Mwalimu Building at Ilala Boma, in Dar es Salaam.
The Capital Markets and Securities Authority has said participants in
the equity capital markets are expected to increase by 100 percent, if
all active members of the Tanzania Teachers Union (TTU) will buy shares
from Mwalimu Commercial Bank. (File photo)
Currently, TTU has about 200,000 members with up to date contributions.
“This is going to be a significant transformation in the Tanzania
capital markets landscape and will facilitate attainment of one of the
goals of National Financial Inclusion Framework,” said the Chief
Executive Officer of CMSA, Nasama Massinda.
She was speaking at the launch of the Initial Public Offer (IPO) of
Mwalimu Bank (Information) which was held in Dar es Salaam yesterday.
The goal under the National Financial Inclusion Framework is to
have 50 percent of the adult population participating in the formal
financial sector by the end of year 2016. Therefore the selling of
shares of Mwalimu Commercial bank in formation facilitates attainment of
this national goal and facilitates the government objective of
increasing the number of companies which raise funds through capital
markets.
“This will in turn increase the number of participants in the
formal economy in a transparent way and thus increase government
revenue. This is due to the fact that the law and regulations in the
capital markets require companies operating in these markets to be
transparent and to adhere to principles of good corporate governance.
This results in such companies operating more efficiently and since
their financial statements are subjected to continuous disclosure
requirements the government is expected to collect the correct amount of
tax from such companies and therefore increase government revenue,” she
explained.
She added: “As you are aware buying and selling of shares listed on
the stock exchange which is the secondary market is done through
brokers of the Dar es salaam Stock Exchange (DSE). In the primary
market, when shares are sold for the first time by way of IPO, investors
buy shares through brokers or different banks, depending on the
agreement with the issuer of the shares.”
She also said the Capital Markets and Securities Act, 1994 requires
promoters of a company with more than fifty members to prepare a
prospectus to be approved by the CMSA. A prospectus is a document that
provides important information to potential investors in terms of
disclosure of material facts about the company, its management, business
outlook and the principal risks involved in their business. The
Management of Mwalimu Commercial Bank in formation and Consultants for
Resource Evaluation Ltd (CORE), who are the Nominated Advisors licensed
by the CMSA prepared the prospectus for selling 50,000,000 ordinary
shares at a price of 500/- each by way of IPO and therefore 25 bn/- is
expected to be raised from the public.
She further said that the prospectus of Mwalimu Commercial Bank in
formation was reviewed and approved by the CMSA in line with the
requirements of the Capital Markets and Securities Act, 1994. Potential
investors are required to read the prospectus since it contains
important Information for making informed decision regarding shares of
Mwalimu Commercial Bank in formation.
The Authority recognises that Brokers of the Dar es Salaam Stock
Exchange and banks that facilitate payment for the purchase of shares
are located in town and major cities, while majority of Tanzanians live
in different regions, districts and villages in the country.
For quite some time, the Authority embarked on different
initiatives including allowing brokers having agents in various regions
in Tanzania with a view to facilite more Tanzanians to participate in
the capital markets by buying shares. In an effort to overcome that
challenge, the Authority through its Five Year Strategic Plan for
2013/2014- 2017/2018 planned for instituting a mechanism that will
facilitate investors to participate in the capital markets by using
electronic technology and by the end of 2014, the Authority implemented
its plan by putting in place Capital Markets and Securities, Electronic
Trading Guidelines, 2015. These guidelines have facilitated having an
Electronic Trading System that facilitates purchase of shares using
mobile phones.
CMSA also recognises the role and importance of teachers in
facilitating social and economic development in our country and by being
mindful of the fact that that most of our teachers live in different
regions, districts and villages in the country, the Authority considered
it appropriate to start using the Electronic Trading System using
mobile phones to buy shares in order to facilitate teachers and other
investors countywide to participate in the IPO. In this regard, teachers
can buy shares of Mwalimu Commercial Bank in formation while marking
student’s exercise books at their work stations whether in town or in a
village by dialing *150*36# and then follow instructions .
“This is a significant transformation in the development of capital
markets, since the Capital Markets and Securities Authority of Tanzania
is making history because Tanzania becomes the first country in the
East African Community (EAC) region to facilitate purchase of shares in
an IPO using mobile phones,” Massinda said.
Successful completion of the IPO of Mwalimu Bank information is
expected to increase the number of companies that have issued shares to
the public to twenty three (23) and increase the number of participants
in the equity capital markets in Tanzania to about 400,000. Having more
companies that have issued shares through capital markets will provide
more opportunities to investors to buy shares of different companies and
thus diversify the risk of investment. In addition, having more
companies and participants in the capital markets, facilitates increase
in the level of savings, investment, employment, government revenue and
this in turn increases the level of social and economic development in
the country.
The CMSA is responsible for developing, regulating and supervising
the capital markets in the country. Capital markets facilitate companies
to obtain long term finance for development and enable public ownership
in such companies thus channelling savings into the productive sector
which is essential for economic development of our country.
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