Basic HTML Version
www.ebizguides.com
100
Finance
suffer pecuniary loss occasioned by the default of a li-
censed dealer or licensed investment advisor.
The LuSE offers several incentives to investors to pro-
mote rapid development of the capital market in Zam-
bia. In addition to the absence of restrictions on share-
holding levels and foreign ownership, these include:
• No capital gains tax
• No withholding tax on dividends paid by listed com
pany to individuals
• Corporate income tax discount of 2 percent for
companies listed on the LuSE for the first year of
listing
• A further 5 percent discount if offer results in at
least 33 percent uptake by Zambians
• No property transfer tax on listed securities
For further information, log on to www.luse.co.zm.
The financial sector in Zambia is considered relatively
under-developed and has had limited success in reach-
ing all sectors of the economy. A study by Finmark Trust
revealed that only 33 percent of the total population in
Zambia had access to financial services. The survey
also indicated that most Zambians prefer to invest in
non-financial instruments, such as a business, live-
stock, land or agricultural equipment.
In recognition of the strategic importance of the finan-
cial sector to the country’s development and poverty
reduction efforts, the Zambian government launched
the Financial Sector Development Plan (FSDP) in 2004
to address weaknesses that had been identified in the
financial sector. The FSDP is a comprehensive strategy
aimed at achieving a financial system that is sound, sta-
ble and market-based, and able to support the resource
mobilisation necessary for economic diversification and
sustainable growth. A key motivator behind the plan
BBZ handover of Vehicle to Breakthrough Cancer Trust
THE FINANCIAL SECTOR
DEVELOPMENT PLAN (FSDP)
was the changing profile of the financial services sector
and a pressing need to develop effective means of su-
pervising the different sectors, with large financial con-
glomerates and integrated product development serv-
ing to blur the traditional boundaries between banks
and non-bank financial institutions.
A number of activities have already been undertaken
under the FSDP, such as the establishment of a Credit
Reference Bureau. Similarly, policies and legal and
regulatory frameworks have been developed to take
into account the evolving financial environment. These
developments have resulted in a considerable increase
in the number of banks and other financial service pro-
viders in the country. Furthermore, the Bank of Zambia
Strategic Plan 2008-2011 has made financial inclusion
one of its strategic objectives.
A Deposit Protection Scheme (DPS) is being estab-
lished for all eligible banks and deposit taking financial
institutions. The draft Deposit Protection Scheme Bill
has been developed and a meeting for stakeholders
was convened in December 2009. Legislative drafting
was undertaken during the first quarter of 2010.
A policy on rural banking is being developed under the
Rural Finance Programme, and a scoping study was fi-
nalized in December 2009. The second phase began in
January 2010 and consists of an examination of exist-
ing policy gaps, identifying key issues, and carrying out
research for the betterment of financial policy.
Phase II of the FSDP
Following the Financial Sector Assessment Programme
(FSAP) report of November 2008, the World Bank and
IMF proposed that the FSDP Phase II Project docu-
ment be expanded to take into account implementation
of the policy recommendations from the FSAP.
In view of the issues currently outstanding from FSDP
I, as well as new short to medium-term financial sector
reform recommendations arising from the 2008 FSAP,
the FSDP implementation period had been extended
for a further three years until December 2012.
FSDP II proposes three project components; namely,
market infrastructure, increasing competition and ac-
cess to finance. The focus of the programme will in-
clude implementing the following project activities:
• Consumer awareness on the cost of banking services
• Obtaining approval on investment guide lines for pub-
lic and private pension funds
• Facilitating adoption of good corporate governance
principles by institutions investing in companies that
observe good corporate best practices