PRETORIA – Friday, 3rd October, 2014 – The Zambian Kwacha has broken new ground after it was listed on the Johannesburg Stock Exchange (JSE) on Friday as one of the three African currencies in which investors, as well as importers and exporters will now be able to protect themselves against currency fluctuations in the three countries.
The listing of the Kwacha, together with the Kenyan Shilling and the Nigerian Naira, was launched at a ceremony held at the JSE in Johannesburg today. The JSE officially started trading in the three currencies at 9.00 am immediately after representatives from the three countries took part in celebrating the trade opening bell.
Zambia’s Deputy High Commissioner to South Africa, Mr. Joe Kaunda represented Zambia.
The development means that market participants wherever they may be around the world are guaranteed a future price for a specific commodity. In this way, businesses are able to hedge or lock in the existing exchange rate and thereby guaranteeing themselves against that price for the commodity that they plan to pay for even months later, regardless of exchange rate fluctuations that may occur between the Kwacha and the South African Rand, for example.
Mr. Kaunda described the launch as a momentous occasion especially that it was happening barely three weeks before Zambia celebrates her Independence Golden Jubilee. He said the development was a milestone and confirmed the confidence that the international markets had in Zambia’s economy and its leadership.
“We are further glad that Zambia was paraded during the launch as an excellent performer with a projected growth of over seven per cent by year-end, out-performing major economies. And as JSE stated, we continue to attract huge figures in Foreign Direct Investment. The challenge now is to the investors out there to take advantage and not miss out on the grand opportunities that Zambia as a preferred investment destination has to offer,” Mr. Kaunda said.
JSE General Manager for Capital Markets, Mr. Warren Geers, said at the event that the day marked a ground-breaking initiative in that the JSE had finally managed to launch the African currency listing after having worked on the idea for two years.
Mr. Geers said with Africa being a global investment strategy, it made sense for the JSE, as a major exchange player in Africa, to be involved in providing appropriate products to mitigate currency risk when doing business in Africa.
Lusaka Stock Exchange (LuSE) Chief Executive Officer, Mr. Brian Tembo, who was also in attendance, hailed JSE for the initiative. Mr. Tembo pointed out in an interview that LuSE was working on introducing such measures through collaboration with the South African stock exchange.
He said LuSE’s rules were benchmarked against JSE and that his institution has continued benefiting from the invaluable experience of the South African stock exchange which goes back over 120 years.
Mr. Tembo disclosed that LuSE was working closely with the Zambia Agricultural Commodities Exchange (ZAMACE) and JSE to strengthen commodities exchange trading pointing out that a memorandum of understanding (MOU) will soon be signed with ZAMACE.
He said the MOU would allow LuSE to extend their systems to ZAMACE so that the latter could operate efficiently and further avoid duplication.
“We will also be looking at introducing in Zambia what we are witnessing today so that we allow for predictability in the market. Today, everyone is looking to government to set the pace and that is not the best way of doing things,” Mr. Tembo said.
Barclays Bank vice-president for Sub-Saharan African Trading, Mr. Lourens Harmse noted that the economic growth rates for Zambia, Kenya and Nigeria were among the highest in the world and signs were that the trend would continue for years to come as investment into Africa continued.
Mr. Harmse said Barclays Africa’s involvement with the listing of the African currency futures on the JSE further showed the bank’s commitment to growing markets participation in Africa.
Head for Tradition Futures, Mr. Andrew Gillespie said it was a ground-breaking development to have a transparent, independent and well-regulated platform from which to mitigate or assume foreign exchange risk in the three African countries.
“The ability to transact anonymously, through specialist brokers such as Tradition Futures, and to have access to full and fair, timeous price discovery is an international benchmark requirement for a developed market. This allows for a level and fair playing field, where the best price is available to all, which is a significant feature of this market in African foreign exchange on the JSE,” Mr. Gillespie said.
The JSE had partnered with Barclays Africa and specialist brokers, Tradition Futures, in working on this initiative.
HIGH COMMISSION OF ZAMBIA IN SOUTH AFRICA