The History of Dar-es-salaam stock Exchange (DSE).
By “Stewart Mbegu’ (School of Business, Mzumbe University, P.O Box 6559, Mbeya, Tanzania)
The Dar es Salaam Stock Exchange(DSE) is a stock exchangelocated on Ohio Street, west of Kivukoni, south east of Dar es Salaam, the commercial capital and largest cityin Tanzania. It was incorporated in September 1996 and trading started in April 1998. It is a member of the African Stock Exchanges Associationand the World Federation of Exchanges. The exchange is open five days a week, from Monday through Friday. The trading days are weekly from Monday to Friday, starting from 10.00 am to 14.00 pm.
The activities of the exchange are monitored and supervised by the Capital Markets and Securities Authority (CMSA).The DSE operates in close association with the Nairobi Securities Exchangein Kenyaand the Uganda Securities Exchangein Uganda. Plans are underway to integrate the three to form a single East Africanbourse
The history of dare s salaam stock exchange
Incorporation
The Dar es Salaam Stock Exchange was established by the capital markets and security authority under the Capital Markets and Securities (CMS) Act of 1994 in Dar-es-salaam, Tanzania. The stock exchange was incorporated on 19 September 1996.The company was incorporated as a private company limited by guarantee and not having a share capital under the Companies Ordinate, therefore the DSE is a non-profit making body.The exchange became operational on 15 April 1998 with TOL Gas Limited listing as the first company followed by the Tanzania Breweries Limited (TBL)during the same year. The delay was due to the necessary background operational preparations that were inevitable such as training of brokers and formulation of issuance and trading rules.
Historical Background
The Dar es Salaam Stock Exchange (DSE) was incorporated in 1996 as a private company limited by guarantee (a non-profit making body) and became operational in 1998. As of September 2020, there are 27 listed equity securities, 13 licensed brokers, and 6 custodian banks, with a market capitalization of TZS 15,183.09 billion (USD 6.5 billion). Dar es Salaam Stock Exchange History The first company to list at DSE was Tanzania Oxygen Limited (DSE:TOL) in 1998, which was also the first state-owned company selected for privatization through the capital markets. It was followed by Tanzania Breweries Limited (DSE:TBL), Tanzania Cigarette Company (DSE:TCC), Swissport (DSE:SWIS), Tanzania Portland Cement Company (DSE:TPCC), Tanga Cement Company Limited (DSE:TCCL) and National Microfinance Bank (NMB). After these first state-driven listings, other private companies decided to list at DSE as a part of their corporate growth strategy to raise capital. These include TATEPA, CRDB Bank, DCB Commercial Bank, and Precision Air that listed at the DSE during 1999–2011. In 2013, the DSE launched a second-tier market, the Enterprise Growth Market (EGM) with lower listing requirements. The EGM is designed to attract small and medium companies with high growth potential. So far, the EGM has attracted five companies, including YETU Microfinance Bank, Mkombozi Commercial Bank, Maendeleo Commercial Bank, Mwalimu Commercial Bank, and Swala Oil & Gas. In 2015, the DSE was demutualized, i.e. it changed its registration status from being limited by guarantee to being limited by shares. Moremi Marwa, CEO of DSE, explained that the bourse aims at maximizing the value of investment through the process of demutualization. The DSE is the third Exchange in Africa to demutualize after the Johannesburg Stock Exchange (JSE) and the Nairobi Securities Exchange (NSE). In May 2016, the DSE launched its own IPO of 15 million ordinary shares at TZS 500 per share. The Tanzanian bourse raised TZS 35.8 billion from more than 3,000 investors, which is equivalent to 377% in excess of the targeted capital. Following the oversubscribed IPO, the bourse exercised the greenshoe option of 35% to take up an additional TZS 2.6 billion. After exercising the option, the total capital raised from the DSE IPO is TZS 10.1 billion. In July 2016, following the successful DSE IPO, the Tanzanian bourse listed itself at the secondary market under the ticker “DSE”. Dar es Salaam Stock Exchange Performances As of September 2020, the DSE market capitalization stood at TZS 15,183.09 billion (USD 6.5 billion), compared to TZS 17,906 billion (USD 7.7 billion) at the end of 2019, representing a decrease of 18%. The DSE All Share Index (DSEI), which comprises all listed companies at DSE, reached TZS 1,828.80 on 9th of September 2020, down 14% from its peak for the year at above TZS 2,000 in February of the same year. At the end of Q1 2020, the total amount of outstanding corporate bonds was TZS 176 billion (USD 76 million) issued by four entities: Trade and Development Bank (TDB), EXIM Bank, National Microfinance Bank (NMB), and Tanzania Mortgage Refinance Company (TMRC). As of 31st March 2020, total outstanding government bonds stood at TZS 10,864 billion (USD 4.7 billion), marking a 3% increase from the TZS 10,531 billion (USD 4.5 billion) on 31st December 2020. In 2019, the DSE recorded a profit before tax of TZS 3.7 billion, compared to TZS 1.8 billion in 2018, marking an increase of 106%. The increased profitability is on account of good performance in equity trading and bond trading activities, the DSE explains.
