Tanzania's Financial Transformation Through Innovation.

Tanzania’s Financial Landscape Transformed by Innovation and Digital Growth

DAR ES SALAAM: The financial sector in Tanzania is undergoing a remarkable transformation, spurred by technological advancements, diversification, and policies focused on inclusive growth.

The 2024 Capital Markets Review by Vertex International Securities (VIS) highlights this significant evolution, noting that it is opening fresh opportunities for investment, enhancing economic resilience, and positioning Tanzania as a competitive player in both regional and global financial markets.

Mr. Beatus Mlingi, Research and Analytics Manager at VIS, emphasized the importance of innovation and inclusion, stating that these factors are expanding access to financial services, empowering individuals and businesses, and driving sustained economic growth. He further stated that as the country continues to implement forward-looking policies and embrace technology, the momentum from last year is expected to accelerate national development, positioning Tanzania as a key financial hub in East Africa.

One of the major catalysts behind this change is the Mobile Trading Platform (MTP), which has significantly boosted investor participation. The report reveals that the number of new investors in Tanzania’s capital markets surged by 300% in just one year, with new participants rising to 22,774 by December 2024, compared to around 5,700 in December 2023. Notably, individual investors made up 89% of this new cohort.

Mobile trading has played an integral role in democratizing access to capital markets, allowing retail investors to participate in a way that was previously not possible. “This digital shift has paved the way for future investors and broader participation,” said Mlingi.

The MTP’s impact is further demonstrated by its contribution of 24.44% to equity turnover, along with an enhanced user experience that has encouraged increased trading activity. The Dar es Salaam Stock Exchange (DSE) also witnessed robust growth in 2024, driven by technological advancements, innovative financial products, and favorable policies. Key trends included higher liquidity, improved investor confidence, and significant regulatory changes.

“Milestones reached in 2024 underscore the effectiveness of a supportive regulatory environment,” Mlingi noted, “showing that innovative products can significantly drive capital strategies.”

The influx of new investors reflects the growing accessibility of Tanzania’s capital markets, especially for retail investors. The widespread adoption of mobile trading has not only democratized financial participation but has also helped enhance market liquidity, fostering a more vibrant and resilient economy.

Mr. Nicodemus Mkama, Chief Executive Officer of the Capital Markets and Securities Authority (CMSA), stressed the significant progress made in Tanzania's capital markets sector in 2024. He pointed to a notable increase in investment value, greater liquidity, and stronger investor confidence, both locally and internationally.

“These successes can be attributed to the government’s supportive policy, legal, and operational framework through CMSA,” said Mkama. He attributed much of the sector’s growth to innovative financial products, advancements in ICT—especially mobile trading—and initiatives aimed at raising public awareness.

As a result of these developments, the capital markets have become more inclusive, offering greater transparency and accessibility to a broader range of investors. This inclusive approach has fostered a dynamic market and positioned Tanzania for sustainable economic growth, attracting both domestic and foreign investments.

The value of investments in the capital markets increased by 24.7% in 2024, reaching 46.7 trillion Tanzanian shillings by December, up from 37.4 trillion shillings in December 2023.

New and innovative financial products also played a crucial role in attracting investors. Notably, the Green Bond issued by the Tanga Urban Water Supply and Sanitation Authority (Tanga-UWASA) raised 54.72 billion shillings, exceeding its target of 53.2 billion shillings. Similarly, the Samia Infrastructure Bond issued by CRDB Bank raised 323.09 billion shillings, surpassing its target of 150 billion shillings by an impressive 215.4%.

The funds raised from these bonds are earmarked to support road infrastructure projects across rural and urban areas, in collaboration with the Tanzania Rural and Urban Roads Agency (TARURA).

VIS CEO, Mr. Mateja Mgeta, highlighted the sector’s progress in registering new financial products, underscoring the role of technological advancements in transforming Tanzania’s investment landscape. Digital platforms have been key in increasing investor engagement and driving financial inclusion across the country.