BoT issues new alert on dollar shortage

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ARUSHA: The Central Bank of Tanzania (BoT) warned Monday those who are holding foreign currency in secrecy, especially the US dollar, saying they are at risk of incurring huge losses.

Addressing a Working Session of Board Chairpersons and Chief Executives of Public Institutions, BoT Governor Mr. Emmanuel Tutuba, said Tanzania is implementing strategies to strengthen the availability of dollars, insisting that those stashing the global currency might be getting losses instead of profits.

“I urge you to return the money into the local market through proper channels. We will take legal action against all those who will be held using black market to complete their transactions,” the Governor said in Arusha.

Currently, Tutuba has said that the Government is getting US dollars through the usual procedure involving loans, aid, exports and that there is an increase in tourists who have also been contributing to the availability of dollars.

According to the Governor, the shortage of dollars is a global problem. It is a result of a decision by the US to halt the supply into the market as part of a monetary policy to control inflation.

The United States has planned such measures will remain active until next year. It hopes the measures would add the value of the dollar and reduce the inflation of the prices of goods and services in the US.

NMB gets banking sector best dividend remittance award

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ARUSHA: PRESIDENT Samia Suluhu Hassan has presented a special award to the NMB Bank in recognition of the financial institution’s outstanding performance and contribution into the government coffers.

The award was presented to the NMB Bank’s Chief Executive Officer Ruth Zaipuna in Arusha, during the working meeting of Board Chairpersons and Executives of the Public Enterprises and Government Agencies.

The NMB Bank paid dividends amounting to 45.5bn/- to the government as the financial institution’s contributions from realised profits in the previous fiscal year.

“I encourage the Office of the Treasury Registrar to ensure that all public institutions and government agencies record good performance enabling them to record profits and reduce dependency on state support,” she said.

The government owns 31.8 shares in the NMB Bank, which is the second biggest financial institution in the country.

Other banks that government owns shares are CRDB, Tanzania Commercial Bank (TCB), National Bank of Commerce (NBC) and Azania Bank.

NMB is one of the financial sector privatisation success stories initiated and executed during the third phase government under late President Benjamin Mkapa.

According to the Head of State, the government has invested over 73tri/- in the public enterprises and other state-run institutions and it was their expectation that the funds should yield massive returns in profits.

On his part, the Treasury Registrar, Nehemia Mchechu pointed out that there are ongoing reforms in the public institutions and that so far there are 28 such organisations that have weaned themselves off from government subsidies and have now started making profits.

“Just as we have come up with this ‘list of fame,’ for top performing institutions, we were also contemplating to compile another list of shame for non-performers in future but with the ongoing reforms we are confident that it won’t come to that,” he said.

More than 600 participants from nearly 250 public enterprises in the country are attending the strategic workshop in Arusha targeting to improve performances of parastatal entities in Tanzania.

Other awarded entities include Twiga Minerals Corporation, State Mining Company (STAMICO), National Insurance Company (NIC), Tanzania Ports Authority and Tanzania Communications Regulatory Authority (TCRA).

In crowning the event, the Prime Minister Kassim Majaliwa presented a special award to President Samia Suluhu in recognition of the Head of State contributions in the ongoing reforms for the public sectors

TBL Q2 profit up 42pc on strong beer, spirit sales

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TANZANIA Breweries Limited (TBL) has reported 42 per cent growth in net profit in the second quarter of this year boosted by significant increases in beer and spirit sales.

The oldest and largest brewing company in the country which is a local subsidiary of the world’s largest brewing company AB InBev, made 39.5bn/- profit after tax in the quarter ending in June up from 27.7bn/- obtained from a similar period last year.

According to financial statement for the second quarter of this year, the maker of Safari Lager, earned 301bn/- in revenue up from 260bn/- made in similar period last year, equivalent to 16 per cent increase.

The revenue increase has been attributed to growth across the beer and spirit categories driven by strong performance.

Shareholders of the Dar es Salaam Stock Exchange (DSE) listed brewing firm will be making more money with 43 per cent increase in basic earnings per share to 123/- in the second quarter of this year up from 86/- of the similar period last year.

Operating profit increased by 48 per cent driven by strong volume performance and an improvement in brand sales mix.

Selling and distribution costs were 27.8bn/- slightly lower than the second quarter of the previous year which reached 28.9bn/- due to what Managing Director, Jose Moran said “optimisation and efficiency in operations.”

Finance costs increased to 5.6bn/- from around 2.0bn/- in the second quarter last year due to the increase in foreign currencies exchange rate.

