Securities and Exchange Commission - SEC Zambia

COPPERBELT ENERGY CORPORATION RENEWABLES LIMITED (“CEC RENEWABLES”) REGISTRATION OF DEBT SECURITIES USD 200,000,000 (TWO HUNDRED MILLION UNITED STATES DOLLARS) MEDIUM-TERM NOTE PROGRAMME

The Securities and Exchange Commission applauds CEC Renewables for the successful registration and raising of USD53 million as part of its USD200 million Green Medium Term Note Programme, with the notes set to be listed on the Lusaka Securities Exchange Plc (LuSE).

The announcement of the inaugural Green Bond issuance by year end, at the COP28 sidelines, exemplifies the capital markets development agenda to facilitate the development of innovative products for raising long term funding.

Once again, congratulations to CEC for being the first to issue a Zambian Green Bond! We are delighted as this signifies a deliberate effort towards the implementation of the environmental sustainability agenda envisioned under the 8NDP.
Here are the key benefits of the Green Bond issuance:
1. Pioneering Green Finance: This upcoming issuance stands as a cornerstone in Zambia's financial landscape, affirming a dedicated focus on environmentally sustainable investments.
2. Addressing Climate Change: Aligned with Zambia's commitment to combating climate change, this initiative contributes to global sustainability endeavours.
3. Investor Opportunities: An exciting invitation awaits investors! Participation in this Green Bond offers a chance to mark a significant milestone while reaping financial returns coupled with positive environmental impact.
4. Supporting Green Initiatives: The proceeds from the Green Bond will fund eco-friendly projects, further solidifying Zambia's support for green initiatives.
5. Strategic Alignment: The Green Bond issuance seamlessly aligns with the Commission's vision, promoting sustainable finance in the national financial ecosystem.
Congratulations CEC renewables Limited on this great milestone achievement!

SEC Appreciates Recognition From UNZABECA

The Securities and Exchange Commission (SEC) wishes to express its sincere gratitude to the University of Zambia Business and Economics Association (UNZABECA) for presenting us with a certificate of appreciation. We are immensely proud and humbled by this recognition, which serves as evidence to our unwavering commitment towards fostering financial literacy and investor protection in Zambia.

The SEC has always prioritized collaborating with educational institutions in carrying out its mandate, this is because we recognize the crucial role academia plays in shaping future generations of financial professionals and investors. Through various initiatives such as workshops, seminars, and investor awareness campaigns, we strive to equip students with the necessary knowledge and skills to make well informed investment decisions.

The appreciation is humbling feedback on the impact that our stakeholders are having through the various interactions that aim to foster financial literacy and investor education in Zambia.

https://drive.google.com/drive/folders/1bf7fK1EDnwBUWQSM08RKJUfK1bjm5t1N?usp=drive_link
Kindly click on the link to access the Concept Note for the 2023 Essay Competition.

Zanaco and SEC will be discussing the opportunities and challenges around green financing in Zambia. Scan the QR Code or follow this link to register >> https://www.eventbrite.com/e/panel-discussion-green-financing-in-zambia-opportunities-and-challenges-tickets-767631184537?aff=oddtdtcreator

Congratulations to ZCAS University on achieving accreditation from CISI as a Local Training Partner. This remarkable milestone not only reflects ZCAS' commitment to excellence in financial education but also positions them as a premier institution fostering securities industry-relevant skills. As a recognized CISI partner, ZCAS University opens new doors for students, offering them access to globally recognized certifications and a pathway to success in the dynamic world of capital markets. Kudos to the entire ZCAS community for this outstanding achievement!

The Securities and Exchange Commission will be at COP 28 highlighting strides being taken to position Zambia as a global green Investments hub. Visit the Zambia Pavillion for insightful presentations and panel discussions.

Greetings!!

