Zambia’s football governing body’s hopes of making history as the first executive to use the capital markets to raise capital for infrastructure and operations may have to wait a little longer, according to sources close to the matter.
“The Football Association of Zambia has for some months been working on the mechanics of football bond that has been lauded by FIFA as the future of financing football activities”, indicated an executive in the Andrew Kamanga led administration in Q1 2019. “We are hoping the bond is issued by August 2019 and we are already speaking one of the big banks in Zambia that has agreed to underwrite the football bond”.
FAZ’s intention to raise US$10 million through the issuance of Chipolopolo bonds was announced by the governing body, according to Zambia Daily Mail in an article published in January 2019. “The general purpose vehicle, planned for execution before the end of the year, would seek to complement the US$1 million contribution expected from world governing body, FIFA, to offset some of the country’s urgent needs, including improving infrastructure and youth talent identification”, explained Jeff Kapembwa in an article published on the southerntimesafrica.com website in February 2019.
Fast forward to the present day (Q1 2020), the football bond has faced exogenous challenges despite the mechanics of it being astute. “There are a lot of dynamics that we need to consider in terms of raising money and funds even for clubs because the major issues is the management in that a lot of people have not taken soccer as a business”, said a regional football executive whose provincial election comes up in March 2020. “When somebody tries to bring in business principals it becomes a challenge”.
The somebody with business principals is the current head of Zambia’s football governing body, Andrew Kamanga whose background in corporate finance has been the key to the turnaround that FAZ has seen since his administration took office.
“Andrew is being fought just basically on account that there are now systems in place (at FAZ) where people cannot just walk in and get funds and walk out and use the funds in any way without retiring”.
FAZ now enters 2020 with elections on the horizon which will be the main focus for Q1 and Q2. After the elections, the process must be restarted to ensure that the new strategic focus of FAZ is firmly guided towards alternative ways of raising finance. Issuance of the bond will uplift FAZ’s credibility as their books will be open to scrutiny by investors. This is where the credit rating of FAZ would become important and if they don’t have one the advising bank would advise which rating agency to use. This would then be followed by a roadshow which would see Andrew Kamanga’s team sell the bond concept to investors. Finally, once the window of opportunity is identified, the bond would be placed on the market.