impact of investor’s social economic factors on their participation on capital market in tanzania

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DAR

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Abstract

The purpose of this term paper is to analyse how the social economic factors such as level of

education, income etc affects investors participation in the capital market. There after point

out the impact the capital market gets due to lack of participation of these investors.

Data has been collected through interview and questionnaires to the selected sample space

which comprises 20 respondents owning shares in companies listed at Dar es Salaam Stock

Exchange. Then the data has been analysed qualitatively and the result to be relates with the

low development of Tanzania capital market.

The results of the research are in detail explained in results chapter, but from the sample

space involved 50% by 50% comprised of male and female with 25.00% of males in the age

of 31-40 while 17.86% of female are in the range of 26-30 and 31-40

ii

Contents Abstract .................................................................................................................................................... i

List of Tables .......................................................................................................................................... iii

Introduction ............................................................................................................................................ 1

Literature Review .................................................................................................................................... 2

Capital Market..................................................................................................................................... 2

Money Market .................................................................................................................................... 2

Nature of Capital Market .................................................................................................................... 3

Primary Market ............................................................................................................................... 4

Secondary Market ........................................................................................................................... 4

Products in secondary market ........................................................................................................ 4

Importance Of Capital Market ............................................................................................................ 5

Social Economic Factors affecting investors and their decision in Capital Market Participation ....... 6

Education Level ............................................................................................................................... 6

Level of income ............................................................................................................................... 6

Awareness /Technology .................................................................................................................. 6

Other factors includes (but not limited); ........................................................................................ 6

Methodology ........................................................................................................................................... 8

Qualitative ........................................................................................................................................... 8

Quantitative ........................................................................................................................................ 9

Mixed Methods ................................................................................................................................. 10

Variables Used .............................................................................................................................. 10

Sampling Design ............................................................................................................................ 11

Measurement and scaling techniques .......................................................................................... 11

Methods of data collection ........................................................................................................... 13

Processing and analysis of data .................................................................................................... 14

Conclusion ............................................................................................................................................. 16

Related Study ........................................................................................................................................ 21

Bibliography .......................................................................................................................................... 22

iii

List of Tables Table 1 : Scales Used in Measuring Attitudes ....................................................................................... 12 Table 2 : Likert Score Assignment ......................................................................................................... 13 Table 3 : Education Level Vs Knowing Listed Companies..................................................................... 15 Table 4:Gender versus owning shares .................................................................................................. 15 Table 5:Gender and Age ....................................................................................................................... 16 Table 6:Level of education and Employment Type ............................................................................... 16 Table 7:Income Level ............................................................................................................................ 17 Table 8: Capital Market and Dar es Salaam Stock Exchange awareness ............................................. 17 Table 9:DSE operation and DSE Participants ....................................................................................... 18 Table 10 :Capital Market Related Terminologies .................................................................................. 18 Table 11: Listed Companies and Number of shares ............................................................................. 19 Table 12 : Physically visiting DSE vs Visiting DSE Website ................................................................... 20

1

Introduction There many factors which contribute to the low development of Tanzania capital market

which can be classified or grouped into different groups. Among the key constraint for the

low development is low participation of Tanzania citizens in the capital market as a result of

different factors.

This study is intended to investigate how this low development of Tanzania Capital Market is

affected by low participation of investors who are the key stake holders in the Capital Market.

The study has conducted analysis of different indigenous and evaluation their knowledge on

Capital Market.

The analysis reveals that factors like Education level ,level of income ,Dependants , ,Age

group highly affect investors in terms of knowledge and awareness ,ability to invest as a

result those companies in the capital market needing capital they can’t grow /invest and this

in general contributes to low development of the country in all sectors be education ,banking

,manufacturing ,or any service industry and hence impact on country economy.

The study is very important as there are many companies which require capital to invest to

provide better services, make profit and hence pay tax and contribute to country economy.

Once these factors are known it is very important to take necessary actions especially in

providing more knowledge to most people at all age groups so that they can see the

importance of investing money in Capital Market products.

In Tanzania there are few listed companies under Dar Es Salaam Stock Exchange, this could

also be a factor hindering investors to put in their money. It is for this reason DSE is

encouraging more companies to comply with necessary standards so that they can be listed at

DSE. Recently DSE has been encouraging Telecom companies to list themselves since they

make lot of profit yet they need a lot of capital and they are investors in public willing to

invest.

