The government through the Ministry of Finance is working with the Lusaka Securities Exchange (LuSE) to introduce Retail Bonds which are issued specifically to retail investors.
Ministry of finance permanent secretary for budget and economic affairs Mulenga Pamu explained that retail Bonds are bonds that are specifically issued for retail investors and will be denominated in Zambian Kwacha and can be bought in relatively small intallments.
He noted that both government and corporate bonds traded on the secondary market of the LuSE demand significantly higher investment amounts than purchasing shares and because of this, most of the general public have found it difficult to meet the minimum investment amount for purchasing bonds.
Dr. Pamu Mulenga said with the introduction of the retail bond, Zambians will be able to purchase a retail bond with as little as K500 in comparison to the current K 30,000 for a competitive government bonds.
“In addition to the lower investment amount, retail bonds also encourage domestic participation, promotes financial literacy, gives citizens an alternative form of savings, away from the traditional bank account and offers a fixed interest that ensures the aspect of predictability for investors.
“Once the retails bonds are launched, they will be made available to the LuSE online trading platform,” he said.
LuSE board chairperson Raphael Kasonde said LuSE has embarked on introducing market development projects to ensure availability of a greater diversity of financial securities to the investing public.
He said amongst the LuSE’s market development projects is the introduction of retail bonds which are ordinary shares broken down into smaller units that cater to the needs and purposes of retail investors.
“Retail Bonds will enable retail investors to participate in Government Bond purchases. With the MyLuSE platform being launched today, Retail bonds will also be accessible using a mobile phone and mobile money platforms to make purchases,” Kasonde said.
He said LuSE was also working on the Commodities Market, which was launched by Minister of Finance, on behalf of the Vice-President, in February 2020.
Kasonde said the Commodities Market presents investors with the opportunity to trade commodities with the MyLuSE App on the market using warehouse receipts with the Spot Market being the initial step taken in the development of the Commodities market.
He said the LuSE is aware that there is demand for derivatives in the agricultural commodities market space where market players can also use the MyLuSE App to trade the derivatives by locking in a price and quantity of commodities for delivery at a future date.
“This demand is one that the LuSE will look to meet in the future with the involvement of all stakeholders,” Kasonde added.
