Beatrice Nkanza: world's second woman to head stock exchange
By Amos Malupenga
Saturday January 12, 2008

It is now a growing phenomenon that women in Zambia are shining like morning sunlight in the corporate world.

Some of the parastatal companies that under-performed for a long time under the leadership of male top managers are now thriving under the direction of women.

Only last week, Mizinga Melu was appointed as the first woman to head Standard Chartered Bank Zambia Limited. Zambia National Building Society is being headed by a woman in the name of Noriana Muneku and so is Zambia State Insurance Corporation which is being led by Ireen Muyenga. There is no doubt that Muyenga has rescued this insurance company from drowning during the last few years she had been at the helm.

Until last month, the National Airports Corporation was being managed by a woman. A few years ago, Margaret Mwanakatwe headed Barclays Bank Zambia as managing director. She is still managing director except this time she is managing Barclays Bank Ghana. The list of these women who have broken into, and made it in the corporate world is long.

This Sunday, I decided to focus on Beatrice Nkanza, the general manager of Lusaka Stock Exchange. Beatrice is the first woman ever to head the Lusaka Stock Exchange from the time it was formed in 1994. But most importantly, Beatrice is the second woman in the world to head a stock exchange market. Isn’t that an achievement?
Read on and discover what Beatrice is doing at LuSE.

Question: What is Lusaka Stock Exchange (LuSE)?
Answer: Lusaka Stock Exchange was established in 1994, it is a market where shares of listed companies can be bought or sold. The LuSE market is regulated by SEC. LuSE is also a self-regulated market in that it sets its own listing rules for listed and participating companies. It operates as a private company owned by the brokers. In this case, we are talking about buy and sell of the 16 companies whose shares are listed on the Exchange.

If I may mention also that by design this market is borderless in that investors/participants are both local and from everywhere abroad.

Q: When you talk of securities, what are you talking about?
A: Securities are shares. Companies list shares in the company. And if LuSE were on a commodities market, a security (in the same vein) would be those commodities whether it is cement, maize or wheat. It’s a unit of those commodities that are traded on that market.

So a security is a unit of or Lafarge shares, a security is a unit of Zambian Breweries shares, Investrust shares etc.
Similarly, if we were a commodities market, and there is no reason why there shouldn’t be a commodities market, the securities will be the units of those products which are traded on that particular market.

So a security is a product that is tradable on that market.

Q: What are the advantages of listing or trading on this market?
A: The advantage of trading in this market is that it is an international market. When shares are on sale the whole world is your potential market to sell to. It is transparent, pricing is through bid and offer. What this means is that you decide what shares you want to buy and bid your price.

The seller also offers his sell price. What settles is the matching of the bid and offer and a deal is struck. Not a deal in the sense of a negotiation but a meeting of the bid and offer price within the stipulated guideline of the trading rules. What that says is that there is price discovery. The share price of that will settle at the given demand and supply of the shares on that day. So all the trades that will take place on that particular day in that particular security will be known.

That is the advantage of trading on the market. Price discovery and the availability of this information means you cannot be misled.

Q: Towards the end of last year, you celebrated 13 years of existence as LuSE. You have been around for 13 years and yet you only have about 16 companies listed, why? What is the problem?
A: I wouldn’t call it a problem; I would call it a process. I think we have come a long way. We started with one company. The first company to list was Chilanga Cement, which we are now calling Lafarge. From one company in 1994 to 16 in 2007, I think it is remarkable. However, we can do more and I think that is where we are now focusing.

We will focus on awareness, information dissemination, interaction, whatever avenues it will take to make everyone aware about what the LuSE is and how they can use it to create wealth and raise capital. You will agree that by its nature it is a slow process because we are trying to win hearts, converts etc to change their way of doing business.

That is why our strategies include working with our stakeholders e.g. you the media. There are a lot of benefits to be had from using the capital markets to raise long-term funds. Investors who have participated in investing in shares have some good stories to tell. Our concentration for 2008 is to bring out all this information for the benefit of the public.

Q: If, for example, The Post were to list on LuSE tomorrow, what would be the benefits?
A: First of all, The Post as a company will have a means by which as a company it will be valued. Valuation will be by way of the share price. This will be publicly known. The share price of The Post multiplied by the total number of shares equals the value of the company.