Join the Securities and Exchange Commission in this month's virtual Town Hall meeting. This is a series to help you understand your investing options in the Zambian Capital Markets. In this edition Bruce Mulenga talks about Real Estate Investment Trusts (REITs)
You don’t want to miss it!
Date: Thursday 30 November 2023
Time: 15:00hrs – 16:00hrs

Register in advance for this webinar:
https://us02web.zoom.us/webinar/register/WN_UVMCGFH9SJGIXOqBhqzWXg
After registering, you will receive a confirmation email containing information about joining the webinar.

SEC temporary exempts persons from securities license requirement to operate in Capital Markets.

SEC exempts natural and legal persons from securities license requirement.

The SEC has exempted any natural or legal person operating in the Capital Markets without a license from the operation of the Securities Act which make it an offence for such persons to operate in the Capital Markets without a Commission issued licence.

Thank you to everyone who joined us at this year's masterclass! We hope you gained the insights and strategies you need to navigate the ever-changing landscape of capital markets risk based supervision and managing of supervisory relations. We are excited to see how you apply your newfound knowledge in your day-to-day work.

Join Securities and Exchange Commission Chief Executive Officer, Mr. Phillip K Chitalu at 10am on Financial Insights Zambia page and YouTube channel as he gives the capital markets performance and outlook.

Securities and Exchange Commission of Zambia Launches Service Charter
Exciting News Alert! Introducing the SEC Service Charter!
We're thrilled to announce the launch of our brand-new Service Charter, designed with YOU in mind!
The event was held today, at a breakfast meeting hosted by the SEC Board Chairperson Mrs Ruth Mugala.
At the SEC, we're committed to providing top-notch service and transparency. Our Service Charter outlines our promises to you, including response times, communication channels, pproviding timely and accurate information, treating stakeholders fairly and respectfully and resolving complaints promptly and effectively.
The SEC is committed to upholding the highest standards of service delivery. The Service Charter showcases this commitment.
We can't wait to continue serving you even better than ever before. Let's embark on this journey of enhanced service together!

Join us for this year's 2-day Masterclass at the Radisson Blue Hotel in Livingstone for a transformative learning experience with Mr. Aute Kasdorp, a renowned expert in regulatory compliance and risk management.

The Board and Management of The Securities and Exchange Commission (SEC) entered into a Memorandum of Understanding (MoU) with Zambia Information and Communications Technology Authority (ZICTA) on 11th October 2023. Together the two Regulatory Authorities aim to collaborate more closely to promote mutual assistance, exchange of information and avoid duplication of efforts in regulating entities that might operate in the Regulatory Authorities’ mutual jurisdictions.
This necessary collaboration is owed to the increased use of technological innovations in the delivery of financial services and the advent of digital assets in the financial sector through virtual assets had resulted in several entities operating in both the ICT sector and the capital markets.
The MoU was established for some of the following reasons:
• regulation or supervision of entities under the Regulatory Authorities’ mandates to facilitate licensing, supervision, regulation or monitoring of the regulated entities.
• Provide technical expertise in joint onsite inspection of entities in which both Regulatory Authorities have a regulatory or supervisory interest.
• Enforcement of laws in which both Regulatory Authorities have a regulatory and supervisory interest as well as;
• Joint consumer awareness and education initiatives.
Together The Regulatory Authorities, therefore, intend to provide one another with assistance under this MoU to the full extent permitted by the laws, regulations and rules of their respective jurisdictions.

Today, the Securities and Exchange Commission alongside other financial sector regulators joined forces Celebrating World Savings Day and Honouring Financial Literacy Champions!
The theme for this year’s World Savings Day is “Savings prepares you for the future.” This theme demonstrates the important role savings play in building up financial resources to fall back on when we are faced with financial shocks. We are also thrilled to congratulate our Financial Literacy Awards winners, who have made exceptional contributions towards empowering individuals with financial knowledge.
Let's continue to empower individuals with the knowledge and tools they need to make sound financial decisions! Together, we can build a financially secure future for all.

