Pro-growth budget

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THE government has hiked taxes on beers, cigarettes and gambling machines and increased road and fuel tolls to raise additional revenue and promote growth.

Presenting government budget estimates for 2023/24 financial year in the National Assembly on Thursday, the Minister for Finance and Planning, Dr Mwigulu Nchemba said road and fuel tolls would be increased by 100/- per each litre of petrol and diesel and the funds obtained will be channeled for strategic projects.

He said excise duty on beers and tobacco products would be increased by 20 per cent and duty rates for non-petroleum products would be increased by 10 per cent.

The minister said the government intends to raise Value Added Tax (VAT) registration threshold from 100m/- to 200m/- and gradually increase it to 500m/- to enhance administrative efficiency and promote voluntary tax compliance.

He said the government would also extend Value Added Tax (VAT) exemption on sale and lease of aircraft, aircraft engine or parts by a local operator of air transportation.

The government also intends to introduce an excise duty rate of 30 per cent to cigarettes and other tobacco products including water tobacco, electronic cigarettes, vape products and shisha and increase excise duty rate on imported energy drinks from 589.05 to 600/- per litre.

The Finance Minister said the government intends to introduce excise duty at the rate of 20 per cent on imported and domestically manufactured gambling machines and increase gaming levy from 10,000/- to 30,000/- per slot machine in bar sites (clubs/places selling liquor).

It has also planned to reduce the tax rate from 25 per cent to 18 per cent on gross gaming revenue (GGR) for Forty Machines Site operations.

Other measures will be to introduce excise duty at the rate of 20/- per kilogram of imported and domestically manufactured cement.

The government also plans to introduce an excise duty rate of 5 per cent on electric motor vehicles, with engine capacity of more than 1000cc.

Looking to promote local businesses, the government has proposed that regulatory authorities will from 1st July, 2023 be prohibited from suspending business operations due to violation of various legislations.

And as part of measures to promote local manufactures the government plans to exempt Value Added Tax (VAT) on inputs used to manufacture insecticides and acaricides, the minister said.

The government plans VAT deferment on domestically manufactured capital goods in the list of capital goods that qualify for deferment, he said.

According to Dr Nchemba the government will zero rate Value Added Tax (VAT) on textiles products manufactured using domestically produced cotton for a period of one year.

It also plans to exempt Value Added Tax on supply of precious metals, gemstones and other precious stones at buying centres, mineral markets and Gem houses designated by the Mining Commission under the Mining Act or refinery situated in Mainland Tanzania.

The government has increased expenditure by 7.0 per cent to 44.39tri/- in the next financial year, up from 41.48 in the current financial year to shore up the economy against the fallout of the war in Ukraine and the continued aftermath of the coronavirus pandemic.

The lion’’s share of the budget would be financed by domestic revenue estimated to reach 31.38tri/- or about 70.7 per cent of the total budget.

Other sources will be grants and concessional loans from development partners estimated to reach about 5.47tri/- or 12.3 per cent of the total budget.

The government also expects to borrow 2.10tri/- from non-concessional sources for the purpose of accelerating implementation of development projects.

DSE records substantial market turnover in May

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DAR ES SALAAM Stock Exchange (DSE) has recorded a significant activity after equity market turnover increased by 113 per cent last month, thanks to dividend payments.

Exodus Advisory, a Monthly Market Report, said the equity turnover increased from 4.36bn/- in April to 9.25bn/- last month.

“This primarily resulted from stock demand spurred by release of earnings and payment of dividends,” the report released on Tuesday said.

Despite the turnover increase, the total market capitalisation declined by 2.4 per cent to 15.19tri/- by end of last month while domestic market capitalisation went down by 0.81 per cent.

“This resulted from fall in share prices after the stocks began trading post corporate actions,” the report said.

Similar to the market cap performance, all share index (DSEI) declined from 1,867.18 to 1,821.99 points while the Tanzania Share Index (TSI) decreased by 0.81 per cent.

“This indicates that both local and cross listed counters recorded a negative performance in the period,” the Exodus Advisory report showed.

