Tanzania opens government securities market to all foreign investors

Dar es Salaam. The Bank of Tanzania (BoT) has opened the government securities market to all non-resident investors, a move analysts say could broaden sources of Government financing, increase competition and eventually lower borrowing costs.

The central bank said the Foreign Exchange (Amendment) Regulations, 2026, issued under the Foreign Exchange Act, Cap. 271, through Government Notice No. 206 of 2026, were published in the Government Gazette on July 17.

Under the amendments, all non-resident investors are now permitted to invest in Treasury bills and bonds issued by the government of the United Republic of Tanzania.

Previously, participation in the government securities market was restricted to residents of the East African Community (EAC), the Southern African Development Community (SADC) and members of the Tanzanian diaspora.

The BoT said the reform was intended to broaden access to the government securities market as part of its efforts to deepen domestic financial markets and promote Tanzania as an attractive investment destination.

“Therefore, non-residents may participate in the government securities market through the approved Central Depository Participants (CDPs), subject to the provisions of the Foreign Exchange (Amendment) Regulations, 2026, and other applicable laws and operational requirements,” the central bank said in a public notice signed by Governor Emmanuel M. Tutuba.

Analysts said opening the market to a wider pool of international investors could strengthen the government's ability to mobilise capital while reducing its dependence on a relatively narrow domestic investor base.

They said increased participation would also intensify competition for Treasury bills and bonds, potentially putting downward pressure on yields.

“It is a positive move to broaden the sources of revenue from investors,” one analyst said, describing the move as an opportunity to expand the sources of financing available to the government.

Another analyst said the reform could attract more investors because foreigners would now be able to directly participate in the purchase of government bonds and Treasury bills.

The increased competition, analysts said, could eventually reduce the returns demanded by investors, allowing the Government to borrow at more favourable rates.

“If the interest rates or returns on government securities decline, it could provide significant relief to the government when borrowing,” an analyst said.

Lower borrowing costs could also support debt sustainability by enabling the Government to access relatively cheaper financing, analysts said.

The impact could extend beyond Government borrowing, particularly if yields on Treasury securities decline significantly.

Analysts noted that interest rates on government bonds and Treasury bills often provide a benchmark for pricing other investments and financial instruments.

A sustained decline in government securities yields could therefore influence lending rates charged by commercial banks.

“Bond interest rates are used as a benchmark or indicative return for other investments,” an analyst said, adding that lower yields could eventually contribute to lower borrowing costs across the economy.

The reform could also increase the amount of capital flowing into Tanzania, supporting investment, business activity and development projects, particularly infrastructure, analysts said.

They argued that the entry of foreign investors into the Treasury market could enhance Tanzania's attractiveness as an investment destination by providing international investors with another avenue through which to deploy capital.

The effects could also spill over into the capital markets.

With foreign investors gaining greater access to government securities, analysts expect increased liquidity and activity across the broader capital market, potentially benefiting institutions involved in securities trading and investment.

They said greater participation could create opportunities for the Capital Markets and Securities Authority (CMSA), the Dar es Salaam Stock Exchange (DSE), brokers and other market participants to increase their business and revenues.

At the same time, analysts said stronger competition in the government securities market could encourage some investors to seek higher returns in other instruments, including equities and collective investment schemes.

“Bond investors may shift to shares and collective investment schemes in search of higher returns,” one analyst said.

The BoT said non-resident investors seeking to participate in the government securities market should do so through approved CDPs and comply with the new regulations, applicable laws and operational requirements.

The Foreign Exchange (Amendment) Regulations, 2026 are available on the BoT website, while investors seeking clarification have been advised to contact their CDPs or the central bank.