Economist Chibamba Kanyama says mining companies, especially those that were bought through privatisation, must lead by example and remain on the Lusaka Stock exchange in order to encourage the rest and raise capital from the local bourse instead of complaining about inadequate domestic capital while trusting foreign markets.
Chibamba was saying this in clarifying a presentation he made during the Bloomberg Africa Media Innovator’s conference in Livingstone, Tuesday, where he expressed concern that big companies listed under LuSE were not satisfied with the liquidity of the local exchange market and were considering pulling out.
After his remarks, some private sector stakeholders tweeted concerns that Kanyama was alluding to a possibility that major listed companies were considering pulling out and leaving the country, a narrative which the Bridges Limited chief executive refutes as inaccurate.
“I was answering the question from the moderator on government regulation and attraction of investment. I said that ‘the elephant in the room is the failure by the existing listed companies that went through the privatisation programme to raise additional capital from the local market. If anything, as far I see things, there is not a single company outside the local ones that came on board recently that would want to remain on the stock market’. Indeed, the narrative which has gone on for years is that the local financial market is not deep enough to raise capital. This comes on the backdrop of LuSE trying to bring on board a number of SMEs on the market in the next three to four years. The Government supported entity Citizens Empowerment Commission Commission plans to support the listing of these SMEs by meeting some of the listing costs,” he clarified.
“However, it is important for investors to value the domestic market as deep enough to raise capital. Mining companies for example believe our market is not deep enough and that’s why they are not listing here. Those companies that bought through privatisation should be on the forefront of changing this narrative and not thinking of delisting. These listed companies should shape the narrative of the value of listing because given an opportunity, they would rather exit the stock market. We want these companies to even raise additional capital on the local market.”
He observed that ignoring the local stock exchange market was sending a negative perception to prospective investors.
“Trusting foreign markets for capital raising makes us think they do not value our market. Just yesterday, Bloomberg gave a picture of higher returns in emerging markets in coming years but that can only be real if companies see the need to invest here and start impacting directly on per capita incomes of local investors; we have institutional investors who are strong enough to support any investment so that if we start from what we have, it will be easier for companies to go and raise additional capital on deeper markets,” said Kanyama.