Financial Markets
The Bank of Tanzania plays a crucial role in fostering development of financial markets in Tanzania by providing enabling environment. Specifically, the Bank provides financial market infrastructure, putting in place appropriate legislations and overseeing and designing of market instruments. The Bank of Tanzania Act of 1995 paved way for development of financial markets in the country. The financial markets comprise money and capital market instruments, traded in primary and secondary markets. The Financial Markets directorate is responsible for implementing monetary policy of the Bank and managing the country’s official foreign exchange reserves. In addition, it issues and manages the government debt securities.

Major Milestones in Financial Markets in Tanzania

  • November 2018: Introduction of Tanzania Interbank Cash Market System TZ-IBCM
  • September 2018: Introduction of a 20-year Treasury bond aiming at lengthening the maturity structure of government securities
  • July 2017: Interlinkage of BOT Central Depository System and DSE Central Securities System.
  • November 2013: introduction of 15-year Treasury bond aiming at lengthening the maturity structure of government securities
  • August 2012: introduction of Central Depository Participants (CDPs) and online bidding in government securities auctions
  • January 2008: Harmonization of redemption and settlement of Government securities to T+1.
  • January 2008: The auction frequency of Treasury bills was changed from weekly to once fortnightly whist that of Treasury bonds was changed to once every month.
  • March 2004: Financial Markets Leaders Forum was established in order to promote dialogue and networking among stakeholders in the financial markets. Structured and informal knowledge sharing facilitated by the Forum has enhanced comprehension of the market intricacies among market participants.
  • December 2003: The Bank introduced Intraday and Lombard standby credit facilities to provide overnight-collateralized advances to commercial banks.
  • May 2003: The Tanzanian Government opened up the Dar es Salaam Stock Exchange to foreign investors. Several regulations were published in 2003 to guide foreign investors dealings in the Stock Exchange and establish regulatory safeguards for orderly stable market activities.
  • October 2002: The Ministry of Finance issued additional non-marketable stocks into marketable securities worth TZS 80.0 billion.
  • August 2002: The Bank of Tanzania on behalf of the Government launched a 10-year Treasury bond.
  • July 2002: The Bank of Tanzania established an Export Credit Guarantee Scheme (ECGS) to hasten the provision of credit to the export sector, notably non-traditional exports in order to augment efforts towards increased export earnings.
  • July 2002: The Ministry of Finance issued additional unsecuritized domestic debts worth TZS 20.0 billion to be converted into marketable securities.
  • July 2002: The Bank of Tanzania on behalf of the Government launched a 7-year Treasury bond .
  • May 2002: The Bank of Tanzania in collaboration with the Ministry of Finance, converted unsecuritized domestic debts worth TZS 20.0 billion into marketable securities.
  • May 2002: The Bank of Tanzania re-introduced the 35-day Treasury bill as an instrument of monetary policy.
  • April 2002: The Bank of Tanzania changed the 2-year Treasury bond auctions from uniform prices to multiple prices.
  • February 2002: The Bank of Tanzania on behalf of the Government launched a 5-year Treasury bond. The bond is listed at the Dar es Salaam Stock Exchange. The aim was to extend the maturity profile of government debt, lengthen the yield curve, and increase the number of tradable instruments in the market.
  • July 1999: The Bank of Tanzania introduced a computerized book entry system and a central depository system for Treasury bills. The system entails record keeping, transfer and updating ownership of the Treasury bills without having to issue physical certificates, thus improving efficiency. The system also facilitates divisibility of securities into smaller lots, which promotes secondary market trading.
  • April 1998: Trading activities at the Dar-es-Salaam Stock Exchange commenced after two years of background preparatory work under the stewardship of the Government through the Capital Markets and Securities Authority. The opening of the Trading Floor coincided with the listing of TOL Limited (formerly Tanzania Oxygen Limited), as the first company on the new Exchange.
  • September 1996: The Dar es Salaam Stock Exchange was incorporated as a private company limited by guarantee and not having a share capital under the Companies Ordinance.
  • July 1997: Repurchase agreements were introduced to complement Treasury bills and bonds in open market operations.
  • November 1995: Every bank and financial institution was required to determine and report on foreign exchange purchases, sales, the maximum net open position, and average balances on a weekly basis to the Bank of Tanzania.
  • The Capital Markets and Securities Authority (CMSA) was established in 1996, to facilitate establishment of a stock exchange for mobilizing and allocating savings for medium and long-term investments.
  • December 1994: Thee 364-day Treasury bill was introduced in Treasury bills market.
  • December 1994: The 35-day Treasury bill was discontinued from Treasury bill market, with effect from 7th December 1994.
  • A fully-fledged Directorate of Financial Markets was established in the Bank in 1994 to develop and supervise the functioning of the markets.
  • June 1994, the Interbank Foreign Exchange Market (IFEM) was introduced, replacing the weekly foreign exchange auction system. The IFEM, which is a wholesale market, facilitated determination of the exchange rate.
  • February 1994: 182-day Treasury bill was introduced in the Treasury bills market.
  • January 1994: The Capital Market and Securities Act was enacted
  • September 1993: 35-day Treasury bill was introduced.
  • August 1993: The Bank of Tanzania began Treasury Bills Auctions, as a tool for financing short term government deficit, an instrument of liquidity management, and as a reference point for the determination of market interest rates. The Auctions began with the 91–day Treasury bill.
  • July 1993: BOT began auctioning of foreign exchange as a tool for liquidity management as well as for determination of market-based exchange rate.
  • June 1993: The Bank of Tanzania issued of certificates of deposit as an instrument of monetary policy
  • The Bank introduced foreign exchange auctions in July 1993.
  • April 1993: Inception of the Bureaux de Change markets as an effort of foreign exchange liberalization.
  • March 1992: The Foreign Exchange Act 1992 was enacted. The Act liberalized the external trade and created enabling environment for determination of market exchange rates.