Zambia’s capital market small – BoZ
THE Bank of Zambia (BoZ) has admitted that Zambia’s capital market is too small and weak to support Zambia’s desired growth prospects and urgently needs a boost to keep up with the thriving economic trends.
Deputy BoZ governor in charge of operations, Bwalya Ng’andu said the growth of the economy and local companies regardless of their size needed a strong capital market to support opportunities and help refinance operations.
He said the main capital market in Zambia, the Lusaka Stock Exchange (LuSE) was not a well-developed source of finances adding that such were among the challenges Zambia’s financial sector needed to overcome.
“We have a small capital market and weak financial base. These are serious challenges Zambia faces and they have to be worked on for the capital market to support Zambia’s economic growth,” he said.
Dr Ng’andu said the central bank was looking at legislation which would bring in all parties in the financial sector to help provide long-term funding to the economy.
He was responding to Barclay Bank managing director Saviour Chibiya, who is the immediate past Bankers Association of Zambia (BAZ) chairperson who had said banks could not be wholly blamed for not fully supporting economic projects.
Mr Chibiya had said that while commercial banks may be getting the criticisms from various quarters including the Government for not fully supporting the economic growth in Zambia, the other forms of financing that could be used by the local economy were weak.
Commercial banks have been blamed for the high interest rates in Zambia, a situation that had disadvantaged most Small and Medium Scale Enterprises (SME) which were inhibited from accessing the loans.
Mr Chibiya said various forms of capital markets were a source of finance for long-term loans for banks but regretted that Zambia did not have a well developed capital market that the banks could run to for funds to support long -term loans.
Dr Ng’andu admitted that the LuSE was too small and that the pensions and insurance should come on board to help provide financing to the banks or directly offer long-term loans to the business community.
“We have to deepen the financial sector. The development bank should play a role, the capital markets like the stock exchange and pensions and insurance should stimulate the money market and then the economy.
“We at the Bank of Zambia are reviewing legislation so that insurance companies are stimulated and help in deepening the financial sector. The pension is a great source of long-term financing and we are looking into that,” he said.
Posted by special dating advice
on 3:54 PM. Filed under