TBL has a controlling interest in Tanzania Distilleries Limited, Darbrew Limited and Kibo Breweries Limited.

It operates breweries in Dar es Salaam, Arusha, Mwanza and Mbeya, a distillery in Dar es Salaam and eight depots across the country.

VODA | Proposed acquisition of Smile Tanzania

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Long-term T-bonds show steep yield curve this year

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THE long-term Treasury bond yields have yo-yoed in the last three years though show a steep increase in the first seven months of this year.

The yields are expected to rise further as the government’s demand for public financing has significantly increased after the 2023/24 budget rose by 6.9 per cent to 44.4tri/-.

Tanzania Securities Limited (TSL)’s latest report ‘Treasury Bond Yield Trend Analysis’ released recently shows this year’s yields of all bonds have significantly increased compared to the previous years’ lead by 15, 20, and 25-year.

The report showed in the first seven months of the year the 15- year bond yield climbed to 11.96 per cent from 11.20 per cent, the 20-year bond yield rose from 12.23 per cent to 18.03 per cent while 25-year yield significantly increased from 12.76 per cent to 13.60 per cent.

“The rise is mainly due to the increase in the government’s demands for funds to finance the budget which pushed down the prices of bonds, along with an increase in investor’s appetite for the bonds,” the report said.

The bond price and yield trends, despite registering a positive outlook since the beginning of this year, they have fluctuated in 2021 while in 2022 were down.

It is shown in the report that in 2021, the primary market recorded higher bond yields throughout the year compared to 2020.

The 20-year bond closed the year at a yield of 15.41 per cent an increase from 15.39 per cent by January in 2021.

The report also showed the 15-year bond yield climbed slightly by 0.0004 points from 13.53 per cent to the highest 13.57 per cent; by June 2021, the bond yield further climbed by 13.61 per cent.

Additionally, the 25-year bond was auctioned on April 2021, with a yield of 16.34 per cent. The auction was oversubscribed by 279 per cent which demonstrated the appetite for longer-term securities. The auction registered a minimum price of 95/-, thus pushing yields to 16.34 per cent. Though at the end of the year its yields dropped to 15.49 per cent.

Moreover, in 2022 the bond market experienced a major drop in yields. The drop in yield was mainly due to the decline of coupon rates—interest rates.

The report showed by May 2022, 25-year bond yields declined to 12.36 per cent from 15.49 per cent at the beginning of the year, attributed to the decline of coupon rates from 15.95 per cent to 12.56 per cent.

The 20-year bond yield declined to 11.60 per cent due to a decline in interest rates that impacted the coupon rate from 15.49 per cent to 12.1 per cent. The bond’s yield climbed to reach 12.23 per cent at the end of the year.

On other hand, last June 2022 the 15-year bond yield declined to 11.27 per cent from 13.57 per cent in the previous year.

The decline was due to a drop in the interest rate, coupon rates, of the bond from 13.5 to 11.15 per cent.

The TSL report shows that at the late June 25-year bond auction, the successful bids, allotted, sum up to 276.78bn/- against 180bn/- that was offered. This pushed the minimum successful bid down to 90 and made yields climb to 13.56per cent.

BoT: Economy resilient despite global challenges

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Dar es Salaam. Although the global economy is exposed to tightened financial conditions, climate-related risks, ongoing war in Ukraine, and the cumulative effects of the Covid-19 pandemic, risks to the Tanzania’s economy remained moderate, a new report has shown.

The Financial Stability Report issued by the Bank of Tanzania (BoT) says the moderate risk was mainly on account of the sound macroeconomic environment, recovery of business activities and policy measures by the government.

The report says the risk to households and non-financial corporates was subdued mainly due to a rebound in business activities, increased household income, and eased credit conditions by banks.

“Further, risks to banking and non-banking sectors were moderate on account of adequate capital and liquidity to withstand potential shocks,” said the report.

The report show the global economy is projected to grow by 3.8 percent in 2023 owing to continued tight financial conditions, the War in Ukraine, and the cumulative effects of the Covid-19 pandemic. The performance of the domestic economy remained stable amid external shocks.

According to the report, the domestic economy grew 4.7 percent and 5.4 percent in 2022 for Tanzania Mainland and Zanzibar, respectively. The growth was partly contributed by the recovery of economic activities coupled with sustained public and private sector investments.

