Tanzania: New move on purchases of shares in EAC region

The governors of the central banks of the East African Community partner states are working on modalities of enabling the citizens of the five countries to buy shares in public and private companies operating in the region.

East African Co-operation deputy minister Dr Abdallah Abdallah told The Guardian news paper yesterday that Tanzanians remain barred from buying shares in external stock exchange markets “for security reasons”.

Up till now, Tanzanian nationals can only directly buy shares in public and private companies in the other four EAC partner states with permission from the Bank of Tanzania.

On the contrary, no such restriction applies in respect of citizens of Burundi, Kenya, Rwanda and Uganda wishing to buy shares in Tanzanian companies.

The deputy minister said the government needs to have as full a picture as possible on the state of security in a particular country before allowing its citizens to invest there, adding: “We are good supporters of regional integration, but it is also part of our obligation to protect Tanzanians and their money.”

He explained that it was important for the government to appreciate the manner in which Tanzanians stood to utilise and otherwise benefit from the profit generated from their investments.

He said he was not quite sure whether all citizens of EAC partner states buying shares in Tanzanian companies were doing so legally, adding: “Some could be doing so through informal channels and therefore illegally.”

Efforts to reach BoT governor Prof Benno Ndulu for comment on the matter yesterday failed, as he was permanently not reachable by telephone.

Last week, former EAC Secretary General Ambassador Juma Mwapachu underlined the need for the government to allow Tanzanians to buy shares in private and public companies within the bloc’s partner states.

He said that was one of the surest ways of promoting and consolidating economic integration in the region.

“If Tanzania is to make people’s empowerment a reality, it should allow its citizens to buy shares in EAC companies because people from Kenya, Uganda and Rwanda are freely buying shares in Tanzanian companies,” he said.

He noted that the International Monetary Fund had indeed previously imposed such a condition in fear of capital flight, but now the barrier needlessly denies people investment opportunities.

Protocols for the establishment of an East African Customs Union were signed in January 2005, with an EAC common Market facilitating free movement of labour, capital and services coming into force just over a year ago.

SOURCE: THE GUARDIAN