Economic think tank Dr. Lubinda Habazoka has explained the concept of listing.
This follows the recent information asymmetries in the Southern African nation about the future of ZAFFICO. There were allegations leveled against the state that the SOE was in the process of being privatized and that control would be in the hands of a Chinese shareholder. This resulted in demonstrations that were suspected to have been politically fueled by disgruntled facets of society whose fears were allayed by both the Vice President – Honorable Inonge Wina and Minister of Finance – Margaret Mwanakatwe earlier last week. They both re-iterated that ZAFFICO was not being sold to a Chinese investors and that the SOE would be listed with Zambian accorded an opportunity to subscribe for stake. Listing is a move in which government has recommended to improve the inefficiencies of the SOE’s so as to ease the dependency burden on the the state. SOE’s are expected to operate profitably and declare dividends to the state its major shareholder.
“Instead of politicking, Zambians should see this as an opportunity and prepare resources to purchase ZAFFICO scrip. Equity is a form of savings for citizens. Looking at the growth rate of the global construction sector, we only expect ZAFFICO shares to boom especially if the diversified shareholding will enhance efficiency as in the case of Lafarge, ZANACO, Zambia Sugar Plc and other similar entities,” Dr. Habazoka said on his social media page on 11 Nov.
“It is important to grant a certain percentage to employees and Saw millers through some form of trust just as was held in the case of ZANACO. Strict monitoring will be required to ensure that ZAFFICO continues to grow trees to avoid deforestation in Zambia,” he said
In citing both pros and cons of company listings, Dr. Habazoka said listing will strengthen capital base, attracting FDI and technology, diversifies ownership and will force disclosure to the public as a corporate governance requirement. However he stated that listing could also puts pressure on short-term growth, impose more restrictions on management and trading, makes former business owners lose take part in the partial privatization unlike direct sales where citizens can be out done by foreign companies with huge resources.
Zambia Forestry and Forest Industries Corporation – ZAFFICO is a state owned entity and member of the Industry Development Corporation – IDC Group. The corporations objective is manage pine and eucalyptus plantations and to harvest and commercially process timber to supply timber to the local and foreign markets.
Dr. Lubinda Habazoka serves as Executive Director of the Graduate Business School of the University of Zambia and President of the Economics Association of Zambia.