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.

 

VODA – Dividend Declaration

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VODA – Taarifa ya Gawio

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Twiga cement registers 10pc pre-tax profit increase

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THE Tanzania Portland Cement Plc (Twiga) has posted a pre-tax increase of 10.2 per cent in this year’s first half, thanks to production cost control measures.

The oldest cement manufacturer in the country’s financial statement shows that the pre-tax profit increased to 72.02bn/- in the first six months of the year from 65.3bn/- raked in a similar period last year.

Twiga Chairman, Mr Hakaan Gurdal said in a published statement yesterday that despite the cement demand growing slowly this year, the company will continue delivering strong operation results, aiming higher in the future.

“Despite the cement demand growing slowly this year, we are optimistic about the second half of the year, Twiga will continue to work on improving efficiency and operating performance,” the chairman said.

Additionally, the Dar es Salaam-based cement firm posted a net profit increase of 6.3 per cent to 50bn/- compared to the 47.05bn/- of the first six months last year.

The listed firm on Dar es Salaam Stock Exchange (DSE) also said the profitability was attributed, not only to cost-cutting measures but also increase in revenue. Twiga was trading 4,120/- by yesterday-noon.

The statement showed that the revenue went up by 8.0 per cent to 246.28bn/- from 227.51bn/-, however over half was chewed up by the cost of sales.

“This increase is mainly due to the process improvement and cost control in our production. The company has experienced a rather stable growth of sales volume and revenue compared to the same period in 2022,” Mr Gurdal said.

During the period under the review, Twiga over tripled the net gain from foreign currency translation to 3.97bn/- from 1.05bn/-.

“On top of the operational excellence, the company continued to improve in the area of health and safety, with zero loss of time to injury recorded in 2023,” the chairman said.

Twiga is one of the large cement manufacturers in the country, producing three brands of Portland cement -Twiga Ordinary, Twiga Plus+ and Twiga Extra.  The first bag of cement was produced in 1966 and in 2014, the factory expanded and increased its manufacturing capacity to 2,000,000 tonnes per year.

DSE Invitation

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Key Insights – FinScope Tanzania 2023

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FinScope Tanzania is a comprehensive financial sector demand-side survey of Tanzanian adults aged 16 years and above. It provides an understanding of the financial services uptake landscape across the country and is a reliable measure for demand and usage of financial services across various population segments. Further, FinScope Tanzania’s insights clearly present barriers and levers to financial inclusion. The survey oversight is a a public-private sector collaboration – spearheaded by the Ministry of Finance and Planning Tanzania and Zanzibar and Bank of Tanzania, the Financial Sector Deepening Tanzania (FSDT), National Bureau of Statistics (NBS) and the Office of Chief Government Statistician Zanzibar (OCGS).

FinScope Tanzania 2023 is the fifth wave in the FinScope Tanzania series with previous waves in 2006, 2009, 2013 and 2017.

Click here for one pager Key Insights Report

BoT issues licence to new payment service firm

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By The Citizen Reporter

Dar es Salaam. The Bank of Tanzania (BoT) has permitted an African digital payments provider, DPO Pay, to operate as a Payment Service Provider in Tanzania, the company said in a statement yesterday.

The DPO is registered locally under One Payment Tanzania Limited.

The company has been licensed in line with the National Payment System Act, 2015 which requires all Payment Service Providers (PSPs) to undergo a rigorous license application process to provide payment services in Tanzania.

DPO Pay managing director, Judy Waruiru said the license highlight the firm’s commitment to compliance and regulatory standards.

“This milestone demonstrates our dedication to driving financial inclusion and economic growth in Tanzania, empowering businesses of all sizes to thrive in the digital era.

“We will continue to prioritise the security of transactions, adhering to stringent data protection protocols and industry best practices,” Ms Waruiru said in the statement.

DPO Pay says it has been operating successfully throughout Africa since 2006 and was recently acquired by Network International, a leading enabler of digital commerce across the Middle East and Africa (MEA) region.

