Demutualization of Tanzania’s Dar es Salaam Stock Exchange (www.dse.co.tz) is to be driven by a National Demutualization Committee (NDC), under the guidance of the Capital Markets and Securities Authority (www.cmsa-tz.org).The exchange is to start looking for a consultancy firm to develop the demutualization strategy, according to a report in the Tanzania Daily News (www.dailynews.co.tz).
Demutualization would probably involve turning the exchange from being a members’ association into a profit-seeking company, which could itself be listed, and would have a range of shareholders. This could increase accountability and responsibility as well as the ability to raise capital for investment. In some cases, demutualization means the exchange no longer has a monopoly.
The paper reports DSE Chief Executive Officer Gabriel Kitua as saying the process is expected to take 12 months, after the consultant hands over the draft of demutualization strategy: “The procurement of the consultancy firm is at initial stage, once approved, we consider demutualised process will take about 12 months.” He said the timing is good and could lead to further integration as other stock exchanges in the East African Community are also transforming themselves. “At a proper time, these private sector institutions may decide to come together and form one regional exchange.”
The NDC committee has already been given the terms of reference. Its members are from the CMSA, DSE, Treasury, Bank of Tanzania, and Attorney General’s office. The CMSA CEO, Dr Fraten Mboya, said under the old structure it was the members (usually the stockbrokers) of the DSE that had rights of ownership, decision-making and trading. According to the Daily News, he said: “(The change will) establish a more flexible governance structure that fosters decisive action in response to changes in the business environment.. For example, it will push the DSE to make efforts necessary for generation of adequate products in the market.”