One of the
3 Biggest falls in the world,
"Victoria Falls"



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.

In addition, 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.

Central Bank
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.

Commercial Banks
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.

Other Financial Institutions
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 loans.

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.

Money 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 (SEC).

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.

Commodity Exchange
The 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.

Lusaka Stock Exchange (end-period)
Index (year-end; kwacha terms)
Value of share turnover  (US$ m)
Volume of shares (m)
Capitalisation (US$ m)
Source: Lusaka Stock Exchange.


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