For portfolio investors, the opportunities are gradually emerging in Tanzania, East Africa’s fastest-growing nation, according to Stuart Theobald, Chairman of Intellidex and Imara Africa Advisors Contributing Analyst.

“Portfolio investment will gradually evolve alongside the growth of the economy as a whole, but patient investors might benefit from staking out the territory now,” he said.

“With several years of 7%-ish growth behind it, Tanzania is set to deliver several more years of the same. That makes it an attractive investment destination,” he added. 

The Dar es Salaam stock exchange was established in 1996 as part of the nation’s move from a centrally planned economy. 

Several privatisations have seen formally state-owned companies list, alongside local banks and some larger industrial companies. 

Several government bonds are also listed with maturities of two to 15 years. 

The exchange has a market capitalisation of TZ$29bn though trade is thin, with a market turnover of less than 4% per year. 

Foreign interest was brisk until the currency weakness in 2015 and the elections and foreign volumes have not yet recovered. 

“Several initiatives are intended to help grow the capital market including the requirement for the country’s telecoms companies to list on the exchange, which was first required in legislation in 2010 but deadlines have been extended several times. The biggest are Vodacom, Airtel and Tigo,” he said. 

He added that pension fund reform is also intended to stimulate trading activity.

“The large public sector pension funds are currently managed by internal teams though regulations have been promulgated to require them to appoint outside managers,” he said.

“The current investment strategies are heavily biased toward government paper and property, so it is widely expected that when the regulations are enforced there will be a major liquidity injection into the exchange. Legislation requires pension funds to have a minimum 20% equity allocation, but this has been largely ignored,” he added.

According to Theobald, these developments have the potential to dovetail with the requirement for private capital to invest alongside government in industrialisation and infrastructure across the economy. 

“Tanzania’s ultimate ambition of becoming a middle income country by 2025 is expected to drive major development of its capital markets. For foreign investors, there are many opportunities to invest alongside government in projects or directly into other business opportunities in the country,” he said.