increasing interest in diversified investment options. This growth supports financial stability and offers more opportunities for investors.
4. Equity Market Performance
- Equity Turnover Increase: The equity market experienced a significant rise in total turnover by 68.5% to TZS 255.2 billion, driven by notable transactions like the acquisition of a major shareholding in Tanga Cement Plc. This increase demonstrates a robust market for equities, providing companies with capital for growth and development.
5. Market Capitalisation
- Depth of Equity Market: Although the ratio of total market capitalization to GDP decreased to 9.8% from 11.9%, the substantial equity turnover and active trading suggest a growing market depth and the potential for future growth.
6. Foreign Investor Participation
- Significant Foreign Involvement: The high level of foreign investor participation indicates that Tanzania is an attractive destination for international investors. This inflow of foreign capital can drive economic growth, create jobs, and stimulate various sectors of the economy.
7. Primary Market Activity
- Government Securities: The increase in yields for government securities and the average undersubscription of bond auctions by 9.0% suggest a cautious yet active investment environment. Higher yields can attract more investment in government projects, contributing to economic development.
Implications for Economic Development
- Capital Availability: The increased investment and trading activities in the capital market ensure that businesses have access to the necessary capital for growth and expansion, which is vital for economic development.
- Financial Inclusion and Investor Confidence: The growth in collective investment schemes and substantial foreign investor participation reflect increasing financial inclusion and confidence in the market. This confidence is crucial for sustained economic growth and stability.
- Economic Resilience: The resilience of the capital market amidst global financial challenges highlights the robustness of Tanzania's financial system. A strong capital market can buffer the economy against external shocks and support long-term development.
- Infrastructure and Development Projects: The active primary market for government securities suggests that the government can secure funding for infrastructure and development projects, which are essential for economic progress.