UNIVERSITY OF ZAMBIA

GRADUATE SCHOOL OF BUSINESS

ASSIGMENT 2

STUDENT NUMBER: GSB191046

PROGRAM: MSCI ACCOUNTING & FINANCE

COURSE : INVESTMENT ANALAYSIS &

PORTFOLIO MANAGEMENT

COHORT: NOVEMBER COHORT BLENDED

ZDA, a quasi-government institution under the Ministry of Commerce, Trade and Industry was
established under the ZDA Act No. 11 of 2006. It became operational in 2007, after the
amalgamation of five statutory bodies namely; Zambia Investment Centre, Zambia Privatization
Agency, Export Board of Zambia , Small Enterprise Development Board and the Zambia Export
Processing Zones Authority.

Government amalgamated the five statutory bodies in a bid to foster synergies that would
accelerate economic development and achieve sustained exponential growth. The other reason
was to improve efficiency in the delivery of business development services under a one stop
shop concept aimed at reducing the cost of doing business. The one stop shop concept would
also make it easy to do business thereby enhancing business competitiveness.

The Agency’s core functions as provided for in the ZDA Act No. 11 of 2006.

 Promoting and facilitating investment.

 Regulating and facilitating development of multi-facility economic zones and industrial
parks in Zambia and monitoring their performance.
 Overseeing the privatization programme.
 Promoting and facilitating the development of MSMEs.
 Increasing Zambia’s capacity to trade.
 Undertaking economic and sector studies and giving advice to the Minister of Commerce,
Trade and Industry.
 Encouraging public-public, private-private and private to public dialogue
 Establishing a database of facilities and promoting accessibility to industry.

The Zambia Investment Centre

The Zambian International Trade & Investment Centre (ZITIC) is focused on contributing to
socio-economic development through the promotion and facilitation of local and international
trade and investment in Zambia and the surrounding countries.
ZITIC provides consultancy and other support services to foreign and local investors and
facilitates Zambian participation in international trade and investment events.

ZITIC supports international trade through promotion of export of Zambian products and
representation of foreign companies wishing to offer their products on the Zambian market as
well as the COMESA and SADC Regions.

ZITIC works with various stakeholders and institutions including Government, Zambian
Missions abroad, Aid Agencies and other International organizations. ZITIC works as the
channel for Zambia’s wealth creation and distribution, economic growth, employment creation,
and poverty alleviation.

Securities Exchange Commission (SEC)

The Securities and Exchange Commission (SEC) is the regulator of the Capital Markets in
Zambia. It was established through an Act of Parliament, the Securities Act no. 41 of 2016. The
role as regulator is important for ensuring:

 Supervision and development of the Zambian Capital Markets

 Licensing, registration and authorization for financial intermediaries, issuers of debt and
equity instruments and collective investment schemes.

The functions of the Commission vests in the Board which is appointed by the Minister of
Finance in accordance with the provisions of the Securities Act.

The Lusaka Securities Exchange Plc

The Lusaka Securities Exchange Plc. (LuSE) was established in 1993 through the collaborative
efforts of the International Finance Corporation (IFC) and the World Bank. these two
organizations provided the technical support during establishment of the LuSE.

LuSE opened its doors for business on 21st February 1994. The establishment of the Lusaka
Securities Exchange Plc. was part of government’s broader economic reforms aimed at
stimulating a dynamic private sector to be the primary engine for economic growth in Zambia. It
was also motivated by the need to deepen awareness and understanding of financial and capital
markets in support of the emerging private sector.

Securities and Exchange Commission (SEC)

The private sector reform program was anchored on the Privatization Act No 21 of 1992. The
Act recognized the importance of citizens’ participation in the growing economy. Through the
Zambia Privatization Trust Fund (ZPTF), the Act sought to hold shares from the privatized state
companies on behalf of Zambians for divestiture. The aim was to achieve a wider distribution of
shares amongst local citizens. The other objectives for the development of the Capital Market
were;

To enable local businesses to raise relatively cheaper long term capital,

To empower citizens through ownership of shares,

To attract foreign direct investment (FDI) and

To enable companies achieve improved corporate governance through wider share ownership.

The establishment of a exchange was seen as a vehicle to attain these objectives to ensure
equitable, efficient and transparent mechanism for Zambians to create their own wealth creation.
Amendments to the Securities Act (1972) led to the Securities Act, Chapter 354 of the Laws of
Zambia (1993) that established the Securities and Exchange Commission (SEC) to regulate the
securities industry. The SEC is a corporate body that is given powers under the Securities and
Exchange Act to regulate and supervise the securities industry in Zambia. The regulatory powers
of the Commission have four major requirements:

Any person dealing or advising on securities must be licensed by the SEC,

Any securities market must be licensed as a Securities Exchange by the SEC,,

All securities of a public company which are publicly traded must be registered by the SEC, and,

Collective investment schemes must be authorized by the Commission.

A Compensation Fund established under the Act is aimed at creating investor confidence and
designed to compensate persons who suffer a pecuniary loss occasioned by default of a licensed
dealer or licensed investment adviser, which could otherwise lead to investors losing confidence
in the securities industry in Zambia.

Mandate and Structure of the Lusaka Securities Exchange Plc

Mandate

The 1972 Securities Act revised to facilitate the establishment of the Securities Exchange. It was
structured around models of a modern Stock Exchange with automated clearing and settlement
facilities through a Central Securities Depository (CSD). The Government of the Republic of
Zambia (GRZ) provided grant financing to LuSE from 1993 till 2009. Subsequently, GRZ
stopped providing support and LuSE became totally dependent on its listed companies to
generate operational revenues. The sustainability of LuSE became dependent on increasing the
number and size of companies that listed on the Exchange.

The Lusaka Securities Exchange Plc. (LuSE) is the principal stock exchange in Zambia. The
LuSE is a legally mandated company or corporate entity whose main activity is the operation of
a securities exchange for dealing in shares, bonds, and other securities in accordance with the
Securities Act No. 38 of 1993. It was founded in 1993 in Lusaka. The Exchange opened on 21st
February 1994.

The LuSE’s core mandate is to provide a fair and efficient platform through transparent and
equitable trading of the listed securities. LuSE contributes to wealth development, financial
services and a platform for investment for foreign and local investors. It provides a platform
where companies can raise long term capital and secondary trading of shares. LuSE also
provides facilities for the listing of securities and provides users with an orderly, transparent and
regulated platform to trade.