BoZ seeks to simplify sale of securities

By BUSINESS REPORTER THE Bank of Zambia (BoZ) is in the process of developing a secondary market for debt instruments to help investors sell off securities before they mature.

The instrument, expected to be operationalised by next year, is meant to increase liquidity in the market through Government securities.

Currently, the Central Bank operates a primary market for treasury bills and bonds and investors have to wait for the securities to mature to access liquidity.

According to BoZ deputy governor operations, Bwalya Ngandu, the new instrument would enable investors in the securities market easily access or sell their shares before the maturity date.

Dr Ng’andu said in an interview that the introduction of a secondary market would also spur investor confidence and enhance liquidity in the securities market.

He said the development was part of the continued efforts to develop the securities market and help reduce Government borrowing.

“With the new secondary instrument, investors will be able to acquire and sell their shares even before they mature. With increased liquidity, the attractiveness of the securities will increase and in turn bring about higher competition.

“Investors will be guaranteed a market to acquire and disposeoff the instruments whenever need arises unlike currently where one may need money urgently but has to wait until the instrument matures,” Dr Ng`andu said.

He said there was need to make the market more responsive by developing the secondary market for businesses to be able to expand. Dr Ng’andu said the Central Bank was currently working on developing the primary dealership where it would engage commercial banks to provide liquidity on the secondary market.