Locally, TCCL recorded the highest share appreciation of 69 per cent followed by DSE (6 per cent), NMB (4 per cent) and TPCC (0.5 per cent). On the other hand, CRDB recorded the lowest performance falling by 14.81 per cent followed by Jatu 8.62 per cent.

In general, Exodus said, the domestic market has observed a decline as a result of corporate actions undertaken by prominent domestic companies.

“Consequently, it is anticipated that dividend investors will opt to either divest or maintain their positions for the foreseeable future,” it noted.

Additionally, the bourse shows that the banking sector recorded the lowest performance to push down the banking sector index by 4.1 per cent. Commercial services followed with a drop of 0.19 per cent.

“The majority of the counter prices have declined post ex dividend trading date. As such, the market is expected to shift towards fixed income market,” the report painted the future outcome.

However, Industrial and Allied recorded a positive performance growing by 0.91 per cent.

During the month under review, Vodacom Tanzania released their preliminary annual results showing huge turnaround recording a profit of 44.55bn/-.

“This is a significant growth from the loss recorded in the preceding year”.

Overall, the shilling depreciated against the US dollars moving from 2,324/97 as at end of April to 2,330/75 at the end of last month.

BoT insists foreign exchange reserves sufficient

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BANK of Tanzania (BoT) has said the country is experiencing shortages of US dollars, the dominant currency in international transactions but insisted that there was no cause for alarm, as the level of reserves was sufficient to cover four months of imports.

BoT Director of Economic Research and Policy, Dr Suleiman Missango told editors in Dar es Salaam yesterday that the stock of foreign exchange reserves declined to 4,881.2 million US dollars at the end of April 2023, from 5,461.4 million US dollars in the similar period in 2022.

Despite the decline, reserves remained adequate, covering 4.4 months of projected imports of goods and services, in line with the country benchmark of at least four months.

“There is a decline in foreign exchanges reserves in the country, however, that is not a crisis, as the level of reserves remains sufficient to cover four months of imports,” insisted Dr Missango.

Dr Missango said much as Tanzania’s external sector continued to be affected by cumulative effects of global shocks, particularly the war between Ukraine and Russia, Covid-19 and climate change, which largely impacted the global commodity prices, the country is grappling with the situation by instituting various measures.

He said that the available stock of foreign exchange which 4.9 billion US dollars is being used prudently to cope with the global dollar scarcity.

He added that BoT is selling 2 million US dollars to local banks every day, in efforts to curb the deficit of US dollars in the market. He said from January 2022 to May 2023, the BoT has traded a total of 376 million US dollars through Inter-Bank Foreign Exchange Market (IFEM).

Another measure initiated by the BoT is that of purchasing gold from the government for its reserve and has so far acquired 418 kilogrammes of the precious metal. Gold reserves have always been an important part of the diversification of global reserves for countries

He said since the move was introduced, BoT has been purchased gold worth 280 million US dollars annually, equivalent to six (6) tonnes as part of the measures to swell the foreign exchange reserve capacity.

He further said that BoT has moved to issue licence to at least 88 Bureau de change in various part of the country to increase the level of forex domestically.

Dr Missango further said that the prices of petroleum products is declining, which is one of the supporting measures being taken by the BoT to reduce use of dollars in transactions.

However, Dr Missango maintained that the situation will recover soon, especially during the tourism peak season — July to September, as well as market season for traditional cash crops, which will pump into the country more dollars.

He also said that BoT will continue to strictly manage foreign exchange reserves, to meet the objectives of the financial markets.

“The objectives of the financial markets are to ensure that the Bank preserves capital, meet liquidity needs and enhances income given the viability of the market environment,” he said.

Recently, the BoT announced strengthened measures of controlling forex exchange in the country, with experts considering it as a part of efforts to curb the deficit of US dollars in the market.

The measures that according to the BoT Governor Emmanuel Tutuba came to effect from May 1st this year, include the mandatory use of interbank foreign exchange for transaction that exceeds 1 million US dollars

The government has also restricted trading of foreign exchange with international foreign currency brokers, who are not licensed in Tanzania.

