By Felix Andrew
LOCAL authorities in Tanzania have been insisted to use municipal bonds to raise capital that would help the government’ plans towards industrial motive.
Speaking to Azania Post in an exclusive interview, the Business Analyst at Dar es Salaam Stock Exchange (DSE), Aziz Msuya, said most municipals in Tanzania have not yet utilized the exchange for raising capital.
According to him, already Tanzania has put in place a mechanism that enables municipals to raise capital, but most of them have not make it.
Asked whether the municipals bonds play a role in economic development particularly industrialization , he said it has come at a right time.
“I think municipals bond are extremely crucial if Tanzania is going to reach its industrialization targets”, he said.
However it was reported that the bourse had initiated talks with the two municipalities to raise capital through the bourse.
“We have begun talks with those municipalities so as to enable them to raise capital through our bourse in order to execute various development projects within their areas,”, the DSE Chief Executive Officer Moremi Marwa was quoted as saying.
He said the time had come for municipalities intending to implement economic projects to raise capital through the stock market.
“It is our hope that, once the two municipalities succeed in raising capital through bond issuance, more will come up, hence speeding up economic growth,” he noted.
According to Capital Markets and Securities Authority (CMSA), only three municipalities stood a chance of raising funds through the bourse — namely Mbeya, Arusha and Dar.
The CMSA initiated and supported the idea of municipalities fundraising from the public for their development projects through issuance of bonds.
Bonds were an important supplementary revenue source for councils since most of them cannot raise money through the stock exchange.
Feasibility studies by CMSA in many municipalities revealed that many of them needed to improve their financial status but a dire lack of good governance was their bane.
South Africa and Nigeria are the only countries in sub-Saharan Africa where municipalities have raised funding in the debt market, with Zambia became the third when its capital, Lusaka, offered bonds few years ago.