Vodacom IPO Raises Questions About E.Africa Community’s Capital Markets Integration after Tanzania locks out investors

The integration of capital markets in East Africa faces a severe test with the expected listing of 86 telcos and mining companies at the Dar es salaam Stock Exchange (DSE), where only Tanzanians will be allowed to participate.

The initial public offerings (IPOs) buck the recent trend where citizens of the five EAC member states – Burundi, Kenya, Rwanda, Tanzania and Uganda – were allowed to buy shares in the primary sale.

This helped investors to acquire stakes in Stanbic Uganda, Crystal Telecoms in Rwanda and listings in the Growth and Enterprise Market (Gems) at the Nairobi Securities Exchange.

Vodacom Tanzania is set to sell 560 million shares to the public this week, worth Tsh476 billion ($208.5 million) after receiving regulatory approvals but non-Tanzanians can only enter the counter when the shares start trading at the DSE.

“The move by Tanzania to lock out investors from East African countries will slow down the integration of the regional capital markets,” said David K Gathaara, managing director of Baraka Capital, a brokerage firm operating in Rwanda and Uganda.

Integration protocols

“Tanzania has a right to protect local investors in the primary market but, in the spirit of the East African integration protocols, it should have allowed other citizens from the region to participate in the IPO.”

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