“All foreign exchange transactions exceeding 1 million US dollars per transaction in the retail market shall at all-time be traded within the interbank foreign exchange market prevailing quoted prices,” he said.

The governor also instructed that transactions of a single customer in a day shall be summed up for the purpose of determining the amount.

According to him, at all times, foreign exchange dealers are required to strictly observe the procedures for Know Your Customer (KYC) in their undertakings, while the limit for the foreign exchange Net Open Position (NOP) shall be ten per cent of Core Capital and has to be observed at all times.

All Letters of Credit (LCs) for transit cargoes shall be funded by foreign exchange mobilised from respective destination countries.

DSE trading activities slow down

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Equity market

TRADING activities on the Dar es Salaam Stock Exchange (DSE) registered reduced activities for the trading week ending June 2nd. The total turnover for the week reached TZS 921.11 million, marking a decrease of 81.23 per cent compared to the previous week.

The overall market exhibited mixed sentiments, resulting in growth in the total market capitalisation and slightly fall in the domestic market capitalisation.

Among the top trading counters for the week were TCC, CRDB and NMB, dominating the market with 51.03 per cent, 17.88 per cent and 13.90 per cent of the total market turnover, respectively.

Notably, pre-arranged deals involving 78,340 TCC shares were executed at an average price of TZS 6,000 per share, significantly contributing to the overall turnover for the week.

During the week, two counters experienced price gains. NMB led the gainers with a notable increase of 4.6 per cent, closing at TZS 3,640 per share. SWISS also observed a gain of 2.67 per cent per share, finishing the week at TZS 1,540 per share.

On the losing side, TCCL backtracked by 9.47 per cent ending the week at TZS 1,720 per share, CRDB continues to decline as its shares trade ex-div falling by 8 per cent to reach TZS 460 per share. DCB lost 2.7 per cent closing the week off at TZS 180 per share.

In terms of market capitalization, the total market capitalization rose by 0.16 per cent to TZS 15,193.38 billion, while the domestic market capitalisation decreased by 0.31 per cent, reaching TZS 10,901.61 billion by the end of the week.

  • All Share Index (DSEI) closed at 1,821.99 points increasing by 0.16 per cent.
  • Tanzania Share Index (TSI) closed at 4,120.50 points decreasing by 0.31 per cent.

 BoT issues directives on foreign exchange operations

The Bank of Tanzania (BOT) released a directive on foreign exchange operations in the country last week. The directive requires transactions exceeding USD 1,000,000 must be conducted through banks at prevailing market prices. Transactions by a single customer in a day will be aggregated to determine this amount.

The directive also restricts trading with unregistered international currency traders and requires currency dealers to follow procedures for recording customer information. Additionally, all Letters of Credit (LCs) for transit cargoes must be funded using foreign exchange obtained from the respective destination countries

Impact:

The intervention aims to cushion effects of foreign exchange supply constraints. As much as the current forex tightness within the region are structural, policy intervention will give a breathing room for the market.

 BoT shift Yetu Plc assets to NMB.

The Bank of Tanzania has transferred the assets and liabilities of Yetu Microfinance Bank to NMB Bank. Yetu was suspended from trading on the Dar es salaam Stock Exchange after it was placed under the administration of the Central Bank last December to determine the best resolution to its regulatory challenges. Depositors and other creditors of Yetu Microfinance will be advised in due course how and when they will commence accessing banking services through NMB.

Impact:

The regulatory measures undertaken by the Central bank has shown their efforts to protect the interests of depositors and creditors and maintain confidence in the banking sector given its importance to the financial market. Since, creditors and depositors have more priority on the company’s net assets than the shareholders, we are yet to see the fate of the shareholders of the company.

 BoT releases Monetary Policy Committee Statement

The Monetary Policy Committee (MPC) meeting was held on 22nd May 2023 and the MPC noted with satisfaction the sustained implementation of a less accommodative monetary policy that succeeded in containing inflation within the target while ensuring an adequate supply of liquidity. Given the domestic and global economic conditions, the MPC approved the Bank of Tanzania to sustain the implementation of less accommodative monetary policy in May and June 2023.