It also shows the economy was projected to grow at 5.2 percent and 7.2 percent in 2023 for Tanzania Mainland and Zanzibar, respectively, supported by improved business conditions, banking sector profitability, liquidity availability to fund business, and public investment in infrastructure.

Despite the positive outlook, says the report, the growth of the domestic economy remains exposed to tightening financial conditions, spillovers from the ongoing War in Ukraine, and climate-related risks.

Risks emanating from households decreased on account of increased disposable income.

The report further stated that in 2022, the domestic financial system remained resilient, sound, and stable amid challenges posed by the effects of the War in Ukraine, tight financial conditions, and the Covid-19 pandemic.

“The global financial system was vulnerable to risks arising from the War in Ukraine, climate change, and tighter financial conditions. During 2022, global growth slowed to 4.4 percent from 5.9 percent recorded in the preceding period, owing to supply-chain disruptions caused by the War in Ukraine, frequent resurgence of the Covid-19 pandemic, particularly in China and its cumulative effects, tightening financial conditions and climate-related constraints leading to high food and energy prices,” reads the report.

The sources of financing for non-financial corporates improved, reflecting a rebound in business activities.

The Non-Financial Corporate Survey revealed an increase in retained earnings in 2022 compared to 2021, supported by a recovery in business activities and an increase in domestic and foreign demand.

The performance of the non-financial corporate sector is attributed to the implementation of monetary policy, prudential measures, and improved business conditions from the adverse impact of the pandemic.

The increase in fuel and raw material prices and exchange rate pressure emanating from tight global financial conditions pose risks to firms’ financial conditions.

The banking sub-sector remained resilient with adequate capital, liquidity, and subdued credit risks.

The regulatory capital and liquidity ratios remained above the minimum requirements, despite a slight decline following the disbursement of new loans.

This is reflected by increased lending to the private sector, which grew by 22.5 percent due to a pick-up in business activities and policy and regulatory measures taken by BoT.

Further, credit risk declined, with NPL ratios dropping to 5.7 percent, mainly due to intensified credit recovery efforts, enhanced credit underwriting standards, and improved borrowers’ debt servicing capacity increasing profitability.

NHC to list bond on DSE as profit surges

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Dar es Salaam: THE National Housing Corporation (NHC) will for the first time in history list its bond on the stock market, with the company disclosing that it has recorded a significant rise in revenue and profit.

The company’s revenue soared to 257.5bn/- in the financial year 2021/22 up from 144.4bn/- in 2020/21, equivalent to 78.3 per cent rise. NHC saw its profit rising to 60.7bn/- up from 31.7bn/-, equivalent to a 91.5 per cent increase during the period.

“Within a period of one year we are going to issue the bond on the Dar es Salaam Stock Exchange, it will be known as Nyumbani Bond,” NHC Director General Hamad Abdallah revealed on Thursday in Dar es Salaam at a meeting with editors from different media houses.

The meeting was a continuation of meetings between public organisations and the editors organised by the Office of the Treasury Registrar with the aim of highlighting their activities and achievements.

Mr Abdallah stated that the NHC housing bond is now in the preparatory stages within the institution, whereby the first proposal was already presented to the NHC Board of Directors.

Elaborating on the factors for the rising revenue and profit, he said, the company managed to collect more revenue from its rented houses and through the sale of houses and commercial buildings.

Through the sales of residential and commercial buildings the company garnered a total of 121.95bn/- in the year 2021/22 up from only 29.3bn/- in 2020/21 which is a quadruple.

Again, the income from the rented buildings went up from 89.9bn/- in 2020/21 to 90.76bn/- in 2021/22.

In the meantime, the company collected 45.98bn/- in 2021/22 from engineering consultancy services, an amount which is above 25.6bn/- in the previous year.

“In three years consecutively, the corporation has been growing at a rate of 12 per cent.

Speaking over the ongoing projects, he explained that they are implementing an ambitious 466bn/- project dubbed ‘Samia Housing Scheme’ through which 5000 units will be erected in Dar es Salaam, Dodoma and other regions.

50 per cent of the houses will be built in Dar es Salaam, 20 per cent in Dodoma and the remaining 30 per cent in other regions.

In Dar es Salaam the scheme started in September 2022 at Kawe area, where 560 units are under construction.

“About 85 per cent of these houses have already been sold while the construction is currently ongoing,” NHC boss stated.

“We have named this scheme after Samia because these projects were stalled for some years and it is President Samia Suluhu Hassan who revived them.”

He pointed out that in Dodoma, the Samia Housing Scheme will kick off from next month where in the first phase 100 units will be constructed.

