Tanzania civil servants to buy shares in private firms
What you need to know:
The President’s Office has issued a circular to government agencies, local and regional administrations, instructing them to facilitate civil servants’ access to credit so that they can buy the shares at the DSE.
Tanzania is banking on civil servants to increase liquidity at the Dar es Salaam Stock Exchange through purchase of shares, with a hectic schedule of listings expected from telcos and mining companies complying with the law to sell at least a quarter of their shares to the public.
The President’s Office has issued a circular to government agencies, local and regional administrations, instructing them to facilitate civil servants’ access to credit so that they can buy the shares at the DSE.
The circular released last month, specifically targeted Vodacom Tanzania, which is due to start trading on the bourse after its initial public offering (IPO) closed on May 11.
The initial deadline was extended by three weeks after a slow start caused in part by delays by the government in releasing funds to civil servants to buy the shares.
Besides credit, the government, also intends to allow civil servants to buy shares against their $20.8 million in salaries and allowances arrears.
Abdul Njaidi, public relations officer at the Public Service Pension Fund (PSPF), said that the Fund had received the circular and is working on modalities of lending money to its members to buy shares.
Vodacom is a test case of the prudence of the government’s directive to several companies to list within a short time on an bourse suffering liquidity challenges.
Other telcos preparing to list are Zantel, a subsidiary of Etisalat, the Tanzania Telecommunications Company Ltd (TTCL), Vietel Tanzania Ltd, which is trading as Halotel and MIC Tanzania Ltd trading as Tigo.
Mining firms are also slated for mandatory listing, and they have to initiate listing arrangement as of August this year, but they are not mentioned in the circular. It is unclear whether the incentive will be extended to all IPOs, and Tanzanians who work in the private sector. Civil servants constitute only five per cent of Tanzania’s population.
Sources said there would be programmes to empower all local investors especially when the government offloads its shares in some businesses in future.
Acacia Mining, Anglogold Ashanti and Petra Diamond are also expected to float at least 30 per cent of their shares at the DSE under the mandatory listing.
In February this year, Vodacom Tanzania Plc, a subsidiary of Johannesburg-based operation of the UK’s Vodafone Group Plc, is offered Tsh476 billion ($213 million) worth of shares in the mobile operator after the Tanzanian government ordered all telecommunications companies in the country to sell at least a 25 per cent stake on the Dar es Salaam exchange to boost domestic ownership.
The offer expired on April 20, but the telco requested for extension to May 11 to give room for more investors involvement.