So every morning when you wake up, you look at the share price and you will know how much your company is worth and you as an investor will know how much your stake in the company is worth.
Point two is that ownership will be more widely distributed. Right now, ownership is vested in a few hands; not that there is anything wrong with that because The Post is still a private company.
But the advantage of going public is that more people will be shareholders, and the company will have derived financial benefit by selling these shares. Also called permanent capital because the company never has to pay this back.

Public ownership means (higher) accountabilities, transparencies, governance etc. The company’s financial performance is elevated too. Shareholders want dividends and or growth so the company must deliver, to both remain in business and be off the firing line of its shareholders. Both pressures above are good because growth results in more and stable employment and better corporate citizenry.

You as management are thinking of all those people who are shareholders so your strategies will be hell bent on sustaining and improving your performance. When you go to the annual general meeting, you will have to explain why the company has made 15 per cent return when the conditions were so good that you could have made 30 per cent.

Explain, explain, explain, this is your primary constituency.
I would imagine that it would make it exciting for your management when they sit and plan, they are focusing on how the news will be good and make the shareholders happy because the outcome from all these activities is going to be higher.

But if the company is owned by you and the comrade there, the two of you can decide to go to sleep because you are not accountable to anybody. It will not be a big deal whether the company makes profit of not. Wider ownership implies more responsiveness, accountability; the levels of consciousness are enhanced. That is the first thing that will happen to you when you go public.

Q: But why are most companies not interested in listing on the stock exchange, with all these advantages?
A: I don’t think or believe the problem is that many companies do not want to list. What I believe is that to list or not to list is a business decision, it has its time. It is a business decision whether or not to raise more capital and how. Do we borrow more from the same or do we invite more people in? If we want more people in, how do we do it? These are ownership options.

Q: Please, go ahead explain those things…
A: If a company like The Post makes a decision to raise capital from the public, it would have to come to the exchange. Even there it has an option to issue its shares (equity) or borrow short-term debt (bond) which in such a case will be listed. You could also do both simultaneously. Issue debt and equity securities.

You will say that ‘we have been operating as a private company and our capital structure is that we have so much of shareholders funds, so much of debt from the banks, so much of loans from this one and that one’. A whiz kid will come in and say, ‘look, let’s restructure the shareholding of this company. Why don’t we get more equity capital? And how do we get that equity capital because all my relatives can’t give me money?’

Then you will say ‘ok, let’s invite the public, let’s increase the ownership and get more people because equity capital is permanent. Once I buy shares in your company, I will have to sell the shares to someone else to get out.

Once the decision is made that you are going get money from the public, you have to ‘list’. The process then starts with SEC. There, you will be required to register the number of shares and submit certain other information as demanded by them. They will give you the necessary authorisation and your shares are registered. Once you register, you automatically become quoted. The quotation is like a notice to the public that this company’s shares are registered here at SEC. No listing on LuSE yet.

To ‘list’ your shares for trading on the exchange or to ‘list’ your bond in the event that you are borrowing short term, you must lodge an application to list at the Exchange because we are a market, we have our own rules of admission. So the second step after registration is to get the right of admission to trade on LuSE. What that means is that you will have to engage a broker. You can only come to the market through a broker.

There is no other way. This broker will help you to prepare a prospectus. In that prospectus you are supposed to supply various information. This will be the first act of disclosure. When you are a public company, your disclosure levels are higher. There is very little that is not known about you.

You state who you are, when you were registered, who the shareholders are, how many shares you have registered, the directors, their particulars, their qualifications, experience etc. Your registered offices, nature of business, paid up capital, the company performance, profitability track record etc.

You basically require a battery of experts; a lawyer, auditors, accountants and other experts. But this is at the beginning. It’s being prepared for marriage, an induction; you will have all these people to look into your matters and confirm/ verify to the public that this company is who they say they are, there is nothing hidden or untold about them or their associates and all the deals are above board.

Once that prospectus is prepared, the broker brings it to the Exchange as an application to LuSE to list. Management peruses through for compliance with the listing rules and sends/ recommends it to the listing committee for approval. Once the committee is satisfied, it is ratified by the full board. The Committee and the full board are at liberty to raise any issues they may note. Once ratified by the board, the application for listing is approved.
Q: So how was 2007 for Lusaka Stock Exchange?

A: The figures for 2007 are good for a company that is 13 years old. We are happy with the rate of growth that we experienced last year. In index terms year on year we had more than 100 per cent growth. Operations of a capital market are not in isolation from the macro evironment.

