Sampa urges raising of $100m through a Diaspora bond

Sampa urges raising of $100m through a Diaspora bond
By Chiwoyu Sinyangwe
Sat 07 Apr. 2012, 13:30 CAT

THE government and Securities and Exchange Commission (SEC) should consider raising US$100 million from Zambians working abroad through a Diaspora bond, says finance deputy minister Miles Sampa.

And Sampa has implored local authorities to "put their houses in order" and start raising finances from Lusaka Stock Exchange instead of endlessly looking up to central government for operations finance.

Speaking at the launch of SEC strategic plan 2012-2015, Sampa said there was need to leverage the over 2,000 Zambians working abroad to ensure their earnings contribute to national development.

Sampa, who is also Patriotic Front Matero member of parliament, said there was need for SEC and the government to work on a mechanism to structure the bond.

"It has been determined that worldwide, there are about 2,100 professional Zambians abroad doing good jobs at United Nations (agencies), Africa Union, International Monetary Fund and the World Bank, among others," he said.

"Assuming that each one of them can save up US$30, 000 to US$50, 000, there's a US$100 million in the hands of Zambians abroad. So, we need to target that money through a Diaspora bond that can be spiced with some other features that will attract them to bring that money here than invest it abroad. US$100 million raised by the government from Zambians abroad is sweeter than US$100 million that would be raised from foreigners. We need to take advantage of our Diaspora."

Sampa also urged SEC and the Bank of Zambia to harmonise the local bond structure so that a pricing could be determined and properly marketed to the capital market and become a chief source of finances for the country's economic growth and long-term investments in infrastructure projects.

"Because only if pricing for long-term debt is known, it sets a benchmark for short-term borrowing and predictability in the market," he said.

"About 70 per cent of the finances needed in our country can be generated from the capital markets to facilitate mobilisation of funds meant for long-term investments. We need to move from an era where we keep thinking of investment in a short-term, in a one month to five years. We need to have abilities to raise finances for as long as 20 to 50 years because only then will companies be able to borrow to invest in infrastructure."

And Sampa said decentralisation could be accelerated if the local authorities started raising finances from the local bourse.

"These councils…they can actually raise their own funds through municipal bonds like it is done in other countries," said Sampa.

And SEC chief executive officer Dr Wala Chabala said the local capital market was set to grow further and needed support of all key stakeholders in the economy.