The 23rd of February 2023 commemorates a milestone event in the history of Zambian capital markets. Zambia’s Security and Exchange Commission officially launched her inaugural Capital Markets Master Plan, which is a long-term project that aims to grow the country’s financial sector over the next 10 years.
The Capital Markets Master Plan (CMMP) articulates key strategies aimed at addressing the barriers to capital markets development and sanctioning an attractive investment environment for key financial players such as investors, borrowers, and market intermediaries to stimulate development in Zambia. The CMMP sets out a clear framework and provides a roadmap for capital market development which is a significant piece to the puzzle in order for the government to achieve ‘Vision 2030’. One of the main government objectives is to ensure that Zambia is a prosperous middle-income nation by 2030, and this 10 year market plan will be the engine to facilitate this revolutionary transformation.
The vision of the CMMP is to revamp the Zambian Capital markets to become an attractive international destination for long-term investment and deploy domestic and foreign capital that can be used to develop different sectors in the economy and therefore boost Zambia’s economic capacity.
The vision of the master plan will be undertaken by engrossing five main developmental areas namely; Enhancing the government bond market, enhancing other traditional security markets, developing new innovative products and markets, enhancing capacity building across capital markets and finally, enhancing the capital markets regulatory environment. This process will be intentional and consultive and once fully implemented, the government hopes to reap several benefits such as the creation of employment opportunities, reduced poverty and a significant contribution towards sustainable economic growth.
Capital markets play a vital role in any given economy as one of the most powerful drivers of economic growth and wealth creation. Although the government is optimistic about the success of this master plan, the work of actualizing this vision cannot be ignored or condensed. Given Zambia’s current economic standing, implementing this master plan may be easier said than done. The country’s current debt overhang remains a key inhibitor to Zambia reaching its full economic potential economic growth. There is a high risk currently associated with investing in Zambia which dampens investor confidence and lessens the chances of the country receiving Foreign Direct Investment.
Contrary to this, preceding the election of the new government, it was observed that the news of the new government had a positive reception by some international bodies. The dawn of a new government implied a sense of political stability and regained the trust of foreign investors which was demonstrated by the appreciation of the Zambian Kwacha shortly after H.E Hakainde Hichilema was announced as Zambia’s new president elect.
Although the roadblocks are present, if the government strictly follows through with this plan and supports its promises with action, this new master plan could potentially propel Zambia’s economy in a positive direction for the years to come.