This archive report was first published on 8 January 2022.
Published on January 8, 2022, the Bank of Tanzania (BoT) attributed the surge in Treasury bond trading at the Dar es Salaam Stock Exchange (DSE) to an increase in perceived equity risks due to the global and domestic economic slowdown caused by Covid-19.
Between June 2020 and June 2021, the value of Treasury bonds traded by BoT on behalf of the government at the bourse rose 26.6 percent to just over $962.3 million year-on-year, while total turnover of equity market shares traded fell 22.6 percent from $292 million to $225.87 million in the same period.
The 20-year government bond was the most traded, accounting for 42.7 percent of total transactions, followed by the 10-year bond (22.6 percent), 15-year bond (21.6 percent), seven-year bond (9.5 percent), and 5-year bond (3.1 percent).
Trade of corporate bonds more than tripled in value from $246,597 in 2019/2020 to $741,222 in 2020/2021 thanks to the high appetite by retail investors towards bonds issued by the NMB and Exim (Tanzania) banks.
However, financial sector observers have raised concerns that the banks have used the extra liquidity to buy more government securities rather than issue more loans to individuals and private businesses.
BoT said in its report that treasury bills and bonds worth $2.12 million were issued in 2020/2021 to finance government budgetary operations, which were characterised by lower-than-projected revenue collections, thereby widening the fiscal deficit.