2

Literature Review

Capital Market It refers to a market for Long Term Capital. It involves all the facilities and institutional

arrangements for borrowing and lending Long Term Capital. That is, it is the market for

buying and selling long term financial instruments.

Capital market could also be defined as a market for securities (debt or equity), where

business enterprises and government can raise long-term funds. In capital market money is

provided for periods longer than a year, as the raising of short-term funds takes place on other

markets (e.g., the money market)

Money Market It is a market for short term (up to one year) money and financial assets that are near

substitutes for money (Convertible in to cash with minimum transaction cost)

Difference between Capital Market and Money Market

Difference and demarcation between money market and capital market is made on the basis

of maturity period of instruments and claims. Short-term instruments maturing within a

period of one year are traded in money market whereas the capital market deals with longer

maturity financial assets and claims.

Though both types of markets facilitate the transfer of funds from savers to deficit-users, still

the difference between the two is maintained with reference to the time-period covered by the

transactions. Capital market includes trading in securities, mutual fund units and government

debt instruments. On the other hand’ money market facilitates dealings in short-term financial

instruments such as inter-corporate deposits, certificate of deposits, treasury bonds,

commercial papers, commercial bills, etc.

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Money The subject matter of capital market is long-term financial instruments having

maturity of more than one year. On the other hand, the thrust of MM is on short-term

instruments only.

Money market is a wholesale market and the participants in money market are large

institutional investors, commercial banks, mutual funds, and corporate bodies.

However, in case of capital market even a small individual investor can deal by

sale/purchase of shares, debentures or mutual fund units.

In capital market, the two common segments are primary market and secondary

market. Both these segments are interrelated. Securities emerge in primary segment

and their subsequent dealings take place in secondary market. However, in case of

money market, there is no such sub-division in general. In efficient money market,

secondary market transactions may also take place.

Total volume of trade occurs per day in money market is many fold that of the volume

per day taking place in capital market.

In capital market, the financial instruments being dealt with are shares (equity as well

as preference), debentures (a large variety), public sector bonds and units of mutual

funds. On the other hand, money market has different financial instruments such as

treasury bills, commercial papers, call money, certificate of deposits, etc.

Nature of Capital Market The nature of capital market is brought out by the following facts:

It Has Two Segments

It Deals In Long-Term Securities

It Performs Trade-off Function

It Creates Dispersion In Business Ownership

It Helps In Capital Formation

It Helps In Creating Liquidity

There are two types of capital market:

Primary market,

Secondary market

4

Primary Market

Primary market is a market for raising fresh capital in the form of shares and debentures.

It allows for the formation of capital in the country and the accelerated industrial and

economic development.

Public limited companies that are desirous of raising capital funds through the issue of

securities approach this market.

The Public limited and government companies are the issuers and individuals, institutions

and mutual funds are the investors in this market.

Secondary Market

The secondary market is that market in which the buying and selling of the previously

issued securities is done.

The transactions of the secondary market are generally done through the medium of

stock exchange.

The chief purpose of the secondary market is to create liquidity in securities.

Difference between Primary and secondary market

Primary

In primary markets, securities are bought by way of public issue directly from the

company.

New issue are available in primary market.

The primary is a middlemen.

New issue of common stock;bonds and preferred stock are sold by companies

Secondary

In Secondary market share are traded between two investors.

Securities usually bought and sold through the secondary market.

The secondary market is broker and dealer.

The secondary market stock and bonds issues are sold to the public.

Products in secondary market Equity shares

Government securities.

Bonds.

5

Importance Of Capital Market It plays a vital role in mobilizing savings and channelizing them in to productive

investments for the development of trade, commerce and industries. (i.e. The Capital

Market helps in Capital Formation and economic development of the country)

It provides incentives to savers in the form of interest/dividend and transfer funds to

investor.

It provides a market mechanism for those who have savings and to those who need

funds for productive investments. Such an arrangement helps the capital market to

divert resources from wasteful and unproductive channels to productive investments.

It deals in ordinary shares, stocks, debentures, and bonds of corporation and securities

of the Government.

The funds which flow into the capital market come from savers.

