Barriers of individual to invest in emerging capital markets: The case of DSE

The capital market in Tanzania is classified as emerging meaning that it is underdeveloped or at best developing. Securities market in Tanzania emerged as a result of the structural transformation of the Tanzania economy. As the result of the structural transformation of the Tanzania economy. As the result of these reforms, DSE was established under the Capital Market and Securities Authority that act as a regulatory of capital markets in Tanzania and in particular to create the necessary environment for orderly growth and development of capital markets. The absorption capacity of capacity of the buyers as investors. Nevertheless, transactions at the DSE have by and large been limited to participation of local individuals. In this regard capital markets in Tanzania is quite narrow and illiquid as it is characterized by few traded products and few participants. This study attempts to investigate on the barriers of individuals to invest in emerging capita l markets with a particular focus at the equities that are traded at the DSE. Survey strategy was used to allow collection of data using a structured questionnaire and a checklist. Descriptive as well as exploratory research design was used. The study focused on existing and non-existing private investors. It was found out that the low income, few listed companies securities, lack of confidence in the listed companies, low level of public awareness about DSE, alternative investment avenues and inadequate disclosure of information about the listed companies hinders significantly individuals to invest in the stock market securities. Finally the study concluded that for the capita l markets to operate efficiently and at the same time benefit both investors, strong foundation is to be built to create mechanism to increase market activity, illiquidity, broaden market participation and increase the variety of instruments traded. The Government has a role of play in encouraging good investment so as to encourage more private investors and building confidence on individual investors. The study further suggested for the same kind of research to be conducted in the whole country so as to come up with different views and opinions concerning the efficiency of the stock market in Tanzania.