Recently, Mr Moremi Marwa completed his nine-year tenure as chief executive officer of the Dar es Salaam Stock Exchange (DSE). During the period, the number of listed firms grew from 15 to 28.
In this interview with The Citizen reporter Josephine Christopher, Mr Marwa narrates about his nine-year journey at the helm of the stock market leadership. Read on:
What was your vision for the DSE and the capital markets when you joined as CEO in 2013?
ANSWER: The vision was to make the bourse a sustainable securities exchange that is also an engine for economic growth by enabling mobilisation of financial resources for long-term public and private projects and enterprises, by promoting inclusive economic empowerment and enabling more financial inclusion.
Can you confidently say you have achieved that vision by the time you left office in May, 2022?
We did put the best of our efforts towards that direction, and this is an ongoing activity. In the past nine years, we achieved a number of milestones that made us move a needle in what exchanges are created to achieve.
We managed to establish the Enterprise Growth Market (in 2013) for the inclusion of SMEs and start-ups in the capital markets, enabling them access capital via capital markets platform. We then demutualised the Exchange (in 2016) in order to enhance its governance mechanisms.
We established the Mobile Trading Platform which aligned to the nation’s policy on financial inclusion. We also achieved full membership to the World Federation of Exchanges and a Frontier Market Status – a classification by the global rating and classification FTSE Russell – this aimed at enhancing our profile and visibility to global investors, as we know the exchange is one of the windows for attracting global portfolio capital into our country.
As a result of these, we increased the investor base from about 250,000 in 2013 to about 600,000 by end of Q1, 2022; increased the number of equity listed companies from 15 to 28; the domestic market capitalisation increased from Sh3.5 trillion in 2013 to Sh10.5 trillion as of Q1, 2022; outstanding listed bonds from Sh5 trillion in 2013 to Sh15 trillion in Q1, 2022; the liquidity has increased from the annual average turnover of Sh50 billion per annum prior to 2013 into the average of over Sh400 billion of equity turnover per annum, bonds trading turnover increased from the average of Sh300 billion per annum to over Sh2,500 billion currently.
During your tenure, what can you say are the biggest innovations in the market?
Apart from what I mentioned earlier as part of our vision we have also had some good innovations including the establishment of the DSE Scholar Investment Challenge – and edutainment platform for secondary and higher learning institutions about savings, investments and financial management, series of financial literacy campaign; the establishment of the DSE Enterprises Acceleration Programme (DEAP) and establishment of the DSE-ENDELEZA Programme – which is a platform for listing pre-IPO Private Enterprises so as to profile them for potential private investors; we have also created the rules and guidelines to enable listing of sustainable/sustainability financial instruments aligned to ESG (environmental, social and governance) factors – being among the few exchanges in the continent to achieve this milestone.
What are the biggest risks and opportunities to the equities market’s growth in Tanzania?
There are many opportunities in the equity market growth – this requires more financial awareness and proactive actions by the potential actors from both private and public sectors. Currently the ratio of market capitalisation to GDP is only about 10 percent; outstanding bonds listed to GDP ratio again at the level of 10 percent; there are a handful of corporate bonds listed.
The investors’ base of 600,000 investment accounts is still less than 1 percent of the domestic investable population. While there are many private enterprises and public projects with demands for alternative financing –there is also an opportunity to make better use of our capital markets to finance.
There is also an emerging opportunity in the area of sustainable finance, where there are investors who are willing to compromise their investment returns for the service of the greater good i.e., they are willing to accept lower investment returns as long as finances are aimed at addressing environmental, social and governance factors.
There is also an opportunity to enhance our capital markets ecosystem so that key institutions that would normally support a vibrant capital market could exist – institutions such as investment banks to underwrite capital markets transactions, or private equity and venture capital funds to provide pipeline of IPOs and listings, or market makers to provide liquidity and stabilise the markets during turbulence times, etc.
Is there any decision that you made at the DSE during your tenure which you now think you could do differently? If any, what is it and what was its impact?
For anyone in a similar position, one faces key decision points as part of their leadership journey – some of these decisions are operational and administrative in nature, some are strategic in nature and have long-term impacts.
These decisions are made in most cases based on the information available and using one’s imagination, intuitions, knowledge, and experiences – albeit within the aspects of teamwork and good governance mechanisms.
Some of these decisions may be contradictory, or not understood at the time or even not meeting stakeholders’ expectations. But my approach has been, if the decision is for addressing the right thing, coupled with serving the best interest of the institution then one’s conscience should be clear. Of course, the judgement will be deferred for the people – who may be positively or negatively impacted.
Which are the major policy and regulatory decisions that have defined your days at the helm of DSE and how did they (are they going to) impact the stock market?
The DSE legal/regulatory framework, conduct, and activities are governed by the DSE Rules – so, aligned to this: (i) We made major changes in 2013 to accommodate listing of SMEs and start-ups into the EGM segment as well as liberalization of the market to accommodate changes in foreign ownership to DSE Listed companies; (ii) We made further key changes in 2016 to accommodate for the demutualisation of the exchange, the establishment of the DSE’s wholly owned subsidiary (CSD and Registry Company Limited) – separating trading activities from settlement activities, and also amendment of trading rules related to the quantum of trades and their classifications as well as on computation of volume-weighted closing prices; and (iii) we also made another major changes in the DSE Rules in 2021/22 in order to, among others: introduce specific rules related to listing of companies emanating from extractive industries, listing of sustainability/sustainable financial instruments and listing and trading of special purpose vehicles and investment companies.
Based on the background of the past nine years, where do you see the DSE in the next five years or so?
The DSE strategy is aligned to the national policies and plans i.e., the Five Years Development Plan (FYDP III – 2021/22-2024/25); the Financial Sector Development Masterplan 2020-2030 and the National Financial Inclusion Framework.
Furthermore, the ongoing efforts to promote and encourage the use of stock market either for capital raising, and/or for investment activities will propel the DSE into further heights of progress where during this period we expect to see the increase in number listings – both on the equity side and debt side of the market -- which will enable more deepening of the market, it is envisaged that there will be an increase in the investor base, there will be listing of new products, there will be more liquidity and DSE will continue to live its vision of being a sustainable securities exchange that is also an engine for economic growth.
In the end it will enable enhanced mobilization of financial resources for long-term public and private projects and enterprises, promote inclusive economic development and enable further financial inclusion.