Primary Market

On Wednesday 31st May 2023, the Central Bank was in the market offering TZS 103.41 billion to investors for a new 10-Year Treasury bond offering a 10.25 per cent coupon rate annually.

The auction was subscribed by 37.1 per cent – the auction received bids totaling TZS 38.36 billion and accepted bids worth TZS 34.54 billion.

The weighted average yield to maturity climbed 16.72 basis points relative to the previous auction held in early February this year from 11.0548 per cent to 11.222 per cent. Yields have edged higher over the last four auctions gaining 76.73 basis points from the average yield in September 2022. Moreover, the price floor has been lowered to 92 from 97 over the same period. This continues to reflect lessened monetary policy accommodation by the central bank to maintain inflation within the target.

Despite the price floor currently standing at 92, which is the lowest as compared to all other tenures, the 10-yr bond still receives low subscription since most investors have more preference for longer tenures such as the 20-yr and 25-yr maturities which have relatively higher average yields thus driving more demand in those tenures.

Secondary Market

Market activities fell relative to the preceding week, however still registering above average weekly trades. Total turnover for the trading week concluding on June 2 fell by 46.97 per cent, falling from TZS 181.52 billion in the previous week to TZS 96.24 billion. Equally, the number of trades decreased from 48 trades in the previous trading week to 47 trades.

The majority of the traded securities had longer tenures, particularly focusing on the on-the-run 20-year and 25-year bonds issued this year, which accounted for a substantial 73.96 per cent of the total trading volume.

On the other hand, corporate bond activities were slightly elevated, registering a total of two trades with aggregate notional value of TZS 45 million traded at average prices of 92.5.

Looking ahead, we anticipate that secondary trading activities will continue to remain elevated in the forthcoming weeks as we reach the end of Quarter 2.

During the week benchmark indices recorded a mixed trend breaking previous weeks uptrend. Tanzania Share Index (TSI) decreased by 0.31 per cent to close the week at 4,120.50 points from 4,133.41 points while the All-share index (DSEI) increased by 0.16 per cent to close the week at 1,821.99 points from 1,819.11 points. We expect the TSI to further shed a few points in the coming weeks as counters such as NMB exercise their book closure.

However generally prevailing market sentiment is characterised by optimism, with AGM’s hosted last week cemented investors’ confidence in companies as they communicated their positive strategies to investors.

Looking at the year-to-date performance, the market capitalisation of the Dar es Salaam Stock Exchange (DSE) has experienced a decline of 3.2 percent, primarily driven by the devaluation of cross-listed stocks.

However, the domestic market capitalisation has shown consistent growth, recording a 6 percent increase since the beginning of the year.

Sh1.4 billion approved for Swissport shareholders

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Dar es Salaam. Shareholders of Swissport Tanzania Plc will receive a Sh1.4 billion dividend as the ground handling firm’s profit rises. This translates into a Sh41.8 dividend per share.

The firm’s CEO, Mrisho Yassin, said the company’s profit before tax rose to Sh3.9 billion in 2022 from Sh2 billion in the preceding year.

The company resumed payment of dividends last year, when Sh1 billion was shared.

In 2020, the company recorded a loss for the first time due to Covid-19 outbreak.

He said the company’s revenue has been growing due to the improved efficiency of its handling operations and promised that it will increase investment in the procurement of modern equipment.

Mr Yassin said the company will also continue to recruit professionals and increase storage facilities at airports of operations in order to create more jobs for citizens.

Currently, he said, Swissport Tanzania has 800 workers, 500 more as compared to 300 employees at the commencement of operations.

An investor and stock exchange stakeholder, Mr Mnanka Winani, said post Covid-19 operations have revived tourism and handled freight, therefore improving the market.

“Swissport Tanzania PLC should increase awareness about the operation of stock shares and make close follow-ups about investments and reports that will increase efficiency,” he said during the company’s AGM. During the meeting, different agenda items were deliberated, including approving the 2022 financial statement.

