Market oriented reforms
have been successfully implemented in Zambia. Exchange control
regulations have been removed, and prices and interest rates have been
deregulated. After tax profit, dividends and capital may be repatriated
up to 100 percent without restrictions.
In order to stabilise the
Zambian Kwacha and reduce inflation, the
government has implemented a tight monetary policy, which includes
getting the Bank of Zambia to reduce its reliance on cash and liquidity
reserve requirements as instruments of credit control. Instead, the
Bank will intensify the use of market-based monetary instruments.
recommendations of the BASLE Committee on International
Minimum Accounting Standards have also been included in the Act.
Assistance to the revision of the Inspection Manuals was done by the
IMF and an early warning system for off-site inspection was devised.
The adoption of the Capital Assets Management Earning and Liquidity
(CAMEL) rating system has strengthened on-site inspections.
As stipulated under the
Banking and Financial Services Act (BFSA) of
2000, the Bank of Zambia exercises overall control over the banking
system. On behalf of government the Bank of Zambia places high-yielding
Treasury Bills on the market each week to soak up excess liquidity and
to supplement government cash flows.
Zambia's financial sector
is dominated by privately owned commercial
banks namely Barclays, Stanbic, Standard Chartered, Indo Zambia Bank,
Finance Bank, New Capital Bank, Investrust Merchant Bank, CitiBank,
Cavmont Merchant Bank and the Bank of China. There is only one state
owned bank i.e. the Zambia National Commercial Bank.
The commercial banks
provide traditional services including current
accounts, savings and deposit accounts, loans, overdrafts, trade
finance and foreign exchange facilities. Zambian merchant banks offer
project finance, trade finance, syndicated lending and advisory
services for new public issues and private placements.
A vibrant interbank money
market has become operational alongside the
lucrative government bond market.
Development finance is
available through several institutions with
strong ties to government. They receive substantial funding from
foreign governments and donor agencies and provide long-term finance to
promote industrial and agricultural development, export-orientated
projects and development services.
The Development Bank of
Zambia (DBZ) was established in 1974 and is
majority-owned by the government. DBZ is intended to provide medium and
long-term loan finance and equity to productive enterprises in Zambia.
The Development Bank was restructured during 2003, which included
hiving off all its non-performing assets.
There are a number of
building societies in Zambia which mobilise funds
from small depositors and concentrate mainly on long-term mortgage
Zambia has a flourishing
and well-developed insurance industry offering
a full range of services. Insurance policies in life, non-life and
investment insurance are available. The recent emergence of trading
activity on the capital markets has seen insurance policies being
developed to cater for investors wishing to trade in the capital
markets with a minimal degree of risk.
and Capital Markets
The Lusaka Stock Exchange (LuSE) opened in February 1994. Although no
companies were listed in the first year of operation, trading of
unlisted stocks took place. Presently 11 companies are listed, while 10
are quoted. The major companies include ZCCM, Zambia Sugar Plc,
Chilanga Cement Plc, Standard Chartered Bank and Zambia Breweries Plc.
There are no restrictions on foreign investment on the LuSE. There are
six stockbrokers trading on the exchange presently.
Since its inception, the
LuSE has offered trading in equity securities
and in March 1998 it became the official market for trading in
Government Bonds. The market is regulated by the 1993 Securities Act,
which in turn is enforced by the Securities and Exchange Commission
Although most of the
listings on the LuSE have been a result of the
country's privatisation process, a number of private sector companies
are now looking at the exchange as a means of raising capital.
Agricultural Credit Exchange was established in 1994, as an
initiative of the Zambia National Farmers Union. Its establishment
followed the liberalisation of prices of most agricultural commodities,
particularly that of maize, the staple food.
The main function of the
Exchange is to provide a centralised trading
facility for buyers and sellers of agricultural commodities and inputs.
The Exchange also provides updated prices and some market information
for both local and international markets.
Stock Exchange (end-period)
(year-end; kwacha terms)
|Value of share
|Volume of shares (m)
|Capitalisation (US$ m)
Lusaka Stock Exchange.