1996 - Incorporation of the Dar es Salaam Stock Exchange and approval of Stock Exchange Rules
1997 - Publication of Collective Investment Scheme Regulations
1998 - Start of operations of the DSE with the first privatization and listing of state owned entity
1999 - Installation of the Central Depository System at the Exchange and Listing of the first corporate debt
1999 - Issuance of Guidelines for the Issue of Corporate Bonds
2002 - Listing and start of trading of Treasury Bonds at the Exchange
2004 - Cross listing of the first foreign company and the listing of the first airline company
2006 - Deployment of Automated Trading System linked with a new three tier Central Depository System
2008 - Listing of the first commercial bank
2011 - Listing of the first mining company
2011 - Publication of Regulations to govern introduction of Real Estates Investment Trusts
2013 - Migration to the new efficient Automated Trading System and Central Depository System
2013 - Launching of the second tier market: EGM - Enterprise Growth Market (EGM)
2013 - Listing of the first company on EGM
2014 - Deployment of ATS on the Wide Area Network and start of remote trading by brokers
2014 - Uplifting of Foreign Investors Limits Regulations
2015 - Introduction of the regulatory framework and subsequent use of mobile phone technology in IPOs (Equity and Debt) and Secondary Trading
2015 - DSE Demutualization and Re-incorporation into a Public Limited Company
2016 - DSE IPO and Self-Listing ; DSE joined the world federation of exchanges supporting United Nations Sustainable Stock Exchanges initiative; DSE Initiated the DSE Members Award.
2017- DSE listing of Vodacom Tanzania Plc the first and the largest telecom company in the country.
Demutualization
On 29 June 2015 the Dar-es-Salaam Stock exchange re-registered to become a public limited company. The company changed its name from the Dar Es Salaam Stock Exchange Limitedto Dar Es Salaam Stock Exchange Public Limited Company The company began selling shares on 16 May 2016 and is the third exchange in Africaafter Johannesburg Stock Exchange(2006) and Nairobi Securities Exchange(2014) to self list. The company offered 30% of the company's stock on the stock exchange represented by 15,000,000 ordinary shares.
Ownership
As of December 2019, the company stock was owned by corporate entities and individuals. The largest shareholders are listed in the table below.
Dar-es-salaam Stock Exchange Stock Ownership
RANK | NAME OF OWNER | PERCENTAGE OWNERSHIP |
1 | Government of Tanzania | 15.0 |
2 | Briarwood capital partners LP | 12.0 |
3 | Mr. Aunali F. Rajabali and Sajjad F. Rajabali | 10.0 |
4 | National investment company Limited Tanzania | 5.0 |
5 | General Public | 58.0 |
6 | TOTAL | 100.0 |
Services
·DSEMobile Tradingwas launched on 20 August 2015 to allow people upcountry where brokers are not present. The platform is called "soko la hisa kiganjani The platform was designed by Maxcom Africa and is compatible with all Tanzaniancellphoneoperators. The program aims to allow more Tanzanians to participate in the bourseas currently only 400,000 people participate in a country of 50 million. At the end of 2015 over 1000 investors used the platform.The platform continues to gain popularity and at the end of quarter 1 of 2016 the total number of users using the Mobile trading platform increased to 3000.
