Zambia Forestry and Forest Industries Corporation (ZAFFICO) on 12 February 2020, scored a first as it listed on the Lusaka Securities Exchange (LuSE), giving hope to other state-owned entities under the Industrial Development Corporation (IDC) Group to follow.
The company, which raised almost K300 million from the initial public offer (IPO), also becomes the first firm to list on LuSE in five years and brings the total number of companies listed on the capital market to 23.
IDC Group chief executive officer Mateyo Kaluba said the capital raised from the IPO will be deployed into new forest plantations across the country, thus increasing the lifespan of the company. Kaluba said the listing of Zaffico on the wider platform will actualize its potential stating that it is the first IPO in the forestry sector and also restricted to Zambian investors.
Finance Minister Bwalya Ng’andu urged the LuSE and Securities Exchange Commission – SEC to take bold and decisive measures that will make it easier for companies to list. Dr. Ng’andu said this when he officiated at the Zaffico listing ceremony in Lusaka on 12 Februarry 2020.
The Minister said the listing of Zaffico will contribute to increasing supply of stock to LuSE and presents an opportunity for domestic retail and institutional investors to diversify their portfolios.
And Zaffico Board Chairperson Anna Kunda said the development of listing Zaffico will enable the company to expand its plantations, such that the company will have at least one plantation in each of the 10 provinces. Kunda stated that Zaffico will be consolidating its position in the market to be leading supplier of wood and timber related products, while it also supports the re-afforestation efforts to address the effects of climate change.
Speaking at the same function, LuSE Acting Board Chairman Richard Phiri said the listing of Zaffico will raise capital for the long term without incurring high costs that come with traditional modes of financing such as debt. And Securities Exchange Commission CEO Philip Chitalu, said the commission will continue to facilitate a conducive environment to enhance participation in the capital market.
Zambia State Insurance Corporation – ZSIC is the other company that was specifically listed by government for listing in 2019 but is still outstanding. Listing on LuSE is also a control function that aids with companies putting in place good corporate governance measures to meet listing rules. The bourse also offers opportunities for Zambians to have a direct equity stake in companies operating in Zambia.
Analysts have observed that SEC and LuSE management teams need to be reformed to held drive the viability and increase the numbers of listed companies. Just by aggressively working with IDC, LuSE can attract more than 50 companies which are currently state owned.
The Securities market in Zambia needs to be further developed to offer a viable alternative for raising capital other than from banks and financial institutions. LuSE also houses the alternative exchange which needs awakening to offer Small and Medium Enterprises a platform to raise capital for expansion and further creating the much needed employment opportunities.
