Govt to compel mines to list on LuSE

Govt to compel mines to list on LuSE
By Mutale Kapekele
Tue 06 Apr. 2010, 04:01 CAT

COMMERCE minister Felix Mutati has revealed that the government is to compel mining companies to list on the Lusaka Stock Exchange (LuSE) to allow Zambians own equity in the country’s main economic stay.

“Mining groups are operating outside the fences of LuSE and it is a failure by GRZ Plc (the government) to compel them, but we shall rectify that failure,” Mutati said in response to LuSE chairperson Friday Njovu who called on the government to compel mining companies to list on the local bourse.

Mutati accepted that it was a failure by the government for mining companies to operate outside LuSE.

Njovu, during the LuSE corporate governance awards last Thursday, observed that listing mining companies would attract more investors to the local capital market.

“This is a mining country and listing by the mining companies will be a boost to the market and make it more attractive to investors,” Njovu said.

“As part of our sustainability strategy, we would like to see mining companies listed on the exchange.”

He said the government must ensure long-term sustainability of companies, listed or not, through incentives that led to growth.

“Growing companies provide the government with a stream of revenues in the longer term and also have a chance of listing for broader participation,” Njovu said.

“When we talk governance, we are talking long-term partnership with the government and other stakeholders who keep the exchange going.”

He said listing companies on LuSE would encourage transparency and accountability in the way business was conducted.

“Being listed is a mark of excellence. It is the willingness to be transparent and responsive to one stakeholder,” he said.

“It is the willingness to adhere to and be compliant with standards way beyond your own and to an authority way above your own. Dealing with a company that has high accountability levels is much simpler.”

Njovu also said the government should ensure that businesses in the country adhered to high standards of corporate governance.

“I would like to remind you (government) that corporate governance is not only for listed companies,” he said.

“It has become the fundamental consideration why a company should exist and how it should be governed. Good governance is a firm foundation that guarantees the survival of the companies. Evidence is abound when governance is ignored or tampered with. We experience market and company failure.”

Njovu said for the health of the economy and the realisation of the government objectives, everybody should be advocates of corporate governance.

Later, Mutati acknowledged that lack of adherence to good governance led to business failure.

“Business failures are due to defects in corporate governance,” Mutati said.

“Accountants and other professionals in business should not just tick the boxes. Emerging markets, like ourselves, should appreciate as a major issue. We need to encourage structure of employing ethical standards compromised by not adhering to corporate governance. Listed companies should take this into account.”

He said companies that worked hard to ensure corporate governance remained active even in events of crisis.

Mutati said the government was encouraging parastatals to secure long-term financing through listing on LuSE.

Mutati said corporate governance made a difference to people whose “biggest threat is poverty, hopelessness that can be addressed by good corporate governance.”

And Zambia Institute of Chartered Accountants (ZICA) president Chintu Mulendema said most companies did not comply with corporate governance.

“Only 13 out of 20 agreed to be evaluated,” said Mulendema who chaired the selection committee for corporate governance awards.

“It is shameful! This is a major concern for LuSE. Evaluation of companies should be mandatory. Listed companies should be compelled to produce annual reports and to provide accounts to shareholders and stakeholders. They should be people-regulated.”

He said some companies did not highlight activities to do with the environment, health and social responsibility.

Mulendema said ZICA would work with the Institute of Directors (IoD) and LuSE to improve business compliance.

Listed companies are required to comply with provisions of the companies Act, securities Act and the banking and financial sector Act.