Originally published: August 13, 2008
Source: Business Daily
Tanzania has barred Kenyans and Ugandans from taking part in the Initial Public Offering (IPO) of National Microfinance Bank (NMB). The sale of shares will be restricted to Tanzanian individuals and companies. The NMB is Tanzania’s second largest bank by assets and its IPO was expected to attract investors from all three countries. NMB will offer 21% of its total stake to general public. The sale is set to end on September 8, 2008.
Investors from the three countries were the original members of the East African Community. Reluctance by Tanzania to open up its capital markets to foreigners seems to arise from fears that trading would destabilize the country’s foreign exchange position. Unlike Kenya and Uganda, which have long removed exchange and capital controls from their statute books, Tanzania still relies on restricted currency movements as a macroeconomic tool.
The rules appear to be in direct conflict with the East African Customs Management Act, which requires residents of the three countries to be treated as locals when it comes to investment.