DSE Price Updates

                              TOL 330.00     TBL 1,800.00     TTP 510.00     TCC 1,640.00     SIMBA 1,780.00     SWISSPORT 650.00     TWIGA 1,340.00 -20.00     NICOL 305.00     DCB 360.00     KA 1,500.00     EABL 2,000.00     JHL 5,860.00    
LAST UPDATE: 24/9/2008 - 5:58PM EAT

Saturday, August 16, 2008

Opposition wants tax holiday for cellphone companies abolished

2008-08-16 10:22:24
By Guardian Reporter, Dodoma

The Opposition has proposed that mobile phone companies be taxed heavily, saying they are reaping a lot from wananchi.
Presenting views of the opposition on the budget estimates for the Ministry of Communication, Science and Technology yesterday, shadow minister Said Arfi said it was not fair for the government to impose airtime tax on consumers while giving mobile phone service providers tax holidays.



CRDB Bank enlists for global trading technology platforms

2008-08-16 10:14:25
By Perege Gumbo

The CRDB Bank PLC will spend about USD 4million (about 4.2bn/-) to procure state-of-the-art technology geared at improving efficiency of its services to customers.

A contract with prospective technology provider Misys PLC Company was signed on Thursday and it will provide CRDB Bank with Misys BankFusion Universal Banking software.



Friday, August 15, 2008

ATCL to be privatized.... yet again!!!

Dear forum members,
Have we completely failed to successfully run our own companies that we have to sell everything? When we started reforms in the 90's it was only logical to privative state-run companies because as good as socialism was idealistically; it had proven to be futile; mainly due to the general feeling that everybody's property is nobody's property. Most of the investors who could afford to invest in the privatized companies were foreign companies, such as SAA who acquired 49% of ATCL shares in December, 2002.

We all know how the relationship with SAA turned out. To quote the TCAA Director General, Margaret Mungayi, "Air Tanzania was in a worse state than before it was taken over by SAA". (Apparently from the time SAA started running the company to March 31st, 2006, ATCL went TZS 24.7bn into the red). So finally, the government decided to dissolve the contract with SAA in 2007; they pumped money into the company and made some major reforms.
I don't have figures on ATC performance after that move, but I did get the chance to fly ATC from Dar-Mwz in August last year and I was impressed by the service. I had never flown ATC during the SAA era or any other time before, so I didn't really have any experience to compare it with. But from what I had heard, ATC had been some major improvements.

Now, I just came across this article from The Guardian, Govt negotiates ATCL privatization. ``Information about the ATC privatisation process is currently at government level. We are now holding talks with the Chinese firm on the possibility of taking over. We are yet to reach agreement. Members of the public will be informed of the outcome``, Infrastructure Development deputy minister Hezekiah Chibulunje said of the negotiations.

I can only hope that whoever the investor will be this time, Tanzania will benefit from this venture. It was my hope that we would learn from the SAA experience that privatization is not always the solution; and in fact, sometimes it can even make things worse. I understand that as part of the Economic Reforms, the Government decided to have minimal participation in running a lot of major corporations; however, I believe there is an alternative to outright privatization. We have had some very impressive success with letting some companies and government agencies operate in a semi-autonomous manner. With the government retaining 100% interest, but letting the management and board make a lot of the major decisions independently; including decisions on income and expenditure; with the Government only receiving some percentage of the revenue as dividend.

In my opinion, if this can be done, it is a far better option than letting foreign investors, who usually come in with interests to profit only themselves and whatever country they came from. What do you think?

E.Africa currencies seen mixed in coming week

By The Citizen Reporter and Agencies

The Kenya shilling is expected to stay under pressure from the dollar in the coming week to Wednesday, while the Tanzanian currency will hold steady and possibly firm slightly, dealers in the region said yesterday.

The Ugandan currency is seen holding steady.



Thursday, August 14, 2008

Com banks in dramatic credit shift to private sector

2008-08-14 10:42:19
By Beatrice Philemon

Commercial banks credit to the private sector has maintained high annual growth rate above 40 percent mark over the past seven months, according to latest data released by the Bank of Tanzania (BoT).

The trend is attributed to narrowed lending options for commercial banks since the government distanced itself from fiscal reliance on banks` financing through debt securities such as Treasury Bills and Bonds from last financial year.



DSE regulator is earmarked for coveted New York award

By Damas Kanyabwoya

The Tanzania Capital Markets and Securities Authority (CMSA) has been short-listed for prestigious pan-African investment awards to be held at the New York Stock Exchange (NYSE) next month.

The awards known as 'Africa Investor Index Series Awards' are organised by Africa Investor (AI), an international investment research and communications group.

CMSA, the only Tanzanian entity to be short-listed for the awards, will be competing for the final outcome in the category of most innovative capital markets regulator.

About seven other African capital market regulators have been short-listed in that category, a statement released by AI said in Dar es Salaam yesterday.



