By TZ Business News Staff.
Shares at the Dar es Salaam Stock Exchange (DSE) will soon be observed, bought and sold from mobile phones.
A Securities and Trading Technology (STT) system which makes this possible has been imported from South Africa and installed at the exchange.
The system started working June 27, 2014, although configurations to allow internet and mobile phone SMS trading have not yet been effected.
A statement issued by the DSE Chief Executive Officer, Moremi Marwa reads in part: “This is another milestone to our National Exchange – we have not only achieved to execute this in the shortest period possible but we also have managed to procure a system that seamlessly integrates our automated trading platform with the central securities depository and the National Payment System through SWIFT interface; this means we have now achieved a true Delivery versus Payment (DVP) and hence risk management assurance to our investors
“Furthermore the system is more efficient, it is more scaleable and flexible, which is line with our strategic intent of introducing new products and increasing accessibility to our system through the use of mobile, internet and sms trading facilities; we are very grateful for what we have achieved during this short period of time. We are thankful to the STT team for partnering with us and making it possible for us to pull this off,” Marwa says in the statement.
The South African STT system enables DSE trading to be seen live at the trading floor as well as via the internet. An official from the system supplier company, Michelle Janke remarked at the official launching of the system Friday: “I am extremely proud on this momentous occasion. Today the Tanzanian Exchange becomes STT’s third Exchange to go-live with STT’s integrated Exchange Solution. Furthermore, the DSE is STT’s first African Exchange to go-live with our Equities platform as well as our Central Securities Depository (CSD) system, and this was all accomplished within 8 short weeks.”
Securities and Trading Technology (STT) was chosen in April to provide the DSE with solutions to improve its trading ability, as South Africa’s expertise in running efficient financial markets is increasingly being called upon to help other countries in Africa grow their markets, according to a report in the South African Business Day newspaper.
The plan is to increase the number of securities and bonds traded in Tanzania from the current 25 companies.
Speaking during the launch on June 27, Marwa said the new system would help the exchange achieve “true delivery” and improve risk management for investors.
These services delivery improvements at the DSE are taking place against a backdrop of efforts to encourage Small and Medium Enterprises (SMEs) to list at the bourse for raising capital.
With the support of the Capital Markets and Securities Authority, the DSE has already launched the Entrepreneurship Growth Market (EGM) to support implementation of Tanzania’s economic growth policies.
SMEs are seem a major contributor to Tanzania’s economic prosperity, but whose development has been hindered by the lack of capital to develop the business ideas. DSE has opened a window for these companies to raise capital through the EGM.
The EGM is an equity market specifically intended for Small and Medium Enterprises (SMEs) and start-ups.
With the liberalization of the Tanzanian economy, entrepreneurship has grown to reach an estimated 3 million SMEs, but operating in an environment where commercial banks have not been able to address the needs for capital for the start-up and SME segments. The Banks, being too few and relatively “small” have been extremely averse to risk and highly conservative in their lending policies.
While access to short-term, overdraft or trade financing loans have become somewhat accessible, longer term loans are still tied to very stringent collateral requirements as well as high medium and long term interest rates. The EGM window at the DSE therefore provides an option for SMEs capital raising.
The Dar es Salaam Stock Exchange has come a long way. It started operations with only four companies in 1998 by announcing trading results on paper boards and flip-charts. At the beginning of the year 2014, the DSE had 18 listed companies (6 cross-listed). The Exchange now reports domestic market capitalization is Tsh. 6.0 tr/- ($3.8 billion) while the investors base stands at 185,000.
Business is brisk. Most equity listed at the DSE, with the exception of Tanzania Oxygen Limited, Tanzania Breweries and PAL were oversubscribed. All 13 corporate bonds issued and listed were oversubscribed. All government treasury bonds are usually oversubscribed.
“This indicates that there is enough liquidity in the economy,” Marwa said recently, calling well managed SMEs to take advantage of this climate by listing at the stock exchange.