By JUDITH NAMUTOWE –
THE recently revised statutory reserve ratio by the Bank of Zambia (BoZ) has impacted negatively on the development of capital markets in Zambia, the Securities and Exchange Commission (SEC) has said.
This is because of the relationship that exists among the three subsectors in the Zambian financial sector, which were the money market regulated by the central bank, insurance market regulated by Pensions and Insurance Authority (PIA) and the capital markets regulated by the SEC.
SEC acting director market transaction, Bruce Mulenga said the increment in the reserve ratio from 14 per cent to 18 per cent would have a negative bearing on the performance of capital markets.
Mr Mulenga said this yesterday during a two-day media workshop conducted in Chisamba.
In April this year, the BoZ raised the amount of money that commercial banks were required to deposit in its coffers to 18 per cent from 14 per cent to cushion currency shocks affecting the Kwacha against foreign currencies.
He said the adjustment would affect the stock market because most investors would be looking at securities that would offer a higher return.
This also meant that there would be a flight of funds from the capital market to the banking sector, hence whatever each sub sector did affected the other.
