Tanzania: Commodity Exchanges In Tanzania

Last Updated: 29 May 2018
Article by Peter Kasanda, Michaela Marandu and Kankiza Tibaijuka

The Tanzania Mercantile Exchange PLC (TMX) was set up in 2014 as a public private partnership between the Treasury Registrar, TIB Development Bank, the Public Service Pension Fund and the Tanzania Federation of Cooperatives.

TMX is set to be the first commodity exchange in Tanzania, with a key focus on agricultural commodities. According to the National Bureau of Statistics' latest reports, the following agricultural commodities are the most produced in Tanzania:

  1. Sugar – around 295,000 tonnes produced annually
  2. Cashews – around 155,000 tonnes produced annually
  3. Cotton – around 150,000 tonnes produced annually
  4. Tobacco – around 60,000 tonnes produced annually
  5. Coffee – around 60,000 tonnes produced annually

In this month's briefing, we look at the legal regime governing commodity exchanges in Tanzania.

Commodity Exchanges Act 2015

The Commodity Exchanges Act 2015 (CE Act) is the main law which governs commodity exchanges in Tanzania. Some of the key issues that the CE Act deals with are summarised below:


  • A "commodity exchange" is defined as a market licensed by the Capital Markets and Securities Authority (CMSA) in which offers to purchase or sell commodity contracts are made on a centralised basis
  • "Commodity contracts" are defined as including:

    • Spot commodity contracts – contracts wherein commodities are traded and delivered within a two day period
    • Commodity futures contracts – contracts wherein commodities are traded and delivered when a specified event occurs in the future

The regulator

  • The CMSA is responsible for regulating and supervising commodity exchanges in Tanzania
  • Amongst other functions, the CMSA is tasked with:

    • Licensing commodity exchanges
    • Promoting fairness and efficiency across commodity exchanges
    • Exchanging information with foreign regulators of commodity exchanges
    • Formulating principles for the commodity exchanges market
    • Approving commodity contracts

Licensing of operators of commodity exchanges

  • In order to set up and operate a commodity exchange, the following key criteria would need to be fulfilled:

    • Tanzanian company – an applicant must be a company incorporated in Tanzania
    • "Fit and proper" credentials – an applicant must have the financial and technical means to run an effective commodity exchange
    • Operating rules – an applicant must have its own operating rules that will ensure that the commodity exchange runs effectively

Rights and obligations of operators of commodity exchanges

  • When a person is licensed by the CMSA to operate a commodity exchange, they have the right to operate a commodity exchange in Tanzania. In addition, in the event the commodity exchange licence is revoked by the CMSA, a person has the right to appeal that decision
  • The right to operate a commodity exchange is subject to complying with all obligations imposed under the CE Act or as may be prescribed by the CMSA from time to time. These obligations include:

    • Operating the commodity exchange in a fair, transparent and efficient manner
    • Managing risks associated with the commodity exchange in a prudential manner
    • Complying with the anti-money laundering and anti-terrorism laws in Tanzania
    • Submitting annual reports to the CMSA
    • Employ personnel that are competent enough to run the commodity exchange

Approval of commodity contracts

  • In order to ensure that a commodity contract is approved by the CMSA, the following key criteria would need to be fulfilled:

    • Investor information – a commodity contract must contain all information as investors would reasonably expect to find for the purpose of making an informed assessment of the commodity and the right and liabilities attaching thereto
    • Expert opinion – in certain circumstances, an expert opinion may need to accompany a commodity contract. The CE Act does not specify which persons are authorised to issue expert opinions

Commodity Exchanges Regulations 2016

The CMSA has the power to create regulations under the CE Act. Through this power, the CMSA has created the Commodity Exchanges Regulations 2016 (the CE Regulations). Some of the key issues that the CE Regulations deal with are summarised below:

Application forms

  • Depending on the issue at hand, a certain type of application form would have to be used. For example:

    • Application to operate a commodity exchange – this would need to be made via application form no. 1
    • Application to be a commodity broker or commodity dealer – this would need to be made via application form no. 2
    • Application to be a commodity trading adviser – this would need to be made via application form no. 3
    • Application to approve a commodity contract – this would need to be made via the application form prescribed under schedule 9 of the CE Regulations


  • The CMSA is obliged to carry out adhoc inspections on all licensees at least once a year
  • During an adhoc inspection, licensees are obliged to be cooperative and provide all the information that the CMSA may request in a timely manner

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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