Various institutions such as banks, development banks give quantitative and

qualitative direction to the flow funds and bring rational allocation of resources. This

is done by converting financial assets in to productive physical assets. This results in

the development of business.

Capital market is the source from which long term capital is raised for the setting up

and sustained growth of companies.

It readily provides money for new/existing ventures.

It also helps investors to trade in their shares and maintain the liquidity of

investments.

It provides ready and continuous market for securities.

It integrates the demand and supply of securities in an effective manner and

determines the price for securities every now and then.

6

Social Economic Factors affecting investors and their decision in Capital

Market Participation There are many factors that affect investors’ participation in Capital market. Most of these

factors are social economic factors as explained below;

Education Level

It is very evident that education level has in impact on investor’s participation in Capital

Market. This is due to the fact that as you study further there is a deep knowledge on

Investment related information including Capital Market and Shares. From research results it

could be seen those who participate mostly are Degree, masters’ holders.

Level of income

Level of income highly influences investors’ participation in Investment related activities.

Level of income is related to savings and investment budget. Most people with low income

have no interest (or not aware) on Capital Market related activities hence their participation is

almost not there regardless of their level of education.

Awareness /Technology

Awareness on Capital Market activities has an impact on Capital Market Participation.

Awareness comes in different forms, level of technology/computer literate of an investor

(browsing), Capital Market advertisement (DSE) etc. From research results some investors

of reasonable income and education they are not aware of Dar Es Salaam Stock Exchange.

Other factors includes (but not limited);

Risk Tolerance: Risk refers to the volatility of portfolio’s value. The amount of risk

the investor is willing to take on is an extremely important factor.

Return Needs: This refers to whether the investor needs to emphasize growth or

income.

Investment Horizon: The time horizon starts when the investment portfolio is

implemented and ends when the investor will need to take the money out.

Tax Exposure: Investors in higher tax brackets prefer such investments where the

return is tax exempt, others will have no such preference.

Market Trends: Need to understand how various asset classes have performed in the

past before planning for finances.

7

Investment Needs: How much money an investor needs at the time of maturity?

Risk Coverage: A type of insurance coverage that can exclude only risks that have

been specifically outlined in the contract.

Dependents: People who relies on another person, especially a family member, for

financial support.

More factors are included and analysed in the results session of this paper.

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Methodology

As with any process, one of the most important steps in carrying out a successful evaluation

is choosing the right way to go about doing it. If the study's design is well suited to the

questions being considered, the whole process will be made considerably easier.

Each methodology represents a different approach to evaluation. The fact that there are so

many approaches in common use simply reflects the fact that no single methodology is 'the

best'.

There are 3 main types of research methodologies1;

• Qualitative research

• Quantitative research

• Mixed research

Qualitative Qualitative research is research dealing with phenomena that are difficult or impossible to

quantify mathematically, such as beliefs, meanings, attributes, and symbols

Qualitative research seeks to explore a specific phenomenon, not prove a prediction,

according to "Qualitative Research Methods: A Data Collector's Field Guide," published by

Family Health International. Often used in the social sciences and education, qualitative

methodologies use interviews, focus groups and observations to collect data. Qualitative

methods provide rich, contextual explorations of the topic that are often personally or

culturally meaningful.

Advantages • It enables more complex aspects of a person’s experience to be studied

• Fewer restriction or assumptions are placed on the data to be collected.

• Not everything can be quantified, or quantified easily, Individuals can be studied in

more depth

• Good for exploratory research and hypothesis generation

• The participants are able to provide data in their own words and in their own way

1 There are other methods such as basic research, correlational research ,descriptive research ,ethnographic research, experimental research ,exploratory research

9

Disadvantages • It is more difficult to determine the validity and reliability of linguistic data

• There is more subjectivity involved in analysing the data.

• “Data overload” – open-ended questions can sometimes create lots of data, which can

take a long time to analyse!

• Time consuming

Quantitative Quantitative research refers to the systematic empirical investigation of any phenomena via

statistical, mathematical or computational techniques. The objective of quantitative research

is to develop and employ mathematical models, theories and/or hypotheses pertaining to

phenomena

Quantitative research is more objective than qualitative methods. In this type of methodology,

the researcher crafts a hypothesis and then tests it through structured means. Instead of

exploring or describing phenomena, quantitative methods deal with facts and statistics.

