Reforming the Dysfunctional Capital Markets in Zambia
Journal Title: International Journal of Business and Management Invention - Year 2019, Vol 8, Issue 1
Abstract
Over fifty (50) years after independency, Zambia’s economy continues to see modest economic growth rates, high unemployment and noticeable levels of poverty, all attributable to the economy’s inability to spur production and create jobs. In the abundancy of an entrepreneurial spirit and natural resources, the key missing factor of production has been adjudged to be access to cheap capital for the people who need it the most – Small and Medium Enterprises (SME). Researchers and Economists worldwide have done numerous studies, often in far-flung areas, as to the reasons why African economies lack cheap capital to support entrepreneurship and have advanced a simplistic assertion, without loss of generality, that among the enumerated findings, the poor savings culture inherent in the country is solely accountable for the failure of the depository financial institutions to mobilise sufficient deposits for on-lending to the SME (Maimbo and Mavrotas, 2003; Wennekers and Thurik, 1999; ). And they claim that this is true for Zambia as it is for the rest of Africa. On the contrary, there is observable evidence that Zambia’s economy is overflowing with capital in private hands which the current financial system fails to mobilise. If the financial reforms were to be undertaken to usher in a different capital market arrangement, this capital would, no doubt, find itself in entrepreneurial hands. Notwithstanding the foregoing, the existence of private capital in the midst of the paucity of financial intermediation for cheap credit for the SME signals a significant market failure for an economic structure driven by the SME. As such, like any other market failure, there is need for Government intervention.
Authors and Affiliations
Greg Chola Nsofu PhD
Keywords
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