By JUDITH NAMUTOWE –

BANK of Zambia (BoZ) deputy Governor Operations Bwalya N’gandu has called on the need to address challenges hindering growth of the capital markets.
Dr N’gandu named one of the biggest challenges hindering capital markets growth as the supply of investable resources to Small and Medium Entrepreneurs (SMEs).
Others were low activity and liquidity, narrow investor base, limited public awareness, high transaction costs, limited investment products and scarcity of human capital and financial infrastructure.
“All these are critical issues that need to be addressed for our capital markets to grow and become the main driver of the long term growth and success of our economy,” he said.
Dr N’gandu said this would require continued collaboration, concerted efforts and active participation by regulators, Government and all stakeholders.
He said this during the Securities Exchange Commission (SEC) third chairperson’s breakfast meeting held in Lusaka yesterday.
He said that SMEs provided the greatest opportunities for meaningful jobs to the many unemployed citizens, but that despite this realisation, the SMEs remained heavily unrecognised in the flow of investable resources due to the high risk profiles they were generally characterised with.
“Although the supply of bank loans can be critical to the growth and sustenance of the SMEs, we believe that capital markets can innovatively create vehicles that could possibly play a role in influencing risk capital to flow towards SMEs,” he said.
He said venture capital funds, dedicated collective investment schemes and similar structures should be exploited to allow SMEs share investment risk and return with Zambians who were willing to participate in growth sectors of the country’s economy.
Dr N’gandu said the Lusaka Stock Exchange (LuSE) All Share Index had risen by over 6,000.0 points since inception to 6,158 points as at February 12, 2015.
He said the Zambian bond market had equally undergone significant transformation over the years in which the amount of outstanding treasury bills and Government bonds increased by more than 50 per cent to K10.9 billion and K11.6 billion respectively.
He was pleased to note that the BoZ had played an active role and introduced a number of innovative reforms to spur the growth and development of the Government securities market.
SEC board chairperson Chintu Mulendema expressed hope that with continued assistance from the BoZ, the Commission would address the
issue of market liquidity.
“We hope that you will help us come up with strategies that we can include in the Capital Market Development, which is expected to be launched this year. If as a country we develop and adopt best Capital Market practices, our markets will help the continued growth of our economy,” he said.
The commission was considering five applications of debt instruments, registration of securities that were expected to come up by end of
March 2015.
Additionally the SEC was currently considering five potential bond registrations, two registrations coming from State Owned Enterprises, two from statutory bodies and one from  the financial services sector.