 It has worked closely with regulators across the continent to obtain new licenses as requirements vary in each country to ensure secure and uninterrupted services for its merchants and partners.

DPO Pay has gained significant recognition and trust among prestigious business in various industries including hotels and resorts in Arusha, Dar es Salaam and Zanzibar, where it has extensive experience in the travel and tourism sector.

The company, the statement said, has established itself as the preferred payment solution for major merchants in the region, including industries such as Airlines, Hotels, online retailers and logistic companies.

With a firm focus on expanding its network, DPO Pay continues to seek collaboration with top-tier businesses and brands, and cater to the diverse needs of merchants across various industries.

The company’s robust security systems ensure that merchants and consumers can transact with confidence, safeguarding their sensitive information and maintaining the highest standards of integrity. With the recently updated DPO Pay Mobile app, merchants are able to collect and receive payments anywhere and anytime.

DPO Pay provides efficient payment solutions enabling businesses and individuals across the continent to accept both local and international payment options.

It has developed integrated payments technology to support businesses of all sizes in over 20 countries and accept payments securely and swiftly in multiple currencies and through diverse payment methods including cards, mobile money, bank transfers, USSD, and EFT.

Analysts say financial results will drive DSE activities

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By Daily News Reporter

THE turnover of the Dar es Salaam Stock Exchange (DSE) is projected to increase in the coming weeks as companies start to release their quarter two financials.

The investors are banking on the firms’ good performance to make their next move to place investments where they will maximise their returns.

Vertex International Securities said in its weekly market review that it projected the turnover and volume to increase in the coming week, pushed by counters with stellar performance.

“We expect an increase in turnover and volume next week as financial counters such as NICO may drive up market activities, following the release of strong financial results,” Vertex said.

Last week trading activity decreased by 30.29 per cent to 550.72m/-, despite some counters to register price appreciations.

DCB Bank, according to Zan Securities market wrap up report, led the way with a remarkable surge of 7.14 per cent, closing at 150/- per share. SWISS followed after recording a 6.67 per cent increase to close last week at 1,600/- per share. NICO experienced a 5.56 per cent increase to 475/- per share. TPCC saw a 3.0 per cent increase to 4,120/-.

“Looking ahead,” Zan report said, “we anticipate heightened market activities in the upcoming weeks, as companies prepare to release their second-quarter financial reports. This is expected to generate increased interest and trading in the market.”

The banking sector saw an increase of 0.07 per cent where the Bank, Finance, and Investment Index closed at 3,932.18 points, while the industry and allied sector showed an increase of 0.30 per cent at 5,122.32 points and commercial services closed at 2,159.53 points which shows an increase of 0.20 per cent.

Both the All Share Index and the Tanzania Share Index (TSI) increased by 0.55 per cent and 0.21 per cent, respectively.

“These changes were primarily driven by an increase in prices of cross-listed shares and domestic counter prices,” Exodus Advisory’s weekly capital market report said.

On a quarterly basis, DSE saw positive developments during the second quarter of this year in terms of increased activities and market value of listed securities.

“The market saw a net positive growth on its domestic listings, while the total capitalization, which includes cross-listings from Nairobi, took a hit as the DSE continues to outperform the region,” Alpha Capital said in its weekly financial market digest.

The Tanzania Share Index (TSI), which exclusively represents domestic listed equities, slightly went up by 0.25 points to 4,091.81 points despite companies closing the quarter deep into ex-dividend periods. The growth is equivalent to 0.09 per cent of the domestic market capitalisation while the major movers of the first quarter saw a drop in prices in the second quarter.

Is it worth putting investments in DSE?

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Is it a worthwhile investment to put money into the Dar es Salaam Stock Exchange?

Judging from the performance of different stocks on the exchange and the performance of unit trusts that include equity stocks, one can confidently answer, YES, it is indeed worth it.

Upon reviewing the past six months, we can observe several stocks that have shown exceptional performance.