Swissport Tanzania Plc is a subsidiary of Swissport International Ltd, a leading ground and cargo handling services provider in Tanzania.

The company operates at Julius Nyerere and Kilimanjaro International Airports and was previously known as the Dar es Salaam Airport Handling Company (Dahaco).

It started operating at the Julius Nyerere International Airport (JNIA) on October 1, 1985, and extended operations to the Kilimanjaro International Airport (Kia) in October 1990.

In 2000, Swissport International Ltd acquired 51 percent of the shares of Swissport Tanzania (then Dahaco) to become the majority shareholder of Swissport Tanzania.

The remaining 49 percent of the company’s shares are held by the public through the Dar es Salaam Stock Exchange (DSE).

NMB shareholders to pocket 143.1bn/- dividend

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NMB Bank has raised its dividend payout to shareholders to a record of 286/- per share this year up from 196/- last year as interest income boosted earnings in the year ended last December.

Owners of one of the country’s top lender unanimously declared the new cash bonus on Friday during the 23rd Annual General Meeting (AGM) of one of the top three most profitable banks in the EAC bloc.

Chief Executive Officer Ms Ruth Zaipuna said after improving its Cost-to-Income Ratio (CIR) to 42 per cent in 2022 against the previous rate of 46 per cent, NMB Bank has now joined the ranks of the most efficient banks in sub-Saharan Africa.

The approved dividend will be cashed on or about June 14, 2023.

Announcing its approval at a press conference in Dar es Salaam at the weekend after the AGM, Ms Zaipuna said 2022 was the best year ever for the bank where each share earned an additional 93/- over the 193bn/- that was paid last year to mark yet another milestone in the 25 years history of the bank as several other financial performance records we set during the year.

“Year 2022 was a historic year and the most successful for the bank. Building on our strength and the remarkable journey we began 25 years ago, NMB Bank posted the best operating results in its history,” she pointed out.

The record numbers include 1.19tri/- total income, the 429bn/- post tax profit and total assets that jumped to 10.2tri/-.

Ms Zaipuna attributed the monumental achievements to the interplay between disciplined strategy execution and the delivery of financial and non-financial objectives.

She said the outstanding profitability outturn was mostly driven by surge in interest income, which rose following increased lending activities.

Non-funded operations also played a pivotal role as use of the bank’s alternative service channels maintained growth momentum.

Other factors she pointed out for the 2022 triumphs were containment of bad loans and taming operational costs.

Whereas the loans impairment charge dropped 28 per cent from 113bn/- to 81bn/-, operating expenses slightly went up by nine per cent but against a 21 per cent growth in revenue.

“Increase in our net interest income was a result of not increasing the lending interest rates but due to increased loaning activities.

The non-interest income also went up 31 per cent,” Ms Zaipuna noted.

Overall, the bank continued to record strong balance sheet growth, supported by healthy funding and capital positions.

Its loan book during the year was up by 29 per cent at 6tri/- from the 2021 level of 4.6tri/-.

The deposits base was likewise higher, ballooning by 14 per cent to 7.6tri/- from 6.6tri/-.

As a result of strong balance sheet momentum, total assets grew by 18 per cent from 8.7tri/-, surpassing the 10tri/- mark for the first time.

The assets quality was also bettered significantly with the risk of losses from borrowers defaults continuing to decrease as the non-performing loans ratio improved to three percent from 3.6 per cent.

“In 2022, we did not only post good results and continue making profitability history but also paid the requisite taxes to the government and continued to touch the lives of people through social investments,” NMB Board Chair Dr Edwin Mhede said.

 

TBL’s pre-arranged deal boosts DSE turnover by Sh4.7 billion

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Dar es Salaam. Turnover at the Dar es Salaam Stock Exchange (DSE) rose by 23 percent last week, thanks to a Sh4.7 billion pre-arranged deal by foreign investors at the Tanzania Breweries Ltd counters.

With the deal, the turnover jumped to Sh4.9 billion from the preceding week’s Sh3.9 billion.

