COMMENT - Neoliberal economic theory fails again. Inflation is in the single digits, but this has not brought down the cost of money, as bank lending rates are still over 20%. This is obviously a major hurdle for SMEs. Also, the mines use over 50% of power produced by ZESCO, and pay fewer tariffs than ordinary people. Again, this smells of corruption. Foreign owned mines are a net drain on the Zambian economy.
Chilipamushi accuses banks of running cartel
By Kabanda Chulu in Kitwe
Tue 27 July 2010, 04:02 CAT
COPPERBELT University senior lecturer Davidson Chilipamushi has accused commercial banks in the country of operating a cartel hence the failure to reduce lending (interest) rates despite the inflation rate declining to 7.8 per cent.
In a free market economy such as Zambia, the rate of inflation should be able to bring down interest rates to a level equivalent to that of the country’s inflation. For instance,
the rate of inflation is currently at 7.8 per cent and it is expected that interest rates should also be in the range of eight or 10 per cent.
Despite government’s efforts to bring down the rate of inflation to single digit levels, lending rates are still high, the lowest being about 20 per cent offered by some banks.
Government has reduced its borrowing from commercial banks, therefore the yields on treasury bills and bonds have declined thus offering banks alternative ways to make profits such as lending to the private sector and other entrepreneurs.
“This is very surprising that banks have not reacted in the down turn of inflation rates by reducing lending rates, for instance, the rate of inflation is currently at 7.8 per cent and it is envisaged that interest rates should also be in the range of eight or 10 per cent and banks will still make profit but this is not happening, why?” Chilipamushi asked, in an interview last Friday.
“And this is a hindrance to the development of the economy which needs to be addressed and the competition authority should take a keen interest in this matter because there is an apparent tacit collusion if I may say so because it doesn’t make sense that the rates for all banks are high although some have reduced but still remains high and someone was saying that there are many cars in the street since banks are dishing loans but this growth is not tangible since it is not translating into poverty reduction.”
He said the failure by banks to reduce lending rates was stifling development because investment decisions that had to be made by companies and individuals were delayed.
“It is surprising that this is happening, banks and even micro finance institutions are also charging higher rates despite government making efforts to ensure macroeconomic stability, and players are failing to respond, for instance, government is reducing borrowing from the banking sector therefore yields on bonds and treasury bills also come down in line with the desire not to borrow so much from the banks,” Chilipamushi said.
“This situation compels banks to look for alternatives from which they can make money than the easy way of buying bonds and treasury bills and it appears to me that, the alternative still remains lending to the private sector so there must be a balance between alternative investment sources.”
And Chilipamushi said Zesco Limited should stop looking at increasing electricity tariffs as the major source of its capital investments. Chilipamushi said shareholders of Zesco must recognize that the huge problems facing the company require the entity to be restructured to manageable levels.
“It appears the only source of capital investments as of now is through tariffs they charge to consumers out there but what Zesco needs to do is to look for alternative sources of funding to sustain their activities and that is making it saleable or bankable either through restructuring and bringing their books to date by reducing their debts on the balance sheets then people will have confidence. There are several sources of funding including locally at the stock exchange,” Chilipamushi said.
“What Zambians are looking forward to is to ensure that this Zesco is brought into the market and it has to be listed so that you and me can buy interest in it and I don’t know if that is a hindrance in their (Zesco) quest to move forward but they just have to restructure themselves and ensure that they operate on a commercial basis and get on the market and expand capacity to borrow and meet their expenditure requirements.”
He said Zesco does not operate as a commercial entity since it lacked a strategic plan.
“On paper Zesco had undergone commercialization but I don’t believe Zesco is operating as a commercial entity, firstly it has to be restructured and strategize and unbundling is not an issue and the issue is making Zesco viable as a single entity and in the absence of a proper study being done, it is difficult to recommend unbundling,” said Chilipamushi.