Mr Abdallah mentioned other grand projects which had stalled but have now resumed, including the Morocco Square project worth 137bn/-, which has been completed by 97 per cent.

“We have started getting tenants and buyers for houses at the Morocco Square grand project,” he stated, mentioning another grand project  called Kawe 711 and the Golden Premium Residence.

The Morocco Square, which consists of residential, shopping malls, office spaces and hotel, once it becomes operational, the company aims to collect 850m/- monthly, which roughly it will be collecting 9bn/- a year.

“We look forward to starting to get a return on investment after 12 years.”

Top 10 best performing stock markets in Africa

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Tanzania has been ranked number six as the top-performing African stock market that have displayed outstanding returns, captivating attention and admiration from the investment community.

This is according to the African Financials Research, based on data available up to June 2023.

With Up to 1.7 per cent, Tanzania along with BRVM Cote d’Ivoire have admirably held their ground, both showcasing a modest 1.7 per cent increase in US dollar returns.

These markets have exuded resilience amidst regional economic challenges, earning the utmost respect of the investment community.

According to the report, which has been published by the Business Insider Africa, ranks Malawi highest in the continent (up 67.6 per cent) with an awe-inspiring surge of 67.6 percent in US dollars, Malawi’s stock market has emerged as a force to be reckoned with, displaying unparalleled resilience and potential.

Despite its relatively modest size, Malawi’s economic prowess has astounded investors, drawing shrewd minds in search of promising prospects.

Namibia (Up 18.1%) Namibia’s stock market has proven to be a stalwart performer, boasting an impressive 18.1% increase in US dollar returns. Revered for its stable economic conditions, Namibia has quickly become a favoured destination for investors seeking reliable growth avenues.

Zambia (Up 15.5%) Amidst the tumultuous economic landscape, Zambia’s stock market has demonstrated unwavering mettle, soaring with a robust 15.5% gain in US dollar terms. Endowed with abundant copper resources, Zambia has captivated investors who envision long-term prosperity in the country.

Seychelles and Uganda (Up 3.7%) Both Seychelles and Uganda have stood their ground, recording a commendable 3.7% increase in US dollar returns. These nations have exhibited remarkable resilience, inspiring trust and confidence among investors amidst uncertain times.

Ghana (up 3.0 per cent) Nimbly navigating through the storm, Ghana’s stock market charts a steady course, delivering a 3.0 per cent gain in US dollar returns. Bolstered by a diversified economy and investor-friendly policies, Ghana continues to beckon discerning investors with its enticing potential.

 

Reasons behind rise in UTT-AMIS asset value

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Dar es Salaam. In a remarkable display of financial prowess, the Unit Trust Tanzania Asset Management and Investor Services (UTT-AMIS) has witnessed a staggering surge in Assets Under Management (AUM) over the past four years of over 429 percent.

The level of assets managed by the trust has improved from Sh290 billion recorded in 2019 to a staggering Sh1.535 trillion by the end of June 30, 2023.

The improvement in assets signals that Tanzanians are now aware of the various profitable investment avenues at their disposal. It also suggests that the assets were being managed profitably, thus yielding steady returns to investors, who include those in retirement, students, and those conducting various small-scale income-generating activities.

UTT-AMIS’ managing director, Mr Simon Migangala, said yesterday that the meteoric rise in the assets under management can be attributed to several strategic initiatives that have effectively propelled the company’s growth trajectory.

Apart from the government’s pro-business approach, which has injected a new zeal of reliability into Tanzania’s dealings with investors, the rise was also a result of UTT-AMIS’ seamless integration of digital technology into its investment services.

“By integrating mobile phones and banking channels, UTT AMIS has managed to reach a broader audience, making the investment process more accessible, efficient, and user-friendly,” he said during a meeting with journalists yesterday. The meeting was part of an initiative by the Treasury Registrar, Mr Nehamia Mchechu, to ensure that the institutions under his docket do come out to tell Tanzanians how their various institutions have been performing during the past few years.

And according to Mr Migangala, the current asset value was also above the initial projections, where the institution expected to collect Sh485 billion in five years (by ‘2024). “One pivotal move that has significantly influenced this outstanding growth is the reduction of the minimum initial investment amount to Sh100,000. This strategic decision has opened doors for a more extensive demographic of investors, encouraging individuals from all walks of life to participate in collective investment schemes,” he said.

He exuded confidence that if the current pro-business policies, spearheaded by President Samia Suluhu Hassan, are maintained, UTT-AMIS will achieve even more going forward.

