Some work experience organised- Capital Markets in Africa here I come…

Before I left England, I talked about getting some work experience during my break here in Tanzania, especially to fill the in the times when I get bored in all the beach and sun. Well, I’ve finally managed to secure some form of work in the capital markets sector. I arranged this by targeting the leading law firm in Tanzania, where my sister works. After a discussion with one of the lawyers, it was suggested I pursue my needs with the largest brokerage firm in Tanzania. Basically, I would be given the opportunity to “work shadow” and assist some of the brokers in their dealings at the Dar Es Salaam Stock Exchange (DSE). I just have to show up on Monday to meet the managing director of the firm and away I go. I’m hoping to negotiate 2-3 days a week of unpaid work if possible for the next month. So I’m pretty excited not only because of the relevance the experience would bring in preparation for business school, showing my motivation and interest for financial sector internships and jobs, but also of the novelty of capital markets in Tanzania.
The Capital Markets and Securities Act was only passed within the last decade, and the DSE was only set up in 1998. To date no more that 10 companies are listed on the exchange- nothing compared to the western markets of course- but we have to start somewhere and a start has been made nevertheless. Most of the major companies listed are ones that have been recently privatised and in order to facilitate and increase wider share ownership among the Tanzanian community whilst developing a savings culture, a unit trust (or fund)- called the Umoja trust, has been just been set up by the government exclusively for Tanzanian citizens offering a 30% discount during a sale period between May until the end of July this year- each unit costs equivalent of $0.10, which a minimum investment of about $3 required on current exchange rates. So most of the citizens can afford to invest although I doubt the really low earners, those who earn less than a dollar a day, will invest due to their lack of education and hence ability to understand what the trust really means. Now if only I could put some of that locked up UK pension I accumulated over the last 2 years into the scheme- in any case, I hope this will prompt other comparatively wealthy earning Tanzanians abroad to put some of their savings back into the country. The scheme certainly has the potential curb capital flight problems by providing an easy way to invest back into the country.
So far, I’m impressed by the transparency of the scheme considering how mindful of corruption one needs to be in sub-Saharan countries, and indeed most people are scared that their money will disappear down the drain. I was also afraid that the fund managers would be taking excessively large fees, but it is not so, one of the main benefits of the trust is the advantage gained through risk aggregation/pooling to reduce what would be high transaction costs for ordinary Tanzanians. It remains to be seen how competent the fund managers are, on paper they seem okay, although how wrong can you go in choosing a diversified portfolio from 10 listed companies (a majority are solid privatised companies such as tobacco and breweries)? Apparently interest in the trust seems pretty large following a wide marketing campaign across the country and I have to laud the governments’ efforts on pragmatically introducing capitalism to benefit all Tanzanians, not just to the wealthy and foreigners. I just hope the companies will perform well- another signal that Tanzania is on the path to positive development and a reinforcement of my goal to certainly consider returning here and putting my MBA skills to use. Let’s just pray for a good result at the G8 meetings this week in debt cancellation and the flow of more aid to Africa, which would greatly benefit Tanzania and put us firmly on the road to development and economic prosperity.