INSIGHT

MAY 6 , 2 0 1 9

Investing in Government Securities in Tanzania

Written by Tenda Msinjili and Imani Mselle

In this month’s briefing we highlight investments in Government securities by

Tanzanian residents and the restrictions imposed under Tanzanian law on East African
Community residents and non-residents investing in Government securities.

Government securities are debt instruments issued by the Government in exchange for money borrowed
from the public, with a promise of repayment upon maturity.

There are two types of Government securities commonly traded in Tanzania, these are treasury bonds (T-
bonds) and treasury bills (T-bills). T-bonds consist of long-term securities that mature over a year whilst T-
bills mature in less than a year. The Bank of Tanzania (BOT) issues T-bonds in five categories with maturities
of 2 years, 5 years, 7 years, 10 years and 15 years. T-bills are issued in four categories with maturities of 35
days, 91 days, 182 days and 364 days.
 There are two markets for Government securities in Tanzania; the primary market and the secondary
market. The primary market is the BOT’s auction through the Central Depository System (CDS). BOT
auctions Government securities through the CDS for the first time on regular intervals. T-bills are issued for
the first time on a fortnightly basis and T-bonds are issued on a monthly basis. After being bought in the
primary market, Government securities are listed at the Dar es Salaam Stock Exchange for secondary
trading.

Investing in Government securities in Tanzania is partially restricted. A Tanzanian resident (Resident) can
freely invest and trade in Government securities. The Foreign Exchange Listed Securities (Amendment)
Regulations 2014 (the Amendment Regulations) defines a 'Resident' as a person who resides
consecutively, or whose centre of predominant economic interest is in Tanzania for twelve months or more.
A Prescribed Territory is defined under the Amendment Regulations as a member country of the East
African Community. Pursuant to the Amendment Regulations a resident within the Prescribed Territory can
invest in Government securities provided that:

The total amount of securities acquired by residents from the Prescribed Territory does not exceed 40%
of the securities issued;

The amount acquired by the residents from a single Prescribed Territory does not exceed two thirds of
the amount acquired under the first item above; and

The Government securities acquired shall not be transferred to a Resident within twelve months of the
date of acquisition.

Government securities in Tanzania are not open for investment to any other non-residents.

Eligible investors are required to open a CDS account through their brokers in order to trade in Government
securities. Through their CDS accounts, investors can transfer, create or release liens on the Government
securities that were pledged as collateral.

Investors accrue several benefits from holding government securities. Some of these benefits are:

They are transferable and negotiable;

They can be pledged as collateral;

Investment in T-bonds accrue interest payment semi-annually; and

Investors are guaranteed a competitive return rate by the discounted price of the securities.

We hope this information has been useful. Should you require further information, please do not hesitate
to contact us.

Clyde & Co LLP accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material
contained in this summary. Further advice should be taken before relying on the contents of this summary. Clyde & Co Tanzania
accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this
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 Authors
 Peter Kasanda
Partner

Tenda Msinjili
Senior Associate

Imani Mselle
Associate

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 Categories

Services

Finance

Locations

Africa Dar es Salaam

Type

English Market insight

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