Market listing
As of August 2020 there are 27 listed companies, five corporate bonds and eight governmentbonds. The table below summarises the current market listings
Main Exchange
SYMBOL | COMPANY | ISIN | DATA LISTED | NOTES | ||
1.CRDB | CRDB BANK | TZ1996100305 | 17/06/2009 | |||
2 DSE |
| TZ1996102434 | 12/07/2016 | |||
3.NMB | TZ1996100222 | 06/11/2008 | ||||
4.VODA | TZ1996102715 | 15/08/2017 | Telecommunication Service Provider | |||
5.SIMBA | TZ1996100057 | 26/09/2002 | ||||
6.KCB | KE0000000315 | 17/12/2008 | ||||
7.TBL | TZ1996100016 | 09/09/1998 |
- East African Breweriesand Kenya Airwaysare cross listed at both the Uganda Securities Exchangeand the Nairobi Securities Exchange.
- Kenya Commercial Bank Group, Nation Media Groupand Uchumi Supermarketsare cross listed on the Nairobi Securities Exchange, the Uganda Securities Exchangeand the Rwanda Stock Exchange.
- National Investments Company (Limited) Tanzaniawas re-listed on 3 June 2018 after it was delisted in 2011. The company originally listed on 15 July 2008.
Enterprise Growth Market (EGM)
SYMBOL | COMPANY | ISIN | DATE LISTED | NOTES | ||
1. MCB | Mwalimu Commercial Bank | TZ1996102129 | 27/11/2015 | |||
2. MBP | Maendeleo Bank | TZ1996101683 | 04/11/2013 | |||
3. MKCB | TZ1996101972 | 29/12/2015 | ||||
4. YETU | TZ1996102344 | 10/03/2016 | ||||
5. MUCOB |
| TZ1996102419 | 10/09/2016 |
Therefore:A stock market is a place where investors trade certificates that indicate partial ownership in businesses for a set price. Different countries in the world have stock markets where other countries started their stock markets long time ago like the USA and they have investigated the trend of their market if it is normally distributed or not. Also they have strong models that assist them in making predictions and also help the investors on the choice of the stocks to invest so as to gain the profit in the future. On the other hand other countries just started few years ago. Tanzania is among the countries where stock markets has just started recently and hence there is a need to study the nature of the stocks distribution and see whether the Dar-Es-Salaam Stock of Exchange (DSE) market do follow the theoretical conclusions or not. Thus in this study we adapt the Markowitz modern portfolio theory (MPT) and using the mean variance analysis theory together with the DSE data to investigate if the DSE stock market follows a normal distribution or not. The analysis shows that the DSE stocks log returns are reasonably normally distributed and its prices do change according to the change in other factors like the inflation rate, consumers (investors) interest, the policy of the country, and other exogenous factors.
References:
· Adjasi, K. Charles and Nicholas B. (2006), “Stock Market Development and Economic Growth: The Case of Selected African Countries,” African Development Review, Vol.18 (1) pp. 144-161.
· Bencivenga, V. & Smith, B. & Starr, R.M. (1992), "Liquidity of Secondary Capital Markets: Allocative Efficiency and the Maturity of the Capital Stock," RCER Working Papers 326, University of Rochester - Center for Economic Research (RCER).
· Bencivenga, Valerie R & Smith, Bruce D. (1991), "Financial Intermediation and Endogenous Growth," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 195-209.
· CMSA (2007), “An Overview of the Development of Capital Markets in Tanzania” Levine, Ross and Sara Z. (1996) “Stock Market Development and Long-Run Growth” World Bank Economic Review, Vol.10 (2) pp. 323-340.
· Levine, Ross and Sara Z. (1998), “Stock Markets Banks and Economic Growth” American Economic Review, Vol. 88, pp. 537-58.
· https://www.tanzaniainvest.com/dse, On 20th may, 2021 (at 07:00 PM)
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