Strive for interest, bank tells clients

Barclays Bank customer Ayoub Lubanza (centre) picks one of the winners of the "Bomba and Wajasiriamali" promotion draw in Dar es Salaam yesterday. Looking on are Barclays Bank product manager Andrew Lyimo (left) and Gaming Board Tanzania inspector Mrisho Millao.
By Polycarp Machira

The public has been urged to adopt the culture of keeping money for a longer time in banks to earn interest as well as utilize the fixed deposit facilities offered to later sustain their living requirements.

Speaking in Dar es Salaam yesterday, Barclays Bank Tanzania deposit/liability manager William Mungai said many bank customers do not deposit their money for the required periods to allow them earn interest income.



Experts call for issuance of long-term loans

By Bethuel Kinyori

The Government has been challenged to help create the environment for farmers and industrialists to access long-term loans to develop their projects. The call was made in Dar es Salaam last week by the head of a local social and economic research think tank (ESRF) in an exclusive interview with this paper.



Wednesday, August 13, 2008

Economy registers mixed fiscal, monetary and external trade signals

2008-08-13 09:30:35
By Beatrice Philemon

Government revenues from its major taxation bases are steadily burgeoning, according to recent data released by the Bank of Tanzania (BoT).

The BoT, which is officially authorised to keep government`s cash and records, in June published a report showing that total revenue collected by the government in May reached 288.5bn against the target of 273.bn/-.

Taxes alone contributed shillings 267.8bn/- above the pre-set target by 8.2 percent.

However, collection of non-tax revenue was below target by 21.5 percent.



Air cargo handler Swissport posts $2.5m profit

Swissport workers inspect goods inside a cargo flight at the Julius Nyerere International Airport in Dar es Salaam. Picture: Leonard Magomba

Swissport Tanzania Ltd — the majority shareholders of Dar es Salaam Handling Company (Dahaco) — has registered a pre-tax profit of Tsh2.9 billion ($2.5 million) in the six months ended June 30, up from Tsh2.7 billion ($2.3 million) in the same period the previous year.

The net profit after tax was Tsh2.1 billion ($1.8 million), compared with Tsh1.9 billion ($1.6 million) last year.


[SOURCE: The East African]

Bank goes for speed with online transaction facility

Citibank e-commerce expert for Sub-Sahara Africa Anuja Pandit addresses a breakfast meeting yesterday in Dar es Salaam.
By Damas Kanyabwoya

The secret behind Citibank's success lies in constantly focusing on technology breakthrough in banking transactions, it has been stated.
Citibank (T) managing director Omar Hafeez says that this is meant to get the customers and the bank reduce the time of initiation and improve the speed of execution of the transaction.

Speaking at a presentation of the bank�s online treasury interactive trading yesterday, Mr Hafeez said e-commerce is currently inevitable and was considered a vital part of a bank�s service strategy.



Tuesday, August 12, 2008

TBL, TWIGA lose 20 points each

TZS rises in the FOREX market

Tanzania Breweries Limited (DSE ticker: TBL) which opened at TZS 1,800 per share today, dropped back to TZS 1,780; a 20-point drop, same as Tanzania Portland Cement Company (DSE ticker: TWIGA) which dropped to 1,440; bringing the DSE Index down by 1.15 points to 1,078.46 at the end of trading today.

Meanwhile, in the FOREX market, the Tanzanian Shilling (TZS) has continued to fare well against the major foreign currencies; gaining 2.9600 against the USD, 23.3641 against the GBP and 17.1913 against the EUR. As for the Kenyan Shiling (KES), against which TZS hadn't done too well of late; TZS rose by 0.1735.
The price of Gold also dropped for the 2nd day running; decreasing by TZS 64,722.3263 to TZS 934,805.4647 per ounce of Gold.

Portfolio Optimization

One of the most basic traits of (rational) human beings is that we always tend to look for the maximum possible reward we can attain, whilst maximizing whatever risks involved in all our endeavors. The same is certainly true when it comes to the world of finance and investments.

Portfolio Optimization is the part of investment analysis that deals with the problem of selecting investment holdings so as to get the maximal return for a given risk that an investor is willing to incur; or conversely, it is the problem of finding getting the minimal risk in order to guarantee a certain expected1 return. The main problem that investment analysts face is, how do we measure risk.