The deal saw TBL accounting for 96.6 percent market share of last week’s trading activities as Twiga Cement and CRDB Bank Plc held 1.49 percent and 0.76 percent of the market turnover, respectively.

Experts anticipate a forthcoming shift in investor preferences towards fixed-income securities as several counters enter the ex-dividend period.


Last week the market also experienced bullish movements as two counters experienced price gains.
Self-listed DSE led the gainers with a notable increase of 5.56 percent, closing at Sh1, 900 per share. Twiga Cement observed a gain of 0.49 percent per share, finishing the week at Sh4, 120 per share.

Analysis by Vertex International Securities Ltd showed that in the secondary market, the investor’s activities continue to surge surpassing Sh100 billion.

The weekly outlook by the brokerage firm showed that there were a total of 48 deals from the Treasury Bond segment last week, recording a turnover of Sh191.63 billion.

Most Turnovers were contributed by the 20-Year Treasury Bond recording 62.08 percent of the market turnover, followed by the 25-Year Bond recording 23.13 percent, and the 10-Year Bond 10.98 percent.

Tanzanians in the Diaspora to get special status by December

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Dar es Salaam. Tanzania is set to complete the process of instituting special status for its citizens living in the Diaspora by the end of 2023.

Winding up debate on her docket’s Sh247.9 billion budget for 2023/24, Foreign Affairs and East African Cooperation minister Stergomena Tax told Parliament the government recognises the role of Tanzanians in diaspora and that it will complete the process of granting them special status (Tanzania Non-Citizen Diaspora) by December.

“Diaspora made 10 recommendations that have been considered and will be included in the special status arrangement, but in the endorsements, there was no suggestion of divine rights,” she said.

Dr Tax added that what the diaspora wanted was to be able to enter the country, own land and access financial services, all of which have been considered in the proposed special status framework.

Presenting the budget earlier, she told the House that the move was among the ministry’s plans for 2023/24 that are meant enable the Tanzanian diaspora to fully contribute to the country’s development.

Dr Tax noted that the diaspora should play a greater role in the country’s economic undertakings as the government strives to create an enabling environment for this endeavour.

“The ministry compiled the views of various stakeholders inside and outside the country, including from the diaspora. The views have classified issues that should be considered in the special status arrangement,” she said.

Unlike its regional peers Kenya and Uganda, Tanzania has yet to allow dual citizenship, a matter that emerged again in Parliament yesterday.

Legislators were divided on the issue when debating the ministry’s budget.

Prof Palamagamba Kabudi (Mvomero-CCM) said the relevant issue in the country currently is special status and asked the ministry to finalise the matter to help the diaspora.

“Now, this is better than what we keep debating, which is the issue of dual citizenship. This dual citizenship matter has no framework in this country, but it also has no agenda elsewhere in the world and so we should hold on to special status and push it forward,” he said.

Prof Kabudi added that his research shows that only 49 percent of countries in the world embrace dual citizenship.

Prof Kitila Mkumbo (Ubungo-CCM) said what they were fighting for was not someone else coming to apply for Tanzanian citizenship, but rather they were concerned about Tanzanians losing their divine right.

He said studies show that one of the ways to resolve jobs the jobs crisis academics are facing is to prepare people to become citizens of the world so that they can find jobs by removing obstacles.

“If it comes to dual citizenship or special status, it is not a problem for me. The big issue is how do we protect the rights of our people who go to look for opportunities in other countries,” said Prof Mkumbo.

Ms Fakharia Shomari (Special Seats-CCM) said it is still too early for Tanzania to allow dual citizenship and the country should continue to consider special status because it provides everything the diaspora needs.

In response, Dr Tax noted that the issue of dual citizenship is still open to debate in Tanzania and beyond.

She said President Samia Suluhu Hassan has strived to make sure that the diaspora who are in foreign countries and who Tanzanians are by birth get their rights and emphasised the process of granting them special status.

“If you grant dual citizenship right now when there is no national and international framework, there are those who may miss out on the opportunities that we hope to provide,” she warned.