Quantitative research is generally made using scientific methods, which can include:

• The generation of models, theories and hypotheses

• The development of instruments and methods for measurement

• Experimental control and manipulation of variables

• Collection of empirical data

• Modelling and analysis of data

• Evaluation of results

Advantages • Quantitative research allows the researcher to measure and analyse data.

• The researcher is more objective about the findings of the research.

• Quantitative research can be used to test hypotheses in experiments because of its

ability to measure data using statistics.

Disadvantages • The main disadvantage of quantitative research is the context of the study or

experiment is ignored.

• Quantitative research does not study things in a natural setting or discuss the meaning

things have for different people.

• A large sample of the population must be studied for more accurate results

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Mixed Methods Mixed methods combine qualitative and quantitative research. This type of methodology uses

several different measures that include both contextual understanding like interviews or

observations along with facts or statistics

Methodology used

In this research I have used Quantitative approach since the hypothesis is available and states

“There are many factors which contribute to the low development of Tanzania capital market

which can be classified or grouped into different groups. Among the key constraint for the

low development is low participation of Tanzania citizens in the capital market as a result of

different factors “

From the fact above nature of the survey and advantages over the other, quantitative research

approach has been selected for this paper.

In this chapter I will go through;

Variables used

Sampling design

Measurement and scaling techniques

Methods of data collection

Processing and analysis of data

Variables Used

Variables used in this research can be categorized in

Demographic

o Gender

o Age

o Marital status

o Level of education

o Employment Type

Knowledge and understanding of Capital Market

o Capital Market Awareness

o Awareness of Dar es Salaam Stock Exchange

o DSE operation

o DSE Participants

11

o DSE Products

o DSE Listed Companies

o Capital Market Related Terminologies

Investing in Capital Market

o Number of shares

o Level of education vs Investment

o Gender vs Investment

Sampling Design A sample design is a definite plan for obtaining a sample from a given population. The

following points have been considered in sampling

• Type of Universe: This is defining set of objects to be used in sampling. In this case

finite universe. (number of items is certain,)

• Sampling Unit: Respondents participating in the capital market by owning shares ,

Masters Students, co-workers or any other respondents

• Sampling list: Respondents participating in the capital market by owning shares ,

Masters Students, co-workers or any other respondents

• Size of sample: 30 respondents, 20 must be participating in capital market.

Measurement and scaling techniques Measurement is a process of mapping aspects of a domain onto other aspects of a range

according to some rule of correspondence. In measuring, a form of scale in the range (in

terms of set theory, range may refer to some set) and then transform or map the properties of

objects from the domain (in terms of set theory, domain may refer to some other set) onto this

scale (categorical data to numerical data)

Scaling technique The itemized rating scale (also known as numerical scale) presents a series of statements

from which a respondent selects one as best reflecting his evaluation. These statements are

ordered progressively in terms of more or less of some property.

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For example;

Are you aware of the term capital Market?

poor/not at all/not aware at all/do not know 1

low /little awareness/low knowledge/low usage 2

moderate awareness/moderate knowledge/moderate usage 3

high awareness/ high knowledge, high usage 4

Excellent knowledge/ Excellent awareness/highest usage 5

Scales used in Measuring Attitudes of people The following scales are used in measuring attitudes of people towards different options;

Name of the scale construction approach Name of the scale developed

Arbitrary approach Arbitrary scales

Consensus scale approach Differential scales (such as Thurstone

Differential scale)

Item analysis approach Summated scales (such as Likert Scale)

Cumulative scale approach Cumulative scales (such as Guttman’s

Scalogram)

Factor analysis approach Factor scales (such as Osgood’s Semantic

Differential, Multi-dimensional Scaling, etc.)

Table 1 : Scales Used in Measuring Attitudes

In this research for Item analysis I have used Summated Scares (Likert-Type Scale)

Summated Scales (or Likert-type Scales) Summated scales (or Likert-type scales) are developed by utilizing the item analysis approach

wherein a particular item is evaluated on the basis of how well it discriminates between those

persons whose total score is high and those whose score is low. Those items or statements

that best meet this sort of discrimination test are included in the final instrument.

Thus, summated scales consist of a number of statements which express either a favorable or

unfavorable attitude towards the given object to which the respondent is asked to react. The

respondent indicates his agreement or disagreement with each statement in the instrument.