Economist/Mathematician Harry Markowitz, one of the pioneers of Modern Portfolio Theory, modelled risk of a given asset2 as the standard deviation/variance, σ; in his work in his 1952 paper, "Portfolio Selection".
In Markowitz's Model, the investor has a selection of n risky assets (usually stocks), each with expected return μi and standard deviation σi; i = 1,2,...,n., and one non-risky asset (usually a bond) with expected return μn+1 and standard deviation σn+1 ≡ 0. (i.e., zero-risk). The Portfolio Selection Problem involves allocating a proportion xi ≥ 0 of an investors wealth to the i-th asset (i = 1,2,...,n+1). Clearly Σxi = 1, ⇒ xi ≤ 1, ∀ i.
Our aim is to simultaneously maximize total return, μ = Σ μixi and minimize the total risk σ = Σ Σ σijxixj. Here σij denotes the covariance between asset i and j, and σii = σi2, i.e. the variance (the square of the standard deviation); subject to constraints {Σxi = 1, 0 ≤ xi ≤ 1}. Other constraints may be added, for instance lower bounds li and/or upper bounds ui to all or some of the xi (other than, but not contradicting the trivial bounds 0 and 1); however the objective and constraints given above define a plausible portfolio optimization problem.
NB: The simultaneous maximization and minimization is attained by setting the objective function to f(x) = ½ σ - t μ [where x = (x1, x2, ..., xn, xn+1)]. The objective may also be modified to include transaction costs. t ∈ [0, +∞) is the risk tolerance factor, which is the inverse of the risk aversion factor, λ.
The analysis above is called Mean-Variance analysis.

This is a quadratic programming (QP) problem which does have a minimum since the covariance matrix is positive definite. Current research amongst quantitative analysts is centered around devising specialized QP algorithm for various special cases to guarantee fast and efficient computation. Professor Michael Best of University of Waterloo deals with such kind of research. I took a Portfolio Optimization course with him. Other research is concerned with calculation of t, which is linked to choices of the utility function.

Markowitz's results are highly celebrated and they form the basis of Modern Portfolio Theory. The results are also connected with such concepts like the Efficient Frontier (which is the "best" portfolio one can hold under Markowitz's Model); as well as other concepts like Sharpe ratio; Carpital Marekt Line (CML) and The Market Portfolio; Capital Asset Pricing Model (CAPM).

However, there are some shortcomings to the Quadratic (Markowitz) Model; one being that a more natural way for a layman investor to define risk is not through variance, but rather through other measures such as Value at Risk, VaR. i.e., roughly speaking, an investor usually wants to know, what is the probability of incurring a loss of a fraction α of my investment , for a given portfolio that I chose (say I chose to put TZS 3m in TBL shares, 2m in TCC shares and 5m in 182-day T-Bill). VaR analysis is well researched and there are numerous papers online; and it is a newer concept and more of an in-thing in Quantitative Analysis and Financial Engineering as opposed to Mean-Variance Analysis.

VaR analysis is used not just in investment theory, but also in other areas of economics as well as operations research, management science and project analysis for engineers. The Mathematical analysis of Portfolio Optimization using VaR is a bit more technical than Mean-Variance Analysis and it involves some sophisticated concepts in Convex Analysis and Nonlinear Programming. A not-too-technical presentation can be found here (pdf) or in Power point here. It is from a talk I gave in the research skills seminar at Waterloo. It is based on Rockefeller and Ursayev (1999). The talk was aimed at an audience full of Mathematicians, however only basic points and just sketches of proofs are given so as to ease understanding.

1. Here expected means the Expected value in probability sense, i.e., the mean value
2. Asset means financial asset, e.g. stock, bond, etc.

This article is aimed at helping people not familiar with Quantitative Analysis, and particularly Portfolio Optimization to get a gist of the kind of stuff Quants do. I promise more articles to come. I welcome any questions and comments
-Nalitolela, P. S.

How small firms can contribute 60% to national economy

2008-08-11 08:55:12
By Felix Andrew

The contribution of small and medium enterprises (SMEs) to the economic wellbeing of the nation could be made to double as long as training and soft loans are expertly availed to the sub-sector, according to a banking expert.

At the moment, the input of the SMEs to the country`s gross domestic product (GDP) is estimated to be around 30 percent.



Monday, August 11, 2008

DSE Index Moves

The Dar Es Salaam Stock Exchange (DSE) Market Index, DSEI moved up 1.89 points to 1,079.61 at the close of trading day today, following it being statistic at 1,077.72 since August 1st, 2008. The move is due to TBL shares jumping up 20 points from 1,780 to 1,800.

Profits shoot up 60% as banks cash in from loans

By Damas Kanyabwoya

Banks have enjoyed a boom marked by a significant increase in pre and after tax profits, which have increased by 60 per cent, according to new figures.

The growth has been due to, among other things, increased lending following the government�s substantial reduction in public borrowing through Treasury bills and bonds.

According to the Tanzania Banking Sector 2007 Performance Review conducted by Ernst & Young, interest earnings accounted for over 70 per cent of total income of banks in the country last year.

The review shows that Citibank recorded the highest interest income among commercial banks with 86 per cent of its total profit coming from interest rates. Dar es Salaam Community Bank was highest among the non-commercial banks with 92 per cent.

However, in terms of monetary value the National Microfinance Bank (NMB) earned more interest income than any other bank during the year.