Leading the pack is Tanga Cement, which has experienced a remarkable increase of 64 per cent. This surge is attributed to investors speculating on the company’s potential acquisition by Scancem International DA, a subsidiary of Heidelberg Cement AG, which already owns Tanzania Portland Cement Plc (Twiga Cement).

Despite Tanga Cement’s recent financial report indicating a significant loss of 22bn/- last year, this hasn’t deterred investors who are eager to acquire its shares in the hope of selling them later at a profit.

It’s important to note that the impressive growth of Tanga Cement is primarily driven by investor sentiment and behaviour, rather than the company’s underlying fundamentals.

NICOL, a closed-ended fund listed on the DSE, has also experienced a remarkable year. In the past six months, its share price has risen by 38 per cent. The main driving force behind this impressive performance is the fund’s strong fundamentals and exceptional portfolio.

Last year, NICOL witnessed a substantial increase in total investment income, soaring by 46 per cent to 8.3bn/-. The primary contributor to this growth was dividend income, accounting for 64 per cent of the total.

Notably, NICOL’s equity holdings in NMB resulted in a significant dividend payment of 5.1bn/-, representing 60 per cent of the company’s total income and an impressive 96 per cent of its dividend income.

Interest income also experienced a notable increase, rising by 36 per cent to 2.99bn/-. The majority of this revenue came from holdings in 20-year government bonds, which contributed 71 per cent of the interest income.

Additional sources of interest income included 25-year bonds, fixed deposits, and interest on normal bank balances.

NICOL’s total assets underwent substantial growth, increasing by a significant 70 per cent to 127.6bn/-. This growth was mainly attributed to an expansion in government bond holdings.

The company recently diversified its portfolio by increasing its government bond investments, resulting in a twofold rise in bond holdings from 15bn/- in 2021 to 35bn/- last year. Despite this growth, equity holdings still make up the majority of NICOL’s portfolio, accounting for 65 per cent of total assets.

A closer examination reveals that NICOL’s equity portfolio is heavily concentrated in its NMB holdings, constituting nearly 93 per cent of the company’s equity investment portfolio.

This implies that investors holding NICOL shares indirectly hold NMB shares at a discounted rate. In fact, when considering both equity and bond holdings, NMB holdings account for 60 per cent of NICOL’s total investment portfolio.

Consequently, NICOL’s share price should ideally trade at a minimum of 60 per cent of NMB’s price, with a range of 1,700/- to 2,000/- per share.

In addition to NMB, NICOL’s equity investment portfolio includes TPCC, Swissport, Tanga Cement, CRDB, DSE, TBL, Vodacom, and TCC. However, the company has recently shifted its focus and diversified into government bonds, with a particular emphasis on 20 and 25-year bonds.

As of now, NICOL’s net asset value stands at 1,687/-, while its share price trades at 475/-, indicating that the stock is trading at a discount.

Among the notable performers in the past six months were the banking stocks CRDB and NMB, which both saw gains of 19 per cent and 15 per cent respectively.

In the service sector, Swissport stood out as the top performer with a 14 per cent increase in its share price. Additionally, Swissport successfully paid dividends for two consecutive years after failing to do so in the previous two years.

The self-listed DSE experienced an 8.2 per cent increase, and Twiga Cement also saw a positive growth of 8.1 per cent in the past six months.

However, it’s important to highlight that not all counters had a successful first half of this year. Maendeleo Bank experienced a decline of 11 per cent, JATU dropped by 9.0 per cent, DCB Bank decreased by 7.0 per cent, TOL declined by 6.0 per cent, and TICL saw a decrease of 3.2 per cent.

Turning to collective investment schemes, JIKIMU emerged as the top-performing fund in the last six months, with a gain of 10.4 per cent. The fund boasts a diversified portfolio consisting of both stocks and bonds. Wekeza followed closely with an 8.8 per cent increase. This fund operates as a life insurance scheme. Other notable performers included Watoto Fund (+7.5 per cent), Umoja (+6.7 per cent), Bond Fund (+6.1 per cent), and Liquid Fund (+5.6 per cent).