Lusaka Stock Exchange (LuSE) general manager Beatrice Nkanza has used every opportunity requesting struggling government entities such as Zesco, Indeni, Tazama, ZSIC and others, to raise part of their capital investment on the stock markets.
Nkanza has explained that due to the strict process of listing, companies could raise funds through bond issuance and other debentures.
Zesco has applied to the Energy Regulation Board (ERB) requesting for 36 per cent electricity tariff adjustment because it requires more than US $850 million to increase power generation capacity.
Zesco also wants to have in place cost reflective tariffs whereby consumers would pay for the power they use but surprisingly the mines that consume over 50 per cent of Zesco’s power production pay less tariffs compared to domestic consumers.
Labels: BANKING, BEATRICE NKANZA, CARTEL, DAVIDSON CHILIPAMUSHI, LENDING RATES, LUSE, ZESCO
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SMEs not ready for listing on LuSE, says Nkanza
By Mutale Kapekele
Thu 01 Apr. 2010, 04:00 CAT
LUSAKA Stock Exchange (LuSE) general manager Beatrice Nkanza has said Small and Medium Enterprises (SMEs) are not yet ready to be listed on the stock exchange.
Addressing the press yesterday, Nkanza said SMEs had corporate governance issues that needed to be addressed before they could be considered for listing on the stock exchange.
“SMEs command 90 per cent of commerce in Zambia and without them, we would be leaving a big gap in the business world,” Nkanza said.
“As LuSE, we have for the past two years sensitised them on their responsibility. For them corporate governance is a big challenge. It will be a while before they become eligible. They should first have structures, clear separation of roles for professionalism’s sake. They still have a long way to go to guarantee sustainability.”
She said the biggest challenge SMEs had was keeping financial records.
“They need to put things in place as they grow,” Nkanza said.
“We are hoping to see cluster of financially in order companies so that they can attract investors. SMEs are small in capital, human resources, focus and marketing.
She said the securities Act had been reviewed to embrace SMEs on the stock market and that all that was remaining was for parliament to enact it into law.
And Nkanza has urged companies that are listed on LuSE to observe high standards of corporate governance.
“This is not limited to big companies but all organisations. Listed companies should be responsible to itself and other stakeholders because they have wider ownership,” she said.
She announced that LuSE will today recognise one of the listed companies with a good corporate governance award.
Currently, 20 companies are listed on LuSE.
Labels: BEATRICE NKANZA, LUSE, SMEs
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COMMENT - I disagree with mrs. Nkunda. People didn't just 'get ahead of themselves' and created hundreds of trillions of dollars in toxic assets - several times global GDP (which I think is 60 trillion dollars). This is about the disastrous effects of neoliberal policies - deregulation, privatisation and corporate free trade. This happened in the 1920s, 1980s, and now it happened again. Neoliberalism has failed again, and we're lucky if the global economy makes it through this time. There is no need to try again.
LuSE to integrate trading sessions into national payment systems
Written by Kabanda Chulu
Friday, May 29, 2009 4:28:41 PM
TRADING sessions at the Lusaka Stock Exchange (LuSE) will this year be integrated into the national payment systems in order to enhance integrity of the capital markets by separating securities from payment systems.
In an interview in Lusaka, LuSE general manager Beatrice Nkanza said there was need to start transacting the way foreign investors did in their own environments when conducting business at the capital markets.
“Things have really been shaken including capital markets and LuSE is affected since we are part of the global network and we have people who are investing in those markets and they are doing that in the so called emerging markets including ours but we will be impacted by the changes going out there like banks, companies going under, markets are affected hence there will be regulatory changes that will impact even on those of us who have been compliant and what those changes will be remains to be seen,” Nkanza said.
“There is nothing wrong with the systems out there but people just got ahead of themselves and ignore rules hence getting into problems so restructuring will enhance and compel players to abide by the rules which we have been doing here and soon the central depository bill will be enacted and what it does is to separate payment and settlement systems thereby enhancing the integrity of markets by separating securities from payment systems. Right now we have just met the Bank of Zambia so that LuSE can be integrated into national payment system so when foreign investors come to do business, they will find that the things they do there we will be doing it here.”