Each response is given a numerical score, indicating its favorableness or unfavourableness,

and the scores are totaled to measure the respondent’s attitude. In other words, the overall

score represents the respondent’s position on the continuum of favourable-unfavourableness

towards an issue.

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Developing Likert Type Scale;

1. There are 11 statements which are relevant to the attitude ebing studies and each of

the statements expresses definite awareness or being not aware.

2. Trial test was done to 4 respondents with shares and 4 without shares.

3. The response to these statements were scored in such a way that a response indicative

of the most favourable attitude is given the highest score of 5 and that with the most

unfavourable attitude is given the lowest score of 1.

No P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 TOTAL

1 5 5 5 5 5 5 5 5 5 5 5 55

2 4 4 4 3 3 3 5 5 4 4 3 42

3 5 5 5 5 5 5 5 5 5 5 5 55

4 4 3 3 3 3 3 3 3 3 3 3 34

5 3 3 3 3 3 3 3 3 3 3 4 34

6 2 2 1 2 1 1 1 1 1 1 1 14

7 1 1 1 1 1 1 1 1 1 1 10

8 3 4 2 3 4 4 4 3 3 3 2 35

Table 2 : Likert Score Assignment

4. Arranging the scores per statement (2/2 ) revealed that those questions were relevant

and would yield appropriate response

Methods of data collection

This study involves primary data collection. The primary data are those which are collected

afresh and for the first time, and thus happen to be original in character.

Methods used in collecting data for this survey are;

• Interview method and

• Through questionnaires

Interview I have managed to interview 2 respondents who have shares and 3 without shares.

For the shareholders it was a personal interview (face to face), I sampled some questions and

some were ad hoc questions based on answers that I got. The most successful interview I did

with one of DSE member who was able to share a lot about the context am researching;

• Was able to get more information on Capital Market Participation

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• Challenges that Capital Market is facing

o Not enough capital

o Few companies are listed

o Risk is very high

• Dar es Salaam Stock Exchange Operations

Questionnaires 26 questionnaires were distributed among different stakeholders, 18 owning shares and 8 not

owning shares majority being masters’ students, undergraduates and businessmen/women.

The questionnaires method is chosen because of several advantages it has over most popular

data collection methods;

• Low cost

• Free from the bias of the interviewer as respondents are choosing themselves answers

• Enough time for respondents to read thoroughly well and provide adequate answers

• Easy to email and respondent can resent filled form via email etc

Processing and analysis of data Processing implies editing, coding, classification and tabulation of collected data so that they

are open to analysis. The term analysis refers to the computation of certain measures along

with searching for patterns of relationship that exist among data-groups. Thus, “in the process

of analysis, relationships or differences supporting or conflicting with original or new

hypotheses are subjected to statistical tests of significance to determine with what validity

data can be said to indicate any conclusions”.

Data collected is then fed into excel sheet edited ,coded , and classified according to

different groups like gender ,age etc with other counterpart variables like number of shares

,knowledge of Capital market etc.

Measures of central tendency From results obtained;

Mean values are computed using the following formula;

Mean=∑

Where n = sample size and i ith item

15

For Example;

Education level versus Knowing Listed companies

Count of Respondents Column Labels

Row Labels 1 2 3 4 5 Grand Total

Advanced diploma or first degree 1 1 4 1 3 10

Diploma 1 1 2

Masters 1 4 5 10

PhD 1 1 1 3

Professor 1 1

Secondary education (Form four and Six) 2 2

Grand Total 4 1 6 7 10 28

Table 3 : Education Level Vs Knowing Listed Companies

It can be computed; in all education levels average of 1.25 respondents have poor/not at

all/not aware at all/do not know while average of 2.5 people have Excellent knowledge/

Excellent awareness/highest usage

Similarly

Gender versus owning shares


Row Labels NO YES Grand Total

Female 4 10 14

Male 3 11 14

Grand Total 7 21 28

Table 4:Gender versus owning shares

It can be computed an average of 10.5 respondents owned shares.

