Municipalities close to issuing bonds at the Dar es Salaam Stock Exchange

Dar es Salaam — The Dar es Salaam Stock Exchange (DSE) is planning to sign a contract with a consultant who will conduct a study on new products including the municipal bonds.

The assessment will also cover investing in fixed income securities.

This will include the issuance of municipal bonds.

This has come at a time when the Ilala Municipal Council has said that it has started the process of inviting investors to finance a number of its grand projects through the bonds.

The DSE manager for market research and development, Mr Ibrahim Mshindo, told BusinessWeek that under its plan a number of projects were implemented successfully.

He said the projects are being funded by the World Bank in the Prime Minister's Office through the Private Sector Competitive Programme.

He said two projects were being implemented. They include M Akiba micro-saving bond and the introduction of new products.

According to him, the projects will be presided with a study to determine whether they were feasible or not.

"The new products mostly aim to increase financial inclusion in the country through enabling both local and foreign investors to invest in government bonds."

The new products will be derived from existing products through shares and bonds (DSE traditional products) performed through the exchange traded fund, index products and collective investment schemes.

"When municipal councils start accessing loans through municipal bonds they will reduce their dependence on the Central Bank financing their projects," he said.

However he was not read to say when they process will actually take off as they were still in the initial stages.

He however noted that there were still a long way in making the municipal bonds accessible especially as there was still lack of awareness, low capacity of local authorities to fit in the capital markets framework and financial laws governing the authorities which have proved restrictive in matters of borrowing.

Ilala municipal economist Rogasian Feda said funds would be borrowed through bonds to modernise Kisutu, Karume, Ilala and Buguruni markets, bus stands and even municipal houses.

"The Kisutu Market project is being run in collaboration with the Tanzania Investment Bank and we expect to finalise the process soon as we await the approval of the minister in charge as we have sought a permit for us to access the loan," he said.

According to him, the law is clear that they cannot seek for loans without the approval of the minister.

He also said project proposals were being prepared to modernise Ilala, Karume and Buguruni markets.

Talks are going on with TIB before embarking on further action for the projects.

Talks are also going on with the National Social Security Fund and a Malaysian company to undertake another project at Mchikichini, where skyscrapers will be built.

"We also have plans to modernise the Kisutu bus stand," he said.

Proposals are being prepared to modernize the Vingunguti abattoir and the Kibasila area. The municipality is waiting for investors to undertake the project.

Mr Feda said the municipality was also planning to refurbish Ukonga municipal quarters.

Moreover, a zoo will be built at Chanika to attract tourists - local and foreign.