The Dar es Salaam Stock Exchange (DSE) in Tanzania has started a set of new reforms to make the market more attractive to foreign investors, improve transparency, and bring the stock exchange operations in line with international standards. These new changes are expected to help boost investor confidence, especially among foreign institutional investors who often want clear, well-regulated and reliable markets before bringing in their money.
One of the key changes is the introduction of fixed trading hours. The DSE will now open every day at exactly 9:00 a.m. and close at 4:00 p.m. The new timetable also includes different phases such as a pre-opening session, auction period, and continuous trading hours. This is part of an effort to make the Tanzanian capital market look more like those in developed countries where trading times are clearly defined. The idea is that foreign investors who are used to structured operations will feel more comfortable participating in the DSE.
Another important reform is the introduction of the Volume Weighted Average Price (VWAP) as the official closing price of shares. Before now, the last traded price of a share was used to determine the closing price for the day. But this system had weaknesses that allowed for possible price manipulation, especially towards the end of the trading day. With VWAP, the DSE will now calculate the closing price by taking the average of all trades throughout the day, with heavier weight placed on bigger transactions. This makes it harder for any single player to influence prices and makes the closing price more accurate and trustworthy.
The DSE has also changed the rules for what counts as a block trade. Previously, several smaller trades could be grouped together to qualify as a block trade. But under the new rules, a block trade must be a single transaction of not less than Tanzanian Shillings 250 million involving just one buyer and one seller. This move is aimed at pushing more trading activity through the regular market platform, instead of behind-the-scenes deals. By tightening the rules, the DSE hopes to improve the visibility and transparency of big transactions in the market.
In another move to promote investor safety and proper identification, the DSE now requires all Tanzanian citizens who want to trade on the exchange to provide their National Identification Number (NIN) from the National Identification Authority (Nida). This new requirement is meant to strengthen investor verification and ensure only genuine participants are allowed in the market. This is similar to Know Your Customer (KYC) rules followed in banking and other financial sectors globally.
According to officials at the Dar es Salaam Stock Exchange, these reforms are part of a wider strategy to strengthen Tanzania’s capital markets, attract more foreign direct investment, and support the country’s broader economic development goals. The DSE says it wants to position itself as a top destination for frontier market investors, who are often looking for high growth potential in developing economies like Tanzania.
Industry observers believe these steps could be a game-changer. In the past, some investors have stayed away from the Tanzanian stock market due to complaints about lack of transparency, unclear pricing mechanisms, and regulatory delays. But with these changes, the DSE is sending a strong message that it is ready to meet global standards and create a fair playing field for both local and foreign investors.
The Chief Executive Officer of DSE, Moremi Marwa, had earlier noted that foreign investors play an important role in increasing liquidity and market depth. He added that with the new reforms in place, the exchange expects to see more participation from offshore institutions, which will not only bring in more money but also encourage better corporate governance among listed companies.
The DSE reforms are also expected to work in line with the government’s financial inclusion policy and the wider regional goal of integrating East African capital markets. With countries like Kenya and Rwanda also making similar upgrades to their exchanges, Tanzania’s latest move could help it stay competitive in the region.
These policy changes are coming at a time when emerging and frontier markets are seeking to recover from the effects of COVID-19 and global inflation. Improving the rules and structures in capital markets is seen as a smart way to build investor trust, increase local participation, and attract much-needed capital for long-term development.