According to Dr Tax, diaspora’s remittances and investments in the economic and social sectors in the country have continued to increase.

In the period from January to December 2022, diaspora invested about Sh4.4 billion in the purchase of houses and plots through National Housing Corporation, Orange Tanzania Ltd (Hamidu City Park), and KC Land Development Plan Consultant Ltd.

The investment is equivalent to an increase of Sh2.2 billion invested in the period from January to December 2021.

In another development, Dr Tax said that the assessment of the ministry’s foreign affairs policy has identified new areas that need to be included in the policy and brought up new strategies for the implementation of the policy, to match the current and future environment including emphasis on economic diplomacy.

The Sh247.9 billion Parliament approved for the Ministry of Foreign Affairs East African Cooperation’s recurrent and development expenditure is significantly higher than the Sh208.3 billion allocated for the current financial year.

T-bills prices keep plunging in nine months

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Treasury bills’ minimum successful bids and weighted average prices have been decreasing consecutively in the last nine months throughout the year.

The bills’ prices on average have dropped from their highest of 99/84 in the auction held last August to 99/67 in the auction held on the third day of May.

Tanzania Securities’ Treasury Bills Analysis report issued yesterday showed that the last five auctions recorded the same price of 99/67.

“Investing in Treasury bills may not make sense, especially for individual investors seeking higher yields and optimum long-term growth.”

However Treasury bills are considered low-risk investments offering competitive yields compared to other similarly safe investments, such as bank savings accounts, the Tanzania Securities report said.

The 364 bill offers yields of 7.22 per cent.

However, the report said, the bills are crucial and valid to institutional investors such as banks and insurance companies for liquidity purposes.

On the other hand, the T-bills weighted average yields have improved from their lowest value of 1.68per cent recorded last August to 3.45per cent at the last auction.

Additionally, unlike other bills, the 364 days T-bill has the highest investor appetite among the four T-bills because it is the most transacted.

“The T-bill has been transacted in all the past 23 auctions and with it being oversubscribed in most of the auctions.

“The yield trend of the 364-day bill has been increasing throughout the year,” the report said.

The 364 days T-bill yields have improved from 3.3 per cent reported on the auction that occurred last May to the all-time high of 7.2 per cent recorded on the auction conducted in mid-January.

Also, unlike other T-bills, the weighted average price of 364-day is always higher than the minimum successful bid because of the large number of bids at different prices.

The 182-day T-bill’s weighted average yield keeps on increasing while prices drop. The bill recorded the highest price of 99/16 with the lowest yield of 1.7per cent in the auction held last May. On February 8, the bill recorded the highest yield of 5.23 per cent with the lowest price of 97/46. On the last traded auction, the bill recorded a yield of 5.4 per cent with a price of 97/38.

“The 91-day T-bill has a similar characteristic to that of the 35-day bill in that both minimum successful bids and weighted average prices have been decreasing throughout the year,” the analysis said.

The weighted average prices of 91 days have dropped from the highest of 99/41 recorded last June to 99/20 recorded on the last auction.

While the weighted yield also improved from 2.4 per cent to the highest of 4.0 per cent recorded on the last auction.

Additionally, the 35 days T-bill minimum successful bids and weighted average prices have been decreasing throughout the year.

Prices have dropped from their highest of 99/84 in the auction held last August to 99/67 in the auction held on May 3, which was similar to the prices of the last five auctions.

However, the 35-day weighted average yields have improved from their lowest value of 1.68 per cent recorded last August to 3.45 per cent at the last auction.

The 364-day Treasury bill is the most transacted security, transacted in all 23 auctions, followed by the 182-day, which was transacted in 15 out of 24 auctions and the 91-day was transacted in 11 auctions, the same as 35-day T-bills.

 

DSE returns to bull ran

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Activities on the Dar es Salaam Stock Exchange (DSE) increased for the second week running.

Turnover for the week amounted to 3.9bn/-, an increase of 48.20 per cent from the previous week. General market was in bullish mode leading to an increase in both total and domestic market capitalisation.