“In short, investors are very positive with the government’s policies and we hope to do even better going forward,” he said, adding that most of the assets have been realised during the past two years.

For instance, as of June 2021, the assets stood at Sh619.6 billion, but they rose to Sh996.8 billion as of June 2022 before rising further to Sh1.536 trillion as of June 2023.

For his part, the head of marketing and public relations, Mr Daudi Mbaga, said UTT AMIS has actively contributed to the rise of awareness concerning financial market investments.

He said that through financial education and investor empowerment, the company has conducted outreach campaigns to enhance financial literacy among Tanzanians, especially young adults in schools.

“We provide a safe haven for people who want to invest with purpose. We inject the funds into safe investment options, which in turn ensure lucrative earnings for the investors,” he said.

One of the key goals for the UTT AMIS, he said, is to assist investors in accessing investment opportunities in financial markets, and this is being done to foster financial inclusion and economic development.

UTT AMIS makes historic growth in two years

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THE UTT AMIS fund size has recorded historic growth of 184.94 per cent to 1.53tri/- in two years of President Samia Suluhu Hassan reign-a move which has been attributed to improved investors’ confidence in the financial markets.

The government established the collective schemes to help investors particularly micro, small scale access financial markets to ultimately boost financial inclusion and economic empowerment.

The 27 months of President Dr Samia in power witnessed the Fund growing to 1.53tri/- in June this year from 539.0bn/- in March 2021, which is an increase of 996.3bn/-.

The UTT AMIS Managing Director Simon Migangala said in Dar es Salaam yesterday that the outstanding performance signifies hefty returns to investors’ mostly micro and small scale as well as increased dividend to the government.

“We have witnessed huge improvement in investment environment that created investors’ confidence in the financial markets thus attracting more investors,” he said.

He added, “The way President Samia is creating investors’ confidence in the financial markets is contributing greatly in the growth of the collective investment schemes.”

Mr Migangala said the outstanding performance in just two years of President Samia makes UTT AMIS the fastest growing collective investment scheme in East Africa region.

Apart from the improvement of investors’ climate, he said the Fund has invested heavily on technology that helped to reach more people.

“For example, with the mobile phone, an individual can open account and start investing in the collective investment schemes,” he said.

With technology, he added, the Fund has managed to bridge the geographical barrier reaching out urban and rural people accessing and benefitting from it.

He said also that the Fund is partnering with banks like NMB, CRDB, NBC through which investors can access and take advantage of various schemes and services.

The deployment of technology has helped to increase the number of investors to over 300,000 investing in a wide range of the Fund’s schemes and services.

Currently, UTT AMIS has seven schemes and services namely Umoja Fund, Wekeza Maisha Fund, Watoto Fund, Jikimu Fund, Liquid Fund, Bond Fund and Wealth Management Service.

Apart from providing huge investment avenue for small scale investors to participate and benefit from money markets, he said the Fund is also paying dividend to the government.

The UTT AMIS Director of Marketing Mr Daudi Mbaga said the Fund is currently covering six regions and the expansion is being implemented gradually.

He however, said the use of technology and partnership with banks has helped to cover almost the whole country to reach out all potential investors.

He said further that the Fund has been using many other platforms like exhibitions including those for farmers, entrepreneurs, innovators to provide education on the usefulness of the collective investment schemes.

The various initiatives have contributed significantly to the growth of the collective investment schemes.

For example, in 48 months from July 2019 to May this year assets increased by 1.24tri/- equivalent to 428.31 per cent.

In five years from 2009 to 2014, assets increased by 113bn/- which is an average annual growth of 22.6bn/-.

The UTT was established under the Trustee Incorporation Act, Cap 318 and was vested with the several key activities including the development of collective investment schemes, acquiring and keeping in trust the shares of privatised enterprises and encouraging savings culture through wide participation in the ownership of distributed shares/units.

The UTT was very successful in launching unit trust schemes since five collective investment schemes were launched attracting over 90,000 investors from all over the country.

Over time UTT grew in size with total funds under management of over 120bn/- as at 30 June 2013 and further diversified into other activities in projects management and microfinance businesses.

Based on advice of stakeholders and the Treasury Registrar and approval of the Minister for Finance, the Unit Trust of Tanzania (UTT) was restructured into three organisations.

The objective of the restructuring was to enable each of the key businesses to focus on their activities and services so as to contribute more to increasing of government revenue and promote development of the country.