Tanzania's thriving stock exchange

Brokers prepare for the day's trading

By Tira Shubart in Dar es Salaam

Six men and women in red jackets wait impatiently in front of the trading board, looking anxiously towards the door which leads into the exchange.

Moments before 10 a.m. an official enters, examines the official clock and rings the bell. Trading at the Dar es Salaam Stock Exchange (DSE) has begun.

Immediately the brokers start shouting, bidding for shares. Despite the small number of brokers, they are tightly bunched together on the large trading floor, straining towards the board and gesturing towards their chosen securities.

An education poster for the stock exchange

Trading floors all over the world generate a certain excitement and the Tanzanian stock market is no exception.

Rachel Mwainyekule, in charge of Data Entry for the DSE, marks the bids on the board, pausing occasionally to oversee the paperwork for each transaction before sealing each deal with an authoritative stamp.

At the end of the 30 minute session, Ms Mwainyekule rings the bell for a second time. Trading for the day is over. Some 21,000 shares have been bought and sold with a total worth of nearly $15,000. A healthy return for half an hour of business in one of the world's poorest nations.

Ever upwards

The DSE may be one of the smallest stock markets in the world, but unlike many markets it has only gone up both in volume and in share value.

In 1998, when the DSE started trading, there was only one session per week. Now four weekly sessions are necessary to handle the business generated by investors and Dar es Salaam's six brokerage firms.

I bought 200 shares. Now I have dividends worth 20% of those shares and I am happy to see the trade is on an upwards swing

Joseph Fungameza

The Financial Times, one of Tanzania's weekly business newspapers, is bullish about the DSE. "At the DSE, trade volume sky-rockets!" trumpeted the front-page article on 14 March.

The increase has been steady despite the fact there are only four equities and one corporate bond (EADB - the East African Development Bank) listed to date.

The equities are three privatised companies, who have successfully negotiated the relatively new hazards of the Tanzanian market economy, and one fully private company TATEPA - Tanzania Tea Packers Ltd.

TATEPA produces and retails one of the few household names in Tanzania, Chai Bora, meaning 'The Best Tea' in Swahili.

Happy investors

The familiarity of the brand, along with the affection felt towards the products of Tanzania Breweries Limited and the Tanzania Cigarette Company encouraged investors to take the plunge into the stock market.

Tanzanians who have bought shares have been impressed. Joseph Fungameza, a driver, owns TATEPA shares, his first investment in the market. "I bought 200 shares. Now I have dividends worth 20% of those shares and I am happy to see the trade is on an upwards swing," he says.

Rachel Mwainyekule at work

Mr Fungameza points out that, had he left the money in a bank, the 6.5% standard interest rate would have earned him far less.

Dr Hamisi Kibola, the DSE chairman, has been there since the beginning and is gratified by investors such as Mr Fungameza.

"The DSE has now ceased to be an experiment. And we have gone through the initial challenges of setting up a new market," Dr Kibola says. Certainly an estimated 45,000 Tanzanians agree with him and now own shares.

Education needed

But Dr Kibola is concerned that the stock market may still be a mystery for many Tanzanians.

"We are doing a lot of public education. We are currently travelling around the country explaining the opportunities of the DSE. For example, we will find somebody with 1000 cows and tell them 'Diversify, sell come cows, invest in a bank account and buy some shares.' This a major cultural transformation we need to achieve."

George Theobald, the founder and Managing Director of TATEPA, a fast moving good company focusing on tea, also points out that general inexperience caused delays and confusion when his company was being listed.

"When you are moving into virgin territory there will of course be a lack of knowledge. But the key point is we did get through those problems and most important we are happy listers," Mr Theobald says.

"TATEPA has shown a dollar return of over 25%, which beats the Western world hands down," says Mr Theobald happily. "What it doesn't beat is TCC which returned investors a phenomenal 42% of their offer price in the first month."

It's not surprising that foreign investors have expressed an interest in the DSE, currently restricted to Tanzanian citizens.

Dr Kibola's optimistism about the growth of the stock market and the Tanzanian economy is shared by Mr. Fugameza who is considering investing more money into his chosen stock.