16

Conclusion

The results of the survey are categorised into 3 groups

Demographic

o Gender and Age


Row Labels Female Male Grand Total

Between 15 – 25 3.6% 3.6% 7.1% Between 26 – 30 17.9% 3.6% 21.4% Between 31- 40 17.9% 25.0% 42.9% Between 41 – 50 10.7% 7.1% 17.9% Between 51- 60 0.0% 7.1% 7.1% More than 60 0.0% 3.6% 3.6% Grand Total 50.0% 50.0% 100.0%

Table 5:Gender and Age

50% of respondents comprised both gender with most respondents in the range of 42.9%.

o Level of education and Employment Type


Row Labels Employed in private sector

Employed in public sector

Not employed

Self-employed/business Grand Total

Advanced diploma or first degree 25.0% 7.1% 0.0% 3.6% 35.7%Diploma 0.0% 0.0% 0.0% 7.1% 7.1%Masters 21.4% 14.3% 0.0% 0.0% 35.7%PhD 7.1% 3.6% 0.0% 0.0% 10.7%Professor 0.0% 3.6% 0.0% 0.0% 3.6%Secondary education (Form four and Six) 0.0% 0.0% 3.6% 3.6% 7.1%Grand Total 53.6% 28.6% 3.6% 14.3% 100.0%

Table 6:Level of education and Employment Type

37.5% consisted of both diploma/advanced degree holders together with masters’ level

respondents. 3.6% comprised of professors

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o income Level

Row Labels Count of Respondents

Below 500,000 per month 3.6%Between 1mil – 3mil per month 28.6%Between 3mil – 5 mil per month 25.0%Between 600,000 – 1,000,000 per month 17.9%More than 5 Mil per month 21.4%No Income 3.6%Grand Total 100.0%

Table 7:Income Level

Out of 28 respondents 28.6% have income range between 1-3 mil per month, while 3.6%

have no income at all, mostly being students or dependants.

Knowledge and understanding of Capital Market

o Capital Market and Dar es Salaam Stock Exchange awareness


Row Labels 1 2 3 4 5Grand Total

1 3.70% 0.00% 3.70% 0.00% 0.00% 7.41% 2 0.00% 7.41% 0.00% 0.00% 0.00% 7.41% 3 0.00% 0.00% 14.81% 11.11% 3.70% 29.63% 4 0.00% 0.00% 3.70% 22.22% 7.41% 33.33% 5 0.00% 0.00% 0.00% 0.00% 22.22% 22.22% Grand Total 3.70% 7.41% 22.22% 33.33% 33.33% 100.00%

Table 8: Capital Market and Dar es Salaam Stock Exchange awareness

The Row represents Capital Market awareness while the columns present DSE Awareness;

The Numbers presents level of knowledge levels as indicated on the excel sheet data.

From the data 22.22% of the sample space has greater knowledge on Capital market and DSE

while 3.7% don’t know about Capital Market and DSE.

This means in every 28 people the Capital Market loses one potential investor to invest in the

capital market.

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o DSE operation and DSE Participants



1 10.71% 0.00% 0.00% 0.00% 0.00% 10.71% 2 3.57% 3.57% 0.00% 0.00% 0.00% 7.14% 3 0.00% 0.00% 21.43% 7.14% 0.00% 28.57% 4 0.00% 0.00% 0.00% 14.29% 10.71% 25.00% 5 0.00% 0.00% 0.00% 10.71% 17.86% 28.57% Grand Total 14.29% 3.57% 21.43% 32.14% 28.57% 100.00%

Table 9:DSE operation and DSE Participants

The Row represents DSE Operation awareness while the columns present DSE participants

Awareness;


From the data 28.57% of the sample space has greater awareness on DSE operations and DSE

participants while 10.71% don’t know about DSE Operation and DSE participants.

This means in every 28 people the Capital Market loses 3 potential investors to invest in the

capital market because they don’t know how DSE operates.

o Capital Market Related Terminologies



Bond 4.76% 4.76% 14.29% 52.38% 23.81% 100.00% Earnings per share (EPS) 4.76% 0.00% 23.81% 28.57% 42.86% 100.00% Equity Turnover 4.76% 19.05% 19.05% 23.81% 33.33% 100.00% Over-the-counter (OTC) 14.29% 9.52% 19.05% 42.86% 14.29% 100.00% Stock 4.76% 4.76% 19.05% 42.86% 28.57% 100.00% Grand Total 6.67% 7.62% 19.05% 38.10% 28.57% 100.00%

Table 10 :Capital Market Related Terminologies

The Row represents Capital Market Terminologies awareness while the columns present

Knowledge level;


From the data 28.57% of the sample space has greater awareness on CM related

terminologies at higher knowledge level while 4.76% have no idea of these terminologies.

