Trade & Development Bank (TDB), held a two days conference forum on April 26 and 27 2023, themed “Harnessing Alternative Investment to Drive Economic Recovery”. The Trade and Development Bank, formerly the PTA Bank, is a trade and development financial institution operating in eastern and southern Africa. TDB is the financial arm of the Common Market for Eastern and Southern Africa, although membership is open to non-COMESA states and other institutional shareholders. Among its speakers were honorable minister of finance and national planning, Dr. Situmbeko Musokotwanewho graced the occasion. Speaking during the conference Hon minister stated that the theme was timely as many countries need to harness alternative investments. To drive investment in the country government is encouraging private sector participation through foreign. He stated that in the next decade we want to see less poverty and better livelihoods for Zambians, however better livelihoods are not wished for but earned, and this comes only by producing more as a nation, producing more maize, wheat, copper, lead, mangos cotton, hence more visitors coming to visit the country, these are examples of things that need to be produced in large quantities for the creation of more jobs, and building infrastructure that are needed such as roads, hospitals and schools. He further stated that opportunity to get big contract is limited due to Zambia’s current debt levels. The government of Zambia has no money, the money that is available is focused on providing better health facilities, schools etc. However opportunities are there, especially in the export lead sector in order to grow the economy of Zambia. Institutional investors should take advantage of this and export more, the government has realized that the needs of the region are very vast and urgent but cannot take it up alone, therefore the government is opening up space to allow investments, road shows will be done in Australia, Brazil, South Africa to allow for investment in wheat and maize production.
Other opportunities seen are on the mining and energy sectors, the government is very committed to working with investment institutions to facilitate these engagements.
Madam Catherine Mavata Phiri, chairperson of the Zambia Association of Pension Funds gave an overview of the pension fund industry in Zambia, she stated that this has continued to grow steadily, as Net assets are at 18.27% as at December, 2022 investment government bond, listed investments where at ZMW12. 82 billion as at December, 2022, African economies growth are at 3.77% a year on average in the past 2 decades. Access to international capital markets remains constrained and costly due to investor’s perception of high risks. Institutional capital has also remained concentrated in developed markets, as investors sought to optimize for near-term returns and rather than sustainable returns through diversification, the situation has resulted in unprecedented levels of liquidity: global assets under management have grown by more than 40% since 2015 and are expected to increase from $110tn to $145bn by 2025. She further elaborated that to make it in Zambia success in African markets requires an understanding of the intersectional, long-term trends currently reshaping the continent. It also requires an exploration and experimentation approach using tactical market entry points plus ground level partnerships.
It was also noted that Africa has struggled with debt restructuring, hence pausing a huge risk for investors to come and invest, however there are vast opportunities in Africa some of which include, the renewable energy sector, natural assets of Africa, arable land, mobile banking just to mention a few.
Speaking during a panel session Mr. Goodson Kapaso, manager at Market, Development Pension said that the resources pulled by pension funds should be used to invest into economic activities, hence help in job creation, and should ensure that funds of its members are protected taking into account what type of investments are made. NAPSA representative stated that it has participated in a number of economic activities, some of which are ending load shedding in the country, commissioning a multi food processing company in western province, fostering investments in hospitality, socially and economic expenses. They stated that they have partners such as African Development Bank and are exploring options of partnering with other financial institutions.
Nasilele Ng’umbi Chaikatisha, portfolio manager, African Life Financial Services Limited said that, there’s a drive to grow capital markets. Pension funds have a low risk profile as they are always careful on what to invest in. it was noted that capital market on LuSE is under developed, NAPSA is one of their largest investors and there is only 4% of listed equity. NAPSA’s strategy is to buy and hold. It was also noted that there is need for an enabling environment, need to develop policies to foster change, and need to allow asset owners to take part in decision making.
In a panel session held on private equity it was noted that, there is need to diversify asset allocation, as there is strong growth in private investor firms, even looking back 15 years ago, private equity is outperforming public equity. There is a lot of room for private equity, and the market is small. Private equity is a risky class but provides high returns. There is also need to have financial knowledge, as the growth in the economy comes from SMEs, and these are what should be focused on. KundaMusonda-Chola, head Treasury and Investments, ZSIC life Plc, stated that, what is lacking is credit guarantee in terms of security for SMEs. Provided there is a formal structure, funding to SMEs can be done. In terms of risk investments pension funds should be conservative, there is therefore a need to increase private equity.
Speaking on the state of pension and retirement fund in Africa-implications to the Zambian investors, Mr. Gerson Kamatuka, chairperson, Funds@work Umbrella Fund, alluded that there is need to understand the need for pension fund, and investing in listed instruments, he said however that risk profiling is critical and should be central in all discussions, he noted that Tanzania recently opened up investment to Africa therefore a call to support and educate each other. Krishen Sukdev, independent actuary and former CEO, Government Pension Administration Agency (GPAA), added that there is need to look at pension funds holistically as something that supports savings, and over the long term there is need to invest in other currencies economies to diversify risks. He also noted that the private sector is what will drive economic growth.
Madam Miria Mazyambe, acting CEO and exchange secretary, Lusaka Securities Exchange (LuSE), had this to say on the topic “the capital market in Zambia”, she said, the LuSE is the only stock exchange market currently active in Zambia, it promotes mobilization in the stock exchange. It plays the role of raising capital through equity and debt, putting into context some figures,she noted that Baobab managed to raise 1.9m USD in 2002, while 26m USD was raised by Zambrew in 2008 just to mention a few, she said stock exchange is one key area in capital raising and transaction fees are once off, however capital market has challenges which are actively being addressed, and are not far-fetched in comparison with other markets. Mr. Nicholas Kabaso, head, ABC, Asset Management, stated that, the key is to get their market in the frontier, introduce indices, and exchange trade funds. He noted that there is traction moving in the right direction in terms of depth, listings are also being actively looked into and there is traction that is visible. For a very long time there has been only brokers listed, but now there are 9, he stated that there is a LuSE application online whereyou can buy and trade online, and there has been an increase in trade volumes. Companies are encouraged to market their businesses and announce to the public that they are listed, there is also a need for participation from individuals and deliberate education on awareness for the stock exchange and what is happening on the market, this will help enhance other securities and others will have to be developed. Inaction is the biggest threat faced on this market, a call is made for the participation of its members in decision making. The market is now more vibrant than ever, which is the biggest opportunity. New marketing strategies are being discussed, however LuSE does not deal directly with retail investors.
In conclusion Zambia has an abundance of natural resources and a diversity fuel of human capital, we must therefore collaboratively explore key areas of potential growth and address pressing questions, the mindset is the biggest resource that any country has, how things are seen and reacted to will make the harnessing of the natural resources of a country to develop that country, there are many natural resources with low production cost that can be invested into more than copper, there is also a need for cultural orientation as the mindset tunes one to think in a certain manner.