The country possesses all the necessary attributes for sustainable economic growth and development. Competitive production costs, incentives, and reforms have also enhanced the attractive investment climate for both local and foreign investors. Numerous investment opportunities exist in the agriculture, manufacturing, tourism and mining sectors across various regions of the country. Almost all provinces in Zambia remain potential areas of investment whose resources remain largely untapped. Its active participation in the SADC Trade protocol and the COMESA/FTA offers preferential tariff access to a market of nearly 380 million people. A key challenge in developing this economic potential and enhancing the wealth creation capability of Zambians to drive growth and development is the ability to access long term investment capital especially for economically viable projects at start-up level. Financial institutions are critical in this process of mobilising and channeling these investment resources. To do so successfully, the industry must identify the constraints to the provision of finance and credit and provide innovative solutions to address them. Such innovations may include venture capital funds, structured finance products, equity and other innovations that allow a more efficient management of risks during the initial stages of the business cycle. On its part, the Bank of Zambia needs to ensure that there is sustainable stable macroeconomic environment first. But we also need to have a good understanding of the financial innovations that may be needed to attract and disburse investment capital.

Venture Capital Funds seek to provide finance to enable businesses to start-up, expand or restructure through the use of equity and quasi-equity instruments such as preference shares, convertible debentures, and shareholders loans that reflect the risk and reward in investing in such businesses. Furthermore, given the relatively high interest rates prevailing, debt financing is not easily available to start-up and other emerging enterprises because they generally lack the collateral, track record, or earnings required to get loans. To this effect, venture capital funds can be essential to these enterprises as they are a combination of equity and professional know-how. To be attractive investment vehicles, venture capital firms must be able to deliver a rate of return that is more attractive than those available in markets for publicly traded stocks and other securities. Mr Chairman, in line with the workshop theme, “exploring and creating financial opportunities”, it should be noted that the financial sector in Zambia is considered relatively under-developed and has had limited reach to all sectors of the economy. A 2005 study by Finmark Trust revealed that only 33% of the total population in Zambia had access to financial services. The survey also revealed that most Zambians prefer to invest in nonfinancial instruments such as a businesses, livestock, land or agricultural equipment. In recognition of the strategic importance of the financial sector to the country’s development and poverty reduction efforts, the Zambian Government launched the Financial Sector Development Plan (FSDP) in 2004 to address weaknesses that had been identified in the financial sector.