Zambia’s capital markets shallow, says Yamba

Despite progress made within the Zambian capital markets, there is abundant evidence that the capital markets remain illiquid and shallow, says Secretary to the Treasury Fredson Yamba.

He said Government desired a stronger capital market which brought about benefits of efficiency, economic stability and flexibility.

“Government is worried that capital markets in Zambia have remained low, illiquid and shallow. There is abundant evidence in particular, secondary markets of shares and bonds showing that levels of capital markets are very low,” Mr Yamba said.

He was speaking at a Bond and Derivatives Exchange (BADEX) breakfast conference under the theme; “New capital markets and financial innovation; the case of the Bonds and Derivatives Exchange” in Lusaka.

BADEX is a public financial company licensed and regulated by the Securities and Exchange Commission (SEC)

Mr Yaluma said Government believed that a functioning and regulated bonds and derives exchange in Zambia would improve the capital markets because of benefits it brought along.

Mr Yamba observed that the financial and capital markets had not yet fully embraced BADEX.

He also observed that efficient capital markets ensured that resources were allocated widely and fostered movement of saving into productive investments.

“Capital market products offered corporate and retail investors a useful vehicle for widening their spectrum of investment,” Mr Yaluma said.

He said exchanges provided important benefits to economies which included risk transfer and price discovery which would assist in lubricating and growing the economy.

Mr Yamba encouraged financial and capital market players to familiarize themselves with the exchange commissions as Zambia’s capital market had been dominated by bonds and shares.

Earlier, SEC chief executive officer Phillip Chitalu observed that Zambian capital market still remained small compared to other markets in the Sub-Saharan Africa.

Mr Chitalu said the Zambian capital market had only one operational exchange which was the Lusaka Stock Exchange until BADEX was licensed in 2011.

“This shows that as a market we still have a long way to go, However, I want to take this opportunity to assure you that BADEX is here to stay,” he said.

Mr Chitalu said the aim of the conference was to bring together various players from capital markets, financial markets, private sector and other stake holders.

And BADEX chief executive officer Peter Sitamulaho said BADEX allowed Zambia to compete with international financial products.

Mr Sitamulaho said BADEX would also provide skills and employment to the local people with its transparency.