She expressed optimism that confidence would soon return to the capital markets.
“Capital markets are run on confidence. Right now confidence is short because of what is happening everywhere not only at LuSE but throughout the world, as a result people have lost value - companies like General Motors (GM) have gone into turbulent difficult waters, did you ever wonder that GM, one of the biggest companies in the world, can go under, did you ever?” asked Nkanza.
“We want confidence to come back and it should come back since western governments are pumping a lot of money to resuscitate companies and financial systems and stimulate people to start doing business again. Hopefully things will soon return to normal and we hope to strengthen our systems so that we fit in smartly with what is happening globally so that when these funds start moving, they can find way to LuSE and people can get returns and profits like they expect.”
Labels: BEATRICE NKANZA, LUSE, PAYMENT SYSTEMS
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‘SADC automated stock exchange will boost securities market’
Written by Nchima Nchito Jr
Tuesday, May 26, 2009 1:59:11 PM
LUSAKA Stock Exchange (LuSE) general manager Beatrice Nkanza has stated that the development of the automated stock exchange hub in SADC will boost the performance of the securities market.
Responding to a press query, Nkanza stated that with the completion of the technical architecture for the hub, plans had reached an advanced stage for the establishment of an automated stock exchange centre in the Southern Africa Development Community (SADC).
“The SADC hub has reached an advanced stage in that the technical architecture has been completed. This means the mode of access; reciprocity between the parties has also been discussed and should be refined as the project nears completion,” she stated.
Nkanza further stated that the co-ordination of the transactions would be included in the trading rules.
“Enforcement, in case of disputes will also be determined in the jurisdiction where the trades take place, as prescribed in the rules,” she stated. “What it means is that the new system is an ‘enabler’ as opposed to being a market per se, meaning that it will enable our local brokers to buy or sell securities in JSE [Johannesburg Stock Exchange] or Mauritius or any member who will be hooked on to this system and vice versa.”
Nkanza stated that the regional stock exchange hub would help in the integration of the various exchanges in the SADC region.
“The benefits of the hub will be the ability of local brokers to access securities in other markets which will be using the system,” she stated.
“The effect is an increase in size of the market out reach, increased liquidity and variety of products and investors. Cross listings will also become a reality.”
Nkanza however pointed out that funding was still being sought for the SADC hub project.
“The committee is looking at various sources. The launch dates keep moving as a result of numerous extenuating circumstances. Currently I believe the launch date is end of year 2009, all things being equal.” said Nkanza.
SADC member states are in the process of developing an automated stock exchange hub which will enable people and investors to buy shares from any listed companies within the region.
Labels: BEATRICE NKANZA, SADC, STOCKMARKETS
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LuSE urges SMEs to raise capital
BY NANCY MWAPE
THE Lusaka Stock Exchange (LuSE) say there is still hope for Zambian companies especially the Small and Medium Enterprises (SMEs) to raise funds on the capital market despite the credit crunch.
LuSE general manager, Beatrice Nkanza said this in Lusaka at the first Finance, Banking and Insurance Services (FINBIS) Expo 2009 meeting organised by SS Media.
The Expo is expected to be held at Mulungushi International Conference Centre in Lusaka next month under the theme: Partnership for Wealth Creation and Protection.
Mrs Nkanza said SMEs could raise funds on the capital market through the stock exchange’s third market tier.
She said LuSE was currently sensitising the public on the benefits and how companies could apply for listing on the third tier.
She said the LuSE all Index had dropped from 4,000 points last year to 3,000 points due to the financial crisis that has hit the global economy, Zambia inclusive.
At the same function, SS Media director, Shem Simuyemba, said the objective of the expo was to provide a platform for companies to showcase their products and services to existing and potential clients.
Mr Simuyemba said the expo would be a unique marketing window to showcase the depth and diversity of the Zambian FINBIS sector.
