Tanzania says to open up capital account by 2015

Prof Ndulu
Tanzania plans to start opening up its capital account this year, its central bank chief said on Tuesday, enabling it to attract more investment initially from other members of the East African Community and then from the rest of the world by 2015.

An open capital account is among the prerequisites for the financial market integration of the regional bloc's five members, a step towards a monetary union protocol, expected to be signed by end 2012.

"It is by 2012 for Tanzania within East African Community, and by 2015 for the rest of the world," Bank of Tanzania Governor Benno Ndulu told a news conference.

The bloc's protocol will set up a timeline for achieving a monetary union with coordinated fiscal and monetary policy, among others.

Tanzania will need to liberalise its capital account to get a sovereign rating, analysts say, if it wants to boost investor interest in its financial markets.

EAC Secretary General Richard Sezibera, from Rwanda, told a joint conference hosted by the bloc and the International Monetary Fund on Monday that other areas of the financial services sector still require further opening up.

"We are ... regrettably aware that the securities, pensions and insurance market is yet to be regionalised and the capital account is yet to be sufficiently liberalised by all partner states to enable our people to participate outside the present framework of cross-listing of market shares at national level," he said.

"Removal of restrictions on capital flows should serve as a catalyst for capital market development and the provision of long term and risk capital most needed to spur economic development."

Other members of the East African Community are Uganda, Rwanda, Burundi and Kenya. South Sudan, which became independent last year, has applied to join the group. Its application to join the bloc will be presented for approval at an EAC heads of state summit later in the year.

The EAC has a population of 133 million people and a gross domestic product of $79 billion. It has a fully-fledged customs union that came into effect in January 2010.
Source: Reuters, af.reuters.com, reported by George Obulutsa

Share on Google Plus

About Abduel Elinaza

This is a short description in the author block about the author. You edit it by entering text in the "Biographical Info" field in the user admin panel.