Absa Bank Zambia says the country rose three places in pillar six of the Absa Africa Financial Markets Index on the measure of legality and enforceability of standard financial markets agreement.
Speaking during the launch of the Index Report, Bank Director for Global Markets Stanley Tamele said this is a good move because Zambia has risen in terms of ranking.
Mr. Tamele stated that the World Bank’s Doing Business Report gave Zambia a higher score after it was made easier for businesses to obtain post commencement finance.
“Zambia’s ranking improves in access to foreign exchange and this comes after commercial banks traded about 4 billion dollars of foreign currency on the interbank market in the period under review, excluding transactions with the central bank,” Mr. Tamele said.
Mr. Tamele added that Financial Markets play a very important role in the economy as they are the driving force behind most economic activities.
“They are basically the driving force behind a lot of what we do, whether it’s in currency conversions, whether it’s in different securities and instruments, stores and measures of value, that is what financial markets are about and that is the importance of this particular index.”
And Mr. Tamele said the Absa Africa Financial Markets Index Report, was officially launched at the World Bank and International Monetary Fund (IMF) annual meeting in October 2018 in partnership with Absa Group Limited and Official Monetary and Financial Institutions Forum (OMFIF).
He added that the index expands across 20 countries on the African Continent and looks at a number of pillars and measures market developments in the financial markets area.
“We are happy to be launching this version of our index especially at this time of the year when the country has been going through various challenges.”
“The report was officially launched at the World Bank and IMF annual meeting in October 2018 and that was in partnership between Absa Group Limited and Official Monetary and Financial Institutions Forum (OMFIF). The index covers a number of countries across the African Continent, and it looks at a number of pillars and it measures market development in the financial markets area of our market,” he stated.
Meanwhile, Economist at the Official Monetary and Financial Institutions Forum (OMFIF), Chris Papadopoullos said Zambia’s Foreign Exchange reserves as at the end of 2019 stood at $1.4 billion down marginally compared with the end of 2019.
He said Zambia recorded a higher score on the World Bank Doing Business Report for resolving Insolvency.
“The amount of Foreign Exchange traded between commercial bank and that’s excluding what’s trading with the Central bank rose to $3.8 billion and also covers the 12 months to June 2020. This was 50% compared with the previous 12 months in which Zambia which puts Zambian in about 8th position on the index, shows a liquid domestic foreign exchange market where commercial banks not necessarily over relying on the central bank for foreign exchange.”
“Foreign Exchange reserves were not much changed for Zambia between the end of 2018 and the end of 2019, which means that on this indicator, Zambia was in a much better Foreign exchange position at the end of 2019 than it was in the year before that,” he stated.
Mr. Papadopoullos further observed that Zambia has high Withholding Tax (WHT) rates for dividends and interest at 20% for each, adding that dividends paid to individuals from firms on the Lusaka Securities Exchange (LUSE) are exempt from WHT.
“While rates are generally high, Zambia has tax treaties with 22 countries, the 6th highest in the index, reducing the incidence of WHT for investors in those countries.”