Dar es Salaam Stock Exchange (DSE.tz) 2018 Annual Report

We have extracted below the Chairman’s Statement from the 2018 annual report of Dar es Salaam Stock Exchange (DSE.tz), listed on Dar es Salaam Stock Exchange:

Introduction

It is my distinct honor and privilege to have this opportunity to communicate with our esteemed valued shareholders and other stakeholders, the year 2018 performance report this being the first year of implementation of the DSE’s Five Year Strategic Plan (2018 -2022). It has been an exciting year for the DSE, characterized by a relative fair financial performance amid a mixed market activity. We have managed to have significant progress on implementation of our strategic plan to ensure the long-term growth and sustainability of our company. It is therefore, with great enthusiasm that I present to you the Annual Report and Financial Statements of the DSE for the financial year ended December, 31 2018.

Operating Environment and Financial Performance

According to the National Bureau of Statistics (NBS), in the first three quarters of the year 2018, on average, the real Gross Domestic Product (GDP) grew by 6.7 percent. The reported growth in GDP was supported by investment in infrastructure, export of the traditional products, favorable weather conditions results into increased crop production. Investment in infrastructure includes, construction of the Standard Gauge Railway (SGR), expansion of the Dar es Salaam sea port, Julius Nyerere International Airport Terminal 3, roads network and preparations for the Stigler’s Gauge Hydro station power plant. Inflation was in check with single digit, mainly on account of increased food supply in the domestic and neighboring markets, general slowdown of global commodity prices, particularly oil prices, and implementation of contractionary fiscal policy. Inflation was at 3.3 percent in December 2018. The TZS Currency to USD was relatively stable and stood at the rate of TZS 2,281.20 per 1 USD. On financial performance, in year 2018 DSE recorded a Profit Before Tax of TZS 1.8 billion, while the Net Assets grew by 1.9 percent to reach TZS 19.5 billion. The CEO’s Statement and financial performance highlights provides further details of the DSE financial performance in 2018.

Strategic Performance in 2018

Buoyed by improvements in macro-environment and the prevailing tranquility country’s political climate, the DSE successfully executed a number of strategic initiatives in our five-year plan. Key to this are:
i.) Listing of four securities (TCCIA and NICOL on equity market segment and TMRC and NMB Bank on corporate bond market segment);
ii.) Listing of Government bonds worth TZS 2,107 billion;
iii) Admitting two more bonds trading members;
iv.) Enhancing operations of the subsidiary company -CSDR;
v.) DSE was admitted as Full Member to the World Federation of Exchanges (WFE) and CSDR was admitted to the Africa & Middle East Depository Association (AMEDA);
vi.) Enhancement of the trading and settlement market infrastructure; and
vii.) Participating in efforts of the potential introduction and listing of Municipal bonds.

Governance and Strengthening Partnership on Global Issues

In adherence to the UN Sustainable Development Goals, particularly the four goals that are relevant to stock exchanges, in the aspect of sustainable investments:
Goal No. 5 – Achieve Gender Equality;
Goals No.12 – Sustainability Production and Consumption;
Goals No. 3 – Combating Climate Change; and
Goal No.17 – Global Partnerships for Sustainable Development.

DSE in partnership with the UN-Global Compact organized the Ring the Bell for Gender Equality event, as the Exchange steps to recognize the importance of gender balance in business running and decision-making processes.

Governance and Strengthening Partnership on Global Issues

DSE being a partner stock exchange of the UN Sustainable Stock Exchanges Initiative, is at the forefront in championing implementation of the relevant investors’ concerns on issues of environment, social and governance as check and balance for sustainability of businesses. In the same vein, in 2018 DSE made some initiatives that aimed at bringing more awareness to its members including listed companies, on issues regarding Environment, Social and Governance -ESG. DSE included issues of ESG in its DSE Annual Membership Award. The aim is to ensure listed companies and broker dealers adhere to the current international best practices. Key Planned Initiatives for 2019 The financial year 2019 will be the second year in implementation of the DSE Five Year Strategic Plan (2018 – 2022). Key strategic initiatives for 2019 include:
Revision of DSE Rules with view to enhance market efficiency and liquidity;
enhancement of the market depth through increase of new products and services;
advocate for new products that are retail investor centered such as CIS and Retail bonds;
devising a program that will effectively ease SMEs access to capital;
increase effort to achieve market classification of Frontier Market Status and enhance controls and risk management to ensure at least a return on assets and equity of about 15 percent.

Outlook and Conclusion

Given its natural role in the financial sector, the DSE remains inextricably interwoven to the Tanzanian and global economy. Downside risks to the global economy such as policy uncertainty in key jurisdictions and geopolitical & business tensions to the big economies have the potential to adversely affect our business; as do uncertainty and speculations in Brexit, china-US trade wars. However, the DSE outlook for 2019 is strongly positive, driven by
(i) potential growth of the Tanzanian economy;
(ii) stable and transparency foreign exchange market;
(iii) stable macro-economic performance;
(iv) continuance of significant investment in infrastructure; and
(v) stable political climate.

In line with the Government intent to bring social-economic development via industrialization, the DSE is position to facilitate access to long term capital for industrial and infrastructure projects. I am confident that our new strategic plan, will enable us respond competitively to emerging trends and changes in this operating environment. The DSE will continue to be at the forefront in the advocacy for favorable government policies that help attract new listings and deepen the Tanzanian capital market in line with the National Financial Inclusion Framework 2018 – 2022. With the right business environment created by the unison in the actions of the various arms of the government and private sector settings, I believe we will consolidate the gains we made in 2018 and achieve new milestones and growth in the coming years.

Board Chairman