When people make a decision to use the capital market, you can be sure that they have also considered what is happening elsewhere, in the financial markets locally and overseas (perhaps), necessarily because you have so many options if you are going to raise money. You can borrow from the financial or the capital market.
In holistic terms, this economy is offering realistic options for long-term borrowers. We now have longer term bonds from 5, 7 as much as 15 years.

This has never happened before in Zambia. So the capital market through borrowers can issue instruments for that length of time. The turbulence that we have known before in both interest rates and forex rates is no longer there.

The exchange rates were used to hedge against anticipated inflation trends but that too has been steadily falling. People were making roaring business in the foreign exchange market etc because of the inequalities in rates or opportunities for profit that were available.

Of course, there was also the era of the treasury bills where interest rates were in double digits. That was all very short-term. But over the past few years, things have settled down and the ‘long term horizon’ has been extended and businesses can now plan some years ahead.

Now, as a financial accountant or some chief executive, you will need to do some hard thinking to decide where you are going to source your funding from; whether short-term or long-term depending on your circumstances of your business cycles. In the past it was all short term!
So we find that businesses are comfortable to borrow long-term. Interest rates and foreign exchange rates had stabilised. Businessmen are more optimistic and are trying to borrow long-term. And one of the places you borrow long-term from is the capital market.

Q: As LuSE, how do you make your money?
A: From the trade commissions and listing fees. That’s why it is very important for us to grow. To grow we need to increase the awareness. Out of people’s increased awareness, they will choose to use the capital market.
And when they use the capital market there is more activities. More activities….and so on. That’s how we make our money. It therefore follows that if we have more listings then we will have more companies being levied listing fees; more trades, equals more commissions.

Q: How does this year look like?
A: We are very optimistic. And we are very optimistic not because it is fashionable to be optimistic. What happened last year is a good start and we have reasons to believe that it will continue. For example, the increased usage of the market for people to raise medium-term debt. In that regard, I am talking about institutions like Development Bank of Zambia (DBZ) who raised K150 billion. That was not the listing of DBZ.

DBZ listed their debt instrument. They were borrowing from the market. And it is that instrument which was listed. There are two ways in which a company can raise money. It does not have to list itself (offer shares). The Post need not list its shares to use the market. But it can decide that ‘we are going to borrow from the public to raise X amount of money to buy new technology’.

There is a mistaken belief that to use the market one must list, as in shares. The example I gave of DBZ. It listed raised K150 billion through the market but it is not listed. So companies, you all come and raise debt capital without having to list your company. We hear this all the time.

That we cannot list. You need not list!
You will then say ‘we are trying to raise K20 billion for a specific purpose. How can we access public funds? A broker will then help you to structure an instrument and come to the market where the public can appraise its attractiveness and decide or not to buy into it. The beauty of these structured instruments is that you can design them in whatever form you like.

Q: Do you see the number of companies listing on the market increasing this year?
A: Yes. We are optimistic because awareness is on the increase. When people have the information about what their options are, they are able to decide. We are hoping this year that our awareness exercise is going to bear more fruits. That’s all we can do because we cannot force anybody to list or to use the market. We can only amplify the benefits which are many and have a good influence on the way businesses are run.

Zambia is in the process of getting a sovereign rating and the effect of this status is it reduces the cost of doing business in a jurisdiction. The only thing that will make a difference is the availability of information. Many people are getting to know what the LuSE is and want to know more.

Another means of info dissemination more and more this year is through partnerships. We are looking forward to partner with all our stakeholders, you the media for e.g. We will try to use their platform. For example, when you are training your journalists, we would like you to have a component where we come and talk to your journalists about our activities so that they understand us better.

This is important to us because journalists are critical, they drive what is heard or not. You don’t know how important you are until you are on the other side of the pen.

If you don’t ask the right questions, then everything is lost. You have the opportunity to interview Amos Malupenga and I squander it because I am not asking him the questions that inform or educate the public correctly about the LuSE.

What I am saying is that journalists are critical in that they interact constantly with people who matter, people who make policies and people who give direction to everything that is going on in this country. So it is important that journalists ask the right questions to get the right information out there.

For example, in your Tuesday Business Post, a journalist asked Standard Chartered Bank managing director whether or not they were going to invest on LuSE!!! How, when Standard Chartered Bank is already listed, and they were very supportive last year especially in playing