Africa-Press – Tanzania. TANZANIA’S policymakers now face a critical question: Should the state continue to hold dominant stakes in key commercial enterprises, or should it emulate peers like Egypt and Kenya that are partially floating their assets to mobilise capital and rebuild fiscal credibility?
Across Africa, the State-Owned Enterprise (SOE) reform wave is no longer theoretical. Governments are using listings to raise liquidity, reprice sovereign risk and inject governance standards into legacy institutions.
The trend invites serious debate in Dodoma: Whether Tanzania’s fiscal and development model can remain sustainable without leveraging capital markets as instruments of reform and accountability. Egypt’s strategy illustrates both promise and peril.
Since 2022, Cairo has implemented a divestment programme targeting 35 companies, raising roughly 5.9 billion US dollars by mid-2025.
The programme coincides with renewed IMF support and a foreign-exchange squeeze that pushed reserves to just under 50 billion US dollars by September 2025, while inflation eased to about 11.7 per cent. By linking asset sales with macro stabilisation, Egypt’s government has attempted to convert dormant equity into usable liquidity—an approach that trims fiscal deficits and anchors the exchange rate.
The model’s strength lies in its sequencing: Privatisation proceeds retire domestic debt, reducing rollover pressure, while credible listings restore investor confidence. Yet the same strategy reveals the pitfalls of opacity, valuation gaps and elite resistance.
If listings become tactical funding tools rather than enduring governance reforms, credibility erodes quickly. Tanzania must examine that tension before embarking on similar paths. Kenya, too, is pursuing its first major state IPO in over a decade.
The Kenya Pipeline Company (KPC), with a proposed 65 per cent sale by March 2026, is expected to raise around 100 billion Kenyan shillings (1.15 billion US dollars).
The objective is to broaden the Nairobi Securities Exchange, where capitalisation has declined to about 12 per cent of GDP from nearly 25 per cent a decade earlier. For Kenya’s policymakers, the fiscal logic is clear: Non-tax revenue from privatisation substitutes costly borrowing, while a liquid equity market creates a valuation reference point for future infrastructure listings.
Yet the experiment also tests institutional strength—whether regulatory systems, valuation protocols and disclosure standards can protect minority investors and sustain confidence once state control relaxes.
For Tanzania, which is managing a public debt ratio near 42 per cent of GDP and aiming for industrial GDP growth above 7 per cent under FYDP III, the Kenya case is instructive. It shows that asset listings can unlock domestic liquidity without compromising sovereignty—if governance is consistent and sequencing disciplined.
Tanzania’s fiscal fundamentals remain relatively stable compared to peers, but structural bottlenecks persist. The state continues to dominate sectors from energy and minerals to transport, with limited privatesector co-ownership.
Parastatals such as TANESCO, STAMICO and Air Tanzania are both development agents and fiscal liabilities. Most operate with low return on equity and high contingent debt exposure.
Listing even minority stakes of select parastatals—such as the TANESCO National Commercial Bank’s residual state share—could catalyse transparency, attract diaspora capital and create domestic savings instruments.
If managed prudently, an SOE-listing programme could complement—not replace—strategic state ownership. A five to ten per cent float on the Dar es Salaam Stock Exchange (DSE) would strengthen price discovery, deepen liquidity and anchor performance incentives to quarterly scrutiny.
That mechanism, not merely fiscal relief, is the deeper reward. However, reform through listing requires credible sequencing. Egypt’s early steps show that capital markets cannot substitute macro discipline; privatisation must accompany credible monetary policy, competitive FX regimes and predictable taxation.
Kenya’s rollout demonstrates that retail and institutional investors respond only when valuation transparency and dividend policy are clear.
Tanzania would need to reinforce the governance ecosystem first—clarify independent regulator mandates, strengthen disclosure enforcement under Capital Markets and Securities Authority (CMSA) and streamline approval procedures.
Without those institutional guardrails, partial privatisations risk degenerating into insider transfers rather than market reforms. The experience of the TIB Development Bank and other legacy state lenders underscores the lesson: Weak governance neutralises capital injections.
The macroeconomic context also matters. Tanzania’s domestic yield curve currently prices ten-year government paper around 10.3 per cent. If privatisation proceeds were applied to debt reduction or capital-market expansion, longterm yields could decline by 100 to 150 basis points, easing the crowding-out effect on private credit.
A deepened DSE could also improve access to long-term financing for industrialisation, aligning with FYDP III’s target of a 40 per cent private investment share in GDP by 2026.
Each one-per cent rise in market capitalisation relative to GDP could raise the private-credit ratio by roughly 0.3 percentage points, based on historical East African correlations. In this sense, listings are not symbolic gestures but instruments of monetary transmission: They can compress sovereign spreads, attract patient capital and broaden ownership of public wealth. Still, reform carries political risk.
The Tanzanian public has deep historical attachment to state enterprises and privatisation still evokes memories of the 1990s sell-offs that produced mixed results. Decision-makers must differentiate the new model from those earlier liberalisations.
This is not about surrendering national assets but about embedding accountability through market mechanisms. Parliament and oversight bodies could legislate guardrails—limiting foreign ownership caps, ensuring citizen participation through collective investment schemes and dedicating proceeds to productive investment rather than recurrent expenditure. A national conversation anchored in evidence, not ideology, is overdue.
The comparative data are persuasive. Egypt’s equity market capitalisation stands near 20 per cent of GDP, Kenya’s at roughly 12 per cent and South Africa’s exceeds 300 per cent. Tanzania’s hovers around 14 per cent. Bridging that gap is not a matter of optics but of economic architecture.
Without deeper markets, fiscal flexibility remains constrained and productive sectors depend excessively on public borrowing. As the sovereign debt burden rises and concessional space narrows, tapping domestic equity markets may become a necessity, not a choice.
Regional integration under the EAC Capital Markets Protocol also demands harmonisation. As Kenya and Uganda broaden their equity bases, cross-border investors will increasingly compare depth, liquidity and governance—metrics on which Tanzania can no longer afford to lag.
The debate, therefore, is strategic: Whether to retain full state control in the name of policy autonomy or to share ownership as a path to efficiency and credibility. Each option carries trade-offs. Full control preserves flexibility but strains fiscal resources; partial listing introduces scrutiny but can amplify efficiency and investor trust.
Tanzania policy makers must weigh these costs and benefits not as ideological choices but as structural levers
for long-term resilience. The moment demands a shift from passive ownership to active portofolio management of state assets-valued, transparent and partially traded.
Source: Daily News – Tanzania Standard Newspapers
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