THE government should consider providing special tax incentives for companies that list on the Dar es Salaam Stock Exchange (DSE) to bring more products to the bourse, DSE Chairman, Jonathan Njau has said.
Mr Njau said in Dar es Salaam last week that a successful stock market requires special tax incentives to stimulate demand and help to channel savings and portfolio investments into productive projects. He said they were preparing to engage the government through treasury on the matter and proposed modality on how to introduce new products and services.
“These special purpose vehicles (SPV) will be used to finance and operate infrastructure projects while enjoying the fiscal incentives to be given,” he said at the event of listing of Tanzania Mortgage Refinance Company (TMRC) bond on DSE.
Mr Njau said a fiscal incentive would raise tax revenues as publicly traded issuers of securities implement higher standards of corporate governance which outperform their unlisted private sector peers in terms of revenues, profits and employment.
Figures show that most of top ten larger tax payer firms are listed on DSE including Tanzania Breweries Limited (TBL), Tanzania Cigarette Company (TCC), NMB bank, Vodacom, and CRDB bank. The Deputy Minister for Finance and Planing, Dr Ashatu Kijaji who officiated at the listing event said she could not comment on the proposal until it’s officially tabled and determined by a task force.
“These incentives are not decided at the listing ceremony, but after receiving them then will know the way forward,” Dr Kijaji told the ‘Daily News’. “We are ready to work with DSE so as to foster the country’s development and make our market one of the leaders in the East African Community bloc,” she said.
Capital Markets and Securities Authority (CMSA) acting Chief Executive Officer, Nicodemus Mkama said they have approved 15 corporate bonds and 11 have since matured and fully paid. “This shows that the bond issuers are credible corporate and adhere to laid down principles and regulations,” Mr Mkama said.
Mr Mkama said the TMRC bond becomes a first such type of corporate securities in the region that is asset backup. DSE data shows that the sizeof the equity market which started operations in 1998 accounts for 21 per cent of GDP while for debt securities, include treasury bonds, stands at 9.0 per cent.
The bourse attributed the GDP ratio to conducive regulatory regime and fiscal incentives put in place by the government. DSE CEO Moremi Marwa said the current total outstanding bonds was 9.468tri/- where Treasury securities contributing almost 99 per cent of the total value of listed bonds, the rest being corporate bonds.
Mr Marwa said in CEO Quarterly Note that there was a significant increase in bonds trading turnover to 423bn/- at a face value of 449bn/- in quarter two (Q2), compared to bonds transactions of 375bn/- at a face value of 405bn/- that traded in Q1.
But in Q2 the bonds worth 654bn/- were listed during the quarter, which was relatively lower compared to bonds worth 972bn/- that were listed during in Q1.