Currently, Dar es Salaam stock exchange market has listed 17 companies. Ten of the listed companies are Tanzanian and beside Africa Barrick Gold the remaining are Kenyan companies. The market has being expanding and growing modestly since its inception in 1998. DSE is working on introducing a parallel exchange market for small companies which will likely spur more business.
Although DSE has being in existence for many years now(decade plus) most of the indigenous have not been benefiting from the opportunities it has come up with. This may be attributed to lower understanding of the benefits the market may bring to the economy and livelihoods of many.Investment in stocks and fixed income securities have being mainly left to financial institutions, social security funds and few high net worth individuals.
Individuals, business persons, entrepreneurs, employees and SMEs have much to benefit through Dar es Salaam Stock Exchange(DSE). I am briefly going to explain how each part may benefit from this institution and business.
Individuals/Employees:
Individuals can have a plan of building investment portfolio through buying their stocks on Dar es Salaam Stock exchange. With as much as TZS50,000 you can buy shares at DSE. This being the case you can buy shares of listed companies on a monthly basis. In the long run(at least 5 years) consistently following your investment/saving strategy you will build a formidable portfolio. Through consultancy from your investment adviser you can build a strong portfolio.
Alternatively, one can invest in collective investment schemes which invest in Listed stocks, example Umoja Fund and other schemes which are managed by professionals who have experience in dealing with risk and exposed to more information.
How do you buy shares? Shares of listed companies are sold through agents called Stock brokers. For DSE there are Eight registered and authorized stockbrokers. If you go on DSE web page you will find the list of brokers and partners. You choose a broker from the list and you start arranging with your choice broker on the amount of shares you want to purchase and price willing to pay for a share. Brokers will charge you some commission and will buy for you the amount of shares you requested.
Business persons/Entrepreneurs:
To this group of people DSE presents an avenue for them to diversify their investments. Relying on your business 100% is risky even though its doing well. Instead of re-investing all your earnings in the same business you can diversify by buying other businesses out there which have good prospect and well managed. This is an alternative way of building an investment portfolio that is independent of your businesses. Good news! Some financial institutions recognize investment in stock markets and they can offer you a loan based on your share certificates. These institutions discount value of your stocks to about 80% and they give you equivalent amount of cash/loan.
Strategic investment in stocks provide an avenue for business persons and Entrepreneurs to build independent assets from their daily businesses. This mitigate the risk of rely on one business.
SMEs:
Dar es Salaam stock exchange presents a spectacular opportunities to SMEs. One is, Opportunity to raise much needed capital/financing. Through sale of shares or issue of bonds SMEs Can raise capital from local and international investors. Preferably, raising capital through sale of shares mobilizes less expensive capital.
Second is an opportunity for entrepreneurs to be rewarded through selling part of their ownership at better market prices contrary to private deals. Third, enhancing of company profile.Listed companies attract best talents therefore listing your company makes it a target for the best personnel.These are just few benefits that DSE presents to the Small and Medium Enterprises.
Consulting professional investors, advisers and investment consultants is prerequisite before investing in stocks. Discuss your investment strategy with a knowledgeable person before investing in stocks. Over time, say three years you will have build some knowledge and skills which may strengthen your investment skills.Investment strategies differ from different group of investors therefore your adviser will help you come up with suitable strategy.
By Emmanuel Akyoo
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