“Zambian public particularly, SMEs do not have a good understanding of the range and diversity of services on offer from customer to the business financial services, leasing to trade finance, microfinance to personal loans, government bonds to stocks markets,” he said.
He said the pension and insurance industry was one of the least understood sectors in the country adding that both businesses and individuals needed to be sensitised to take advantage of many existing products and services to deepen the sector.
“It is by understanding the range, diversity and depth that true partnership for wealth creation and protection can be built, generate increased business and growth for the FINBIS sector,” he said.
Mr Simuyemba said the expo was open to all companies and institutions in the FINBIS sector.
SS Media Group Limited has partnered with LuSE, Bank of Zambia and Pension Insurance Authority to promote the expo scheduled for April 3 to 4, 2009.
Labels: BEATRICE NKANZA, LUSE, MULUNGUSHI INTERNATIONAL CONFERENCE CENTER, SMEs
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LuSE makes progress on creation of alternative exchange market
Written by Nchima Nchito
Wednesday, February 04, 2009 11:07:28 AM
LUSAKA Stock Exchange general manager Beatrice Nkanza yesterday revealed that progress has been made on the establishment of an alternative market on the exchange.
Responding to a press query, Nkanza said deliberations were being held with various stakeholders to find a way forward regarding the establishment of
an alternative exchange for small and medium enterprises (SMEs).
“With respect to this matter, we had our first stakeholder meeting in December where we addressed the member organisations whose members we would be targeting,” she said.
Nkanza revealed that the next stage was to address prospective companies directly with meetings being planned for Kitwe, Livingstone and Chipata.
“The purpose of these meetings is to interact with them and walk through the listing requirements,” said Nkanza
“The only new item on the SME listing requirement is the engagement of the designated advisor. This is really where the difference is from the current listing requirements for other companies not in the SME category.”
Lusaka Stock Exchange (LuSE) in the recent past announced intentions for the establishment of an alternative market for listing of small and medium enterprises to help them find alternative funding to expand their operations. This is in view of the recognition that SMEs had a vital role to play in the growth of the economy.
Labels: BEATRICE NKANZA, LUSE, SMEs
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Nkanza welcomes formation of regional stock exchange
By Fridah Zinyama
Wednesday August 01, 2007 [04:00]
LUSAKA Stock Exchange managing director Beatrice Nkanza has welcomed the move by COMESA to form a regional integrated stock exchange provided it adds value to the structures already in place.
Recently, COMESA member countries stock exchange chief executives met in Cairo to brainstorm the benefits that would result from the integration of the stock exchanges in the region.
Nkanza in an interview said the move was welcome as the member countries had already started moving towards integration.
“There is value in the integration of the stock exchange as it is that are offered in each member country,” she said. “We welcome COMESA’s suggestion to create a regional stock exchange as long as it did not replicate the efforts being made by the African Stock Exchanges Association (ASEA), the SADC Committee of Stock Exchanges and EAC Capital Market Development Committee in this regard.”
Nkanza explained that the integration of the stock exchanges in the region would go a long way in resolving some of the problems of lack of adequate securities and shares to be floated.
“The main objective of COMESA trying to have an integrated regional stock exchange is to try and harmonise the activities of the stock exchanges in the region and to facilitate a wider market so that there are more players involved in the stock exchanges,” she explained. “We would like a situation where a person who is in South Africa can buy shares being floated on LUSE and vice verse.”
And COMESA director for trade Dr. Charles Chanthunya said the integration of the markets into large regional entities would aid in tapping additional savings than would have been the case at the national level, and hence improve the allocation of scarce resources.
“Through a multiplier process, such increased investments would stimulate and accelerate the process of economic growth in the region,” Dr. Chanthunya said.
He explained that once the region managed to integrate their stock exchanges, there would be a resultant improvement of external financing which could encourage the creation of regional projects with foreign equity participation.
Labels: BEATRICE NKANZA, COMESA
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