This means in every 28 people the Capital Market loses at least potential investors to invest

in the capital market because they lack knowledge of important terminologies in capital

19

market. These terminologies are important for an investor to be aware of. But normally in this

situation is an investor really needs to invest he/she can engage listed investor advisors such

as Orbit Securities Company Limited and others (refer to listed investment advisors at

www.dse.co.tz)

Investing in Capital Market

o Listed Companies and Number of shares

Listed Companies More than 20000

1-1000

1001-10000

10001-20000

Grand Total

CRDB Bank(CRDB) 4.76% 0.00% 1.59% 6.35% 12.70%DCB Commercial Bank (DCB) 0.00% 0.00% 3.17% 1.59% 4.76%Maendeleo Bank Plc(Maendeleo) 0.00% 0.00% 4.76% 0.00% 4.76%Mkombozi Commercial Bank 0.00% 1.59% 6.35% 1.59% 9.52%National Microfinance Bank(NMB) 1.59% 3.17% 4.76% 4.76% 14.29%Precision Air Services Plc (PAL) 0.00% 3.17% 4.76% 0.00% 7.94%Swala Gas and Oil 1.59% 3.17% 1.59% 0.00% 6.35%Swissport Tanzania Ltd.(SWISSPORT) 0.00% 1.59% 3.17% 3.17% 7.94%Tanga Cement Public Ltd Co.(SIMBA) 4.76% 0.00% 1.59% 1.59% 7.94%Tanzania Breweries Ltd.(TBL) 1.59% 0.00% 3.17% 1.59% 6.35%Tanzania Cigarette Company.(TCC) 0.00% 0.00% 1.59% 1.59% 3.17%Tanzania Portland Cement Co. Ltd. (TWIGA) 1.59% 1.59% 3.17% 0.00% 6.35%Tatepa Company Ltd.(TATEPA) 0.00% 4.76% 0.00% 0.00% 4.76%TOL Gases Ltd. (TOL) 0.00% 0.00% 3.17% 0.00% 3.17%

Grand Total 15.87%19.05

% 42.86% 22.22% 100.00%Table 11: Listed Companies and Number of shares

From analysis majority of respondents own shares in NMB 14.29% followed by CRDB

12.70%. This is from the fact that these two banks when they were listed they were well

operating and according to financial analysts the risk was minimal for an investor to buy

shares, and by then shares was very cheap as compared to now.

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o Physically visiting DSE vs Visiting DSE Website


Row Labels More than three times a month

Not At All

Once a month

Three times a month

Twice a month

Grand Total

More than three times a month 10.71% 0.00% 0.00% 0.00% 0.00% 10.71%Not At All 7.14% 17.86% 25.00% 0.00% 7.14% 57.14%Once a month 7.14% 3.57% 10.71% 3.57% 3.57% 28.57%Twice a month 0.00% 0.00% 0.00% 0.00% 3.57% 3.57%Grand Total 25.00% 21.43% 35.71% 3.57% 14.29% 100.00%

Table 12 : Physically visiting DSE vs Visiting DSE Website

The Row represents physically visiting DSE offices while the columns presents visiting DSE

website;

From the data 10.71% if the sample space visit DSE office more than three times as well as

visit their website more than three times a month while 17.86% never gone or visited DSE at

all. This means investors out there they miss information regarding capital market investment

hence the market misses their participation. Number of reasons are related to this including

but not limited to computer literacy, owning shares, knowledge and interest etc

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Related Study I have done comparison with two countries of which I have been able to see similar research

as the one I’m doing. The counties are Ghana and Uganda. The results are more less similarly

but I could see from Uganda sampling 28 respondents out of the research sample space ,more

people seems to be aware on Capital markets related terminologies and most of respondents

own shares . Similarly in Ghana results are almost the same as these ones.

In general I could see mail reason of investors not participating from general market large

percentage is due to lack of awareness ,education level and level of income. In this case the

government needs to put more emphasis from early level of secondary education studies

about shares, investment, securities bonds etc

22

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