October is
This year's theme, “No one should face breast cancer alone,” serves as a reminder for providers to consider the many ways they can partner with patients and families in the prevention, detection, and treatment of breast cancer.
Today as we come to the end of the Breast Cancer awareness month, the Securities and Exchange Commission is encouraging us all to stand together in the fight against breast cancer! Early detection saves lives. Let’s encourage our loved ones to get regular check-ups and mammograms. Let's spread awareness, support survivors, and honour those we've lost. Together, we can make a difference!
We want to acknowledge everyone battling with all forms of cancer and offer support and say ‘you are not alone; early detection is key and together we can beat cancer!

The Securities and Exchange Commission hosted the 2023 3rd quarter 2023 Media Brief, below is the Speech by the Chief Executive Officer (CEO) Mr. Philip Chitalu.
Kindly click on the link below to access the speech document.
https://lnkd.in/dk9FPKH9
And see the speech write up below;

1. Introduction
During his address to the nation on the 2024 National Budget in September 2023, the Minister of Finance and National Planning highlighted that for the country to unlock its economic potential, constraints facing the economy, especially in the mining, energy, manufacturing, and agriculture sectors needed to be addressed. These constraints include low productivity, low diversification and industrialization, low private sector investment, low access to affordable finance and low citizen participation.
In this regard, a well-developed capital market allows governments and companies to access long term finance, increases investments directed towards innovation in venture capital, and promotes sustainable growth. Macroeconomic stability will be a critical pre-condition to the development and performance of capital markets.

2. Capital Market Performance
The start of the third quarter of 2023 brought changing conditions in the capital markets such as increased interest rates given the on-going significant dynamics in economic fundamentals. The Secondary Bond Market for example, has seen improved investor participation. There have also been significant improvements in the number of players willing to come to the capital market evidenced by the increase in the number of licence applications among others. However, for some time now, the market has remained stagnant on the number of listed entities.
Downside risks still remain in terms of a slowdown in global growth, tight global financial conditions, adverse weather conditions, due to climate change, and an elevated energy and food prices related to the ongoing instabilities in the Middle East and the Russia-Ukraine war. These still underline the fragility of the stable economic outlook and continue to be key downside risks. More, over, emerging equity markets have had widely varying performances over the past three months.
Whilst the Kwacha appreciated by 4.8 percent against the US dollar in the second quarter, it depreciated by 11.0 percent to K19.48 between June and August 22, 2023 (BOZ MPC_Presentation_August_2023). The local currency depreciated to 21.04 ZMW at end of September 2023, as the market has continued to be characterised by low supply of foreign exchange.
The delays in concluding Zambia’s debt restructuring with creditors in the period under review affected the Zambian economy overall. This could be seen in the expected flow of funds from investors and investor perceptions on the country’s credit rating. The market recorded net outflow of United States Dollars 44,686 (940,193.44 ZMW) on the exchange at end of September 2023 as reported by the Lusaka Securities Exchange
In the month of July, the IMF Executive Board completed the first review under the 38-month Extended Credit Facility (ECF) with Zambia, providing the country with access of about US$ 189 million. This did little to positively change market sentiments and contribute to the appreciation of the Kwacha.
The depreciation of the local currency in quarter three (3) of 2023 affected foreign investors positions while higher yields on government securities at the beginning of the quarter under review affected the performance of the corporate debt market making it expensive for issuers to issue debt securities and at the same time making shares unattractive compared to government paper and other money market assets.
Against this backdrop, an analysis of the Capital markets as of 30th September 2023 against 30th June 2023 showed that the total savings in the capital markets substantially increased by 68.26% percent, largely driven by fund size increase in corporate bonds and the growth in the number of investors and the portfolio size in both local and foreign collective investment schemes.

