CORE Securities: A Licensed Dealing Member of the Dar es Salaam Stock Exchange

George Fumbuka, CEO of CORE Securities Limited, gives an overview of CORE’s scope of business and explains what are the company’s competitive advantages.

“We were the first member of the stock exchange to lead a company onto the stock exchange. Prior to that, we were using former parastatal companies that had been privatized by the government. The advisors are mostly foreign: English or South African. We were the first ones to bring a product known as Swissport on our stock exchange. Swissport was the first product locally managed that came to the stock exchange. After that event, we had a series of companies coming on to the stock exchange. We did the biggest with Tanzania Portland Cement. When we switched to the loan equity markets we did two corporate bonds for the East African Development Bank and for another investor called Bidco. This was guaranteed by Beckley, South Africa and working with our South African advisors. This new window that opened on the stock exchange is called the enterprise growth market. This was done around 2010. This was supposed to enable new companies to come in that did noy have the track record that was necessary for the previous main onboarding. Since then, we have done five banks. We began with the bank for teachers called Mwalimu Commercial Bank. Then there was a Catholic bank called Mkombozi Commercial Bank. We had another one called Maendeleo Bank. We have a small bank here called the Dar Es Salaam Community Bank. It was the best seller for a long time. Since then, we have had several microfinance institutions join the stock exchange. We had our first unit trust in 2015, called Umande. We have the biggest database of clients because we did a lot of it ourselves, either as advisors or as consultants. The unit trust we developed ourselves. We did one for BGP, for Bidco, and for our parent, Exim Bank, which is the fifth largest bank in Tanzania. We did the retail point for them. In the process, we got the chemistry right and Exim now owns 80% of CORE Securities Limited. We are one of the only firms that is working with a bank. We have half a dozen licensed brokers in various capacities. We have an insurance brokerage as a subsidiary, because most of the things that we do revolve around attracting many customers and is labor intensive. Still, there is a problem with the liquidity in the market. Much of what we can do would require the presence of a market maker. A market maker would intervene wherever you find stocks are overvalued or undervalued. This has been experienced in Tanzania often where stocks begin going very high and then they go very low, but the true value is somewhere in between. A market maker can elaborate on the size of the market and the poor valuation of the market to stabilize the prices. Unfortunately, at the present time, the capital of the brokers is still quite low, much lower than you have in Kenya, Nigeria, etc. This is one reason why we are not taking a lot of the advisory and a lot of the market making that would add value to the product. For the whole country now, the only natural assets that we have are farmland, minerals, and the telecoms. We have a law that requires all mining companies to be listed. We have a law that says all telecom companies must be listed. The float is 25%. We have done only two of those. Otherwise, we still have about 10 a week that could come on the market. There is scope for developing those markets. Many of them come from Australia, from South Africa, etc. So, it would be better to work with colleagues from there, rather than direct from here. Another place that we feel we need to go to is in further developing the CIS, the collective investment schemes. We have regulations for unit trusts, we have regulations for rates, we have regulations for everything, but we do not do it either because of lack of capacity internally or because of the problem of market making. We have a huge Muslim community in Tanzania. One for one, they could be considered to be the richest part of the country. We could deliver something that they would take. The regulator is very participatory and gives us a lot of leverage when we are able to bring something new. This has never been done before by talking to them but we are ready to welcome the idea with two hands or more, because we feel it is a gap that is missing in the country. We are trying to get cooperation with colleagues in Malaysia, Singapore, and Dubai who we can work with in developing Sukuk products. It is a new thing, but there are one or two banks that have done it. So, it is another area that is open for us to develop. The problem is that it may take time because of those historical reasons. Because of our liquidity, most brokers need to be more capitalized”, says George Fumbuka.

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