The top three trading counters within the week were, TBL, CRDB, and NMB, dominating the market with 57.44 per cent, 27.42 per cent, and 10.41 per cent of the overall market turnover, respectively.

Four counters registered price gains within the week, Simba Cement (TCCL) leading the gainers as the Scancem acquisition seems imminent.

Simba cement registered 28.38 per cent gain within the week closing at 1,900/- per share, SWISS gained 6.49 per cent per week ending the week at 1,640/-. NICO as well registering a 2.5 per cent gain within the week closing at 410/- per share, lastly CRDB registered a 2.04 per cent increase within the week to close at 500/- per share

On the loser’s side, DCB Bank dropped by 2.63 per cent closing off the week at 185/- per share.

Total market capitalisation increased by 2.12 per cent to 15.151tri/- and domestic market capitalisation increased by 0.52 per cent closing at 10.934tri/-.

Key benchmark indices

  • All Share Index (DSEI) closed at 1,816.97 points increasing by 2.12 per cent.
  • Tanzania Share Index (TSI) closed at 4,133.050 points increasing by 0.52 per cent.

Sector Indices

  • Industrial and Allied Index (IA) closed at 5,128.51 points, up by 0.46 per cent.
  • Bank, Finance and Investment Index closed at 4,029.69 points, up by 0.82 per cent.
  • Commercial Services Index closed at 2,161.21 points, down by 0.20 per cent.

Highlights: Debt Market

Primary market

On Wednesday 17th May 2023, the central bank was in the market offering 103bn/- to investors for a new 5-year Treasury bond offering an 8.6 per cent coupon rate annually.

This auction was catered for investors with more preference for medium-term papers.

The auction was subscribed by 46.17 per cent – the auction received bids totalling 47.55bn/- and accepted bids worth 44.15bn/-.

The weighted average yield to maturity has gone up by 17.87 basis points relative to the previous auction held on January 4th 2023 from 9.6670 per cent to 9.8457 per cent.

Average yields have been on an upward trend over the last four auctions gaining 90.77 basis points from the average yield in May 2022. Moreover, the price floor has reached 92.4 from 96.5 in the same period.

This continues to reflect lessened monetary policy accommodation by the central bank to taper inflation.

This 5-year Treasury bond had been undersubscribed, as were the previous two 5-year auctions. This reflects investor’s current appetite for long tenures such as the 25-year Treasury bond due to its higher cash flow appeal.

Additionally, the recent increased stock market activity can also explain the low auction subscription as higher-risk investors’ shift to equities.

Secondary market

Market activities were elevated during the week, the overall turnover for the trading week ending May 19 increased by 114 per cent from 61.68bn/-registered in the previous week to 132.34bn/-.

Moreover, number of trades increased from 45 trades recorded in the previous trading week to 58 trades.

Overall tenures traded were predominately on the long end of the of the yield curve, the on-the-run 20-year T-bond accounting for 45.33 per cent of the traded volume.

There was a fixed income trade during the week involving a NMB corporate bond with a notional value of 6.0m/- and an average price of 85/94.  We expect secondary trading activities to remain elevated in the coming weeks.

Inflation

Inflation rate drops to 4.3 per cent after slightly going down by 0.4 percentage points in April, after the prices of some food and non-food items slightly declined.

The national bureau of statistics (NBS) statement on Wednesday showed that inflation dropped to 4.3 per cent from 4.7 per cent in March.

Impact

The decline in the inflation rate might be a positive sign that the government’s efforts to contain and maintain the inflation rate are working. This creates favourable conditions for investment for both international and domestic investors.

Outlook

Domestically, we understand equities strategies for 2023 should be focused on companies with solid fundamentals, which will show more growth. From a macro-economic perspective, low inflation and resilient cost pressures will be key drivers to compliment the quality of Tanzania equities. Given the strong growth environment in the companies are expected to increase top line and bottom-line growth relative to FY 2022.

In the short-term we might see slight volatility in the weeks ahead as companies begin to exercise their corporate actions.