3. Market Capitalization
The total market capitalization (including Shoprite Holdings Plc) increased by about 6.93 percent to K82,117 billion as at 30th September 2023 relative to the figure of 30th June 2023, indicating the market capitalisation as a percentage of GDP at 18.52 percent at the end of September. This was mainly driven by share price increases in the listed companies including Airtel Zambia Plc, Copperbelt Energy Corporation Zambia Plc, Zambia Consolidated Copper Mines-IH, Zambia National Commercial Bank (ZANACO), PUMA Energy Plc and Real Estate Investments Zambia Plc (REIZ)

4. Asset Under Management
Collective Investment Schemes Assets under Management (AUM) grew by 9.76% from K1.874 billion in June 2023 to K2.057 billion at September 2023. Total number of investors at September 2023 was 441,818, an increase of 7.44% from 411,211 in June 2023.
The following was the performance of the CIS sector in quarter three of 2023:
(i) Total Domestic AUM – The Domestic AUM closed at an all-time high of K1,787,757,977 in September 2023 against AUM in June 2023 of K1,638,128,932. This represents a growth of 9.13% (K149,629,046). This growth was largely as a result of growth in a number of funds led by Mpile Unit trust which accounted for 58% (K88,901,543) followed by ABC Unit Trust which accounted for 21% (K30,990,093), Hobbiton Unit Trust accounted for 12% (K17,210,175) whilst Prudential Unit Trust accounted for 6% (K9,597,414), Altus Unit Trust accounted for 3% (K3,841,036) and lastly ECR Unit Trust which accounted for 2% (K3,132,279).
The total growth in domestic AUM was however offset by a 2% drop in the AUM of Longhorn Unit Trust (From K62,686,967 in June 2023 to K60,052,017 in September 2023).
Total Foreign AUM – The total AUM in foreign CISs increased by 14.08% between June 2023 (K235,815,770) and September 2023 (K269,017,958) in kwacha terms. This was primarily occasioned by the appreciation of the United States dollar against the kwacha (17.5885 in June to 21.0390 in September - Source: Bank of Zambia). In US dollar terms, growth in the foreign Collective Investment Schemes’ assets under management decreased by 4.63% from US$13,407,384 in June 2023 to US$12,786,632 in September 2023.
(ii) Combined Total AUM (Local and Foreign CISs) – Combined total AUM (Local and Foreign CISs) closed the quarter at K2,056,775,936 representing a 9.76% quarterly increase from K1,873,944,702 in June 2023.

5. Equity Market Performance
5.1 Lusaka All Share Index (LASI)
The Lusaka Securities Exchange (LuSE) All Share Index (LASI) is a benchmark index that represents the performance of all listed equities on the LuSE. The LASI serves as a barometer for the Zambian capital market and provides valuable insights into market trends and investor sentiment.
In the third quarter of 2023, the LASI went up 13.04% as of 30th September 2023, relative to 30th June 2023.
The market index closed the month of June at 8,238.86 points, decreasing by 0.04% from its close in May. By end of July, it increased by 1.49% closing at 8,361.81 points, from its close in June and further marginally increased by 3.94% between July and August before posting a 6.99% increase to close quarter three at an all-time high of 9,313.30 points.
This positive trajectory could be attributed to mainly increases in stock prices between June and September in Airtel Zambia Plc (85%), Copperbelt Energy Corporation (32%), ZCCM-IH (11%), ZANACO Plc (6%), Puma Energy (3%) and REIZ (2%). Airtel Networks began the year with a share price of 17.25 ZMW and has since gained 152% on that price valuation, ranking it first on the LuSE in terms of year-to-date performance between January to September 2023.
Overall, the major drivers of these trades in quarter-three were retail investors and the pension funds, some of whom decided to take the opportunity to cash out and realise capital gains on some shares like Copperbelt Energy Corporation and ZCCM-IH. In general terms, average portfolios gained 30.68 percent of their value in the third quarter of 2023.

5.2 Trading Volumes
Trading volumes on the equity markets increased by an average of positive 1.45 percent between June and July of 2023, due to increased activity signalling an increase in the number of shares traded between the daily open and close. but marginally decreased between July and August by negative 59.37 percent and significantly increased by 34.97 percent between August and September 2023.
This signals increased market activities which had a positive effect on investor perception on prospects of listed companies.

6. Complaints
The Commission also continues to work on complaints received from the market, investors and members of the public. In the third quarter (Q3) of 2023, a total of five (5) complaints were received. Of the five (5) complaints received, three (3) were addressed and closed and two (2) were still being addressed as they require further investigation. The total number of complaints for 2023 to date stands at 14.

7. Corporate Bonds
In our capital markets, the total amount of corporate bonds outstanding in Q3 2023 was K864 million compared to Q2 2023 where it was K628 million. This represents a 37.8% increase in relation to Q2 2023. This increase is attributed to the issuance of new notes amounting to K341 million. One of the new issuances during the period was by the International Finance Corporation (IFC) which raised K193.2 million through a bond issuance dubbed “Zambezi Bond” which was distributed through a private placement. The proceeds of the capital raise will be used to support IFC's local currency investment program in Zambia through the development of the country's domestic capital markets and increased access to local currency finance by the private sector. Other corporates that issued notes during the quarter were Bayport Financial Services and Zambia Home Loans.
In Q3 2023, the corporate bond maturities amounted to K123 million including some notes issued by Zambia Home Loans. This means that individual investors and institutional investors who invested in these corporate bonds received the principal amounts that they had invested. This is in addition to the regular interest income that they were receiving during the investment periods.

8. GRZ Fixed Income Securities and yields
The government raises funds through issuance of Government securities to finance the national budget, projects, and other government programmes. One of these securities is Government bonds, which are long-term instruments that range from two years to fifteen years and can be traded on the secondary markets after being issued in the primary market.
In relation to Q2 2023, the yield rates for government bonds in the primary market in Q3 2023 reduced for two tenors including the 7-year bond which reduced from 25.49% to 25.32%, and the 10-year bond which reduced from 27.75% to 26.88%. For the 2-year, 3-year, and 15-year bonds, the yield rates remained unchanged at 18%, 22%, and 27.75% respectively. On the other hand, the yield rates on the 5- year bond increased from 24% to 24.44%.
Falling yield rates on government securities has positive impact on the issuance of corporate bonds. This is because investors in corporate bonds bench mark their potential returns from investing in corporate bonds with the yields obtainable on government bonds as government bonds are considered to be risk free. Consequently, if the yields on governments bonds are declining the cost of borrowing for corporate bond issuers becomes cheaper as the reference point (GRZ paper) becomes cheaper. Therefore, there have been a number of new bond issuances over the last three quarters in 2023, as discussed in the previous section because the cost of borrowing for corporate debt issuers has slightly declined.

9. Government Bonds Secondary Market
In terms of Q3 2023 secondary bond market activities, the market for Government bonds recorded 2,181 trades, which is 14% higher than in the previous quarter where there were 1,918 trades. The nominal value of bonds that traded in Q3 2023 was K34 billion which is 35% higher than Q2 2023 where the nominal value for bonds that traded was K25 billion. On the other hand, the total market value for bond trades in the secondary market during Q3 2023 was K23 billion compared to the previous quarter where it was K16 billion, representing a 40% increase. The quarterly bond turnover ratio, which is a measure of liquidity, therefore increased from 10% to 14%.
The activity on the secondary market for Government bonds can also be broken down by tenor of the bond. In Q3 2023, the tenor which contributed the most to the total market value traded was the 10-year bond, similar to the previous quarter. The contribution to the market value of each tenor traded is illustrated below.

10. Green and Sustainable Finance Activities
Following the decision to position Zambia as a preferred Global Green Investment Hub, the Commission has continued engagements with stakeholders like FSDA on capacity building. In collaboration with UNCDF Tanzania, the Commission further undertook engagements such as the National Stakeholders workshop on Sub national bonds. This workshop was aimed at raising awareness about revenue bonds issued in local currency for municipalities and sub national entities. During the quarter, there has been increased interest for prospective issuances of Green Bonds.
The Commission has also continued working with other financial sector regulators (Bank of Zambia and the Pensions And Insurance Authority) with technical support from the Biodiversity Finance Initiative (“BIOFIN”) to further mainstream green finance within the broader financial sector.

11. Capital Markets Master Plan (“CMMP”)
As part of the Commission’s efforts aimed towards advancing the formation and other necessary steps required for the successful implementation of the CMMP, the Ministry of Finance and National Planning has appointed the Steering Committee for the CMMP. The primary function of the SC is to provide strategic leadership and oversight for the CMMP implementation over the ten-year period. In doing so, the SC shall be supported by the MoFNP (the anchor Ministry for the CMMP) and the SEC (the CMMP Secretariat).
Further, the Commission has continued to engage cooperating partners such as the United Nations Capital Development Fund and the FSD Africa to progress identified areas of collaboration for the CMMP implementation. In particular, the Commission and the partners have identified two development areas in which collaborative efforts will be directed. The identified areas are the Development Area 3 – Development of new and innovative products / markets and Development Area 5: Enhancing the capital market regulatory environment respectively.
In the same light, the Commission executed a Memorandum of Understanding with the Financial Sector Deepening Africa to develop financial regulation and policy roadmap to foster the adoption of appropriate nature-related disclosure frameworks and incorporates nature into national strategy/policy/emerging regulation to amplify nature-positive outcomes.
To enhance sensitization of the CMMP to the public, the Commission is in the process of finalizing the simplified CMMP document ‘Citizen’s version’. The objective of the Citizens version is to enable the ordinary Zambian to fully appreciate the contents of CMMP and how they can participate.

12. Sandbox
In line with the provisions of the Regulatory Sandbox Guidelines for Capital Markets, the Commission has continued in its efforts to close off the first Sandbox Cohort by ensuring an orderly exit. In the same vein, the Commission successfully undertook a preliminary assessment of Sandbox applications for the 2nd Cohort, which shall only be admitted once the 1st Cohort is closed.
Further to the above, the Commission in collaboration with the Bank of Zambia and the Pensions and Insurance Authority have continued their efforts to explore mechanisms for harmonising the Regulatory Sandboxes and ascertain pros and cons and collaborative approaches for the supervision of Fintechs. The objective of this assignment is to facilitate for streamlined sandbox regulations and effective implementation of sandbox processes in the financial sector.

13. World Investor Week
The World Investor Week (WIW) is a public awareness campaign aimed at enhancing investor education and protection.
The campaign is led by the International Organization of Securities Commissions (IOSCO) and implemented by Securities Regulators worldwide. Therefore, the Securities and Exchange Commission (SEC) is responsible for spearheading and coordinating WIW activities in Zambia and this year the event was commemorated under the theme: Cultivating resilience and wise habits: A smart Investor avoids fraud.
This year’s activities included a kick-off event, an awards ceremony for last year’s tertiary Essay writing competition, launch for this year’s competition, an exhibition and finally the inter university debate that was held in Livingstone.
We would like to thank all our stakeholders including you our media colleagues for taking part in the commemorations in various ways and would like to invite you to continue working with us to disseminate and demystify capital markets information.

14. Conclusion
Overall, the market had grown substantially largely driven by issuance in corporate bonds by International Finance Corporation (IFC) dubbed “Zambezi Bond’’ as well as CIS fund size growth and the increase in the number of investors in both local and foreign collective investment schemes.
We have continued to engage the market and public through our awareness campaigns such as the monthly townhall, World Savings Day which is coming up and Master classes. For the quarter, a total of 1,020 individuals have attended the townhall meetings.
The Commission has also continued collaborating with fellow regulators with the aim of protecting investors and ensuring a transparent capital market through the signing MOUs with ZICTA and National Anti-Terrorism Centre.

The Securities and Exchange Commission hosted the 2023 3rd quarter 2023 Media Brief, below is the Speech by the Chief Executive Officer (CEO) Mr. Philip Chitalu.

Kindly click on the link below to access the speech document.
https://lnkd.in/dk9FPKH9