11 January 2013

Zambia: List On LUSE, Says Chikwanda

THE Government has urged Zambian companies to broaden their horizons and capitalisation by listing on the Lusaka Stock Exchange (LuSE) and use it as an alternative avenue of raising funds rather than complaining of high cost of borrowing.

Last year, the Government appealed to all meaningful size companies to list on the LuSE in an effort to raise funds for various projects and recapitalisation.

Finance Minister Alexander Chikwanda said Zambian companies should use the capital markets to broaden their horizons and capitalisation.

"You will recall that in mid-2012, the Government appealed to all companies of a meaningful size to list on the Lusaka Stock Exchange. Since then, the progression has not been very encouraging. I, therefore, urge Zambian firms to list on LuSE," Mr Chikwanda said.

Speaking during the workshop on the listing of State-owned enterprises on the Zambian stock market in Lusaka yesterday, Mr Chikwanda said the Government was aware and conscious of the genuine challenges faced by parastatals in listing on the stock exchange.

He said capital markets in Zambia continued to lag behind other capital markets within the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA) region partly as a result of State-owned enterprises not actively participating in the local capital markets.

He said it was a well-known fact that most State-owned enterprises had not been performing to desirable and expected standards.

"We keep crying and complaining about the high cost of borrowing in the Zambian market, but the same borrowers do not try to use alternative avenues of raising funds," he said.

Mr Chikwanda said if a number of entities could use alternatives such as the capital markets to raise funds, that in itself would provide competition to the banks and in due course the banks may lower their interest rates to attract and retain business.

"I am very happy with the presence of the Zesco team at this meeting and I know that Zesco will soon list on LuSE and this will encourage other State owned enterprises," he said.

Mr Chikwanda said the Government recently approved aState owned enterprises policy aimed at providing the strategic outlook as well as improving the performance of State owned enterprises.

He said the policy would be launched soon and required that State-owned enterprises should enhance their capitalisation and afford Zambians a chance to own stock through innovative ventures like listing on LuSE and forging strategic partnerships with the private sector.

He said by doing so, they would also empower Zambians to own shares in these companies, saying that was an essential step in the country's development process.

He said the onus was on the local institutional investors such as parastatal entities to show confidence in the local market and invest in it.

Speaking at the same function, Securities and Exchange Commission chief executive officer Wala Chabala said "We have almost all the captains of State-owned enterprises gathered in one place to discuss the issue of using capital markets.

"So potentially, we have among us the architects of the future success stories that will be told about the transformation of some parastatals into globally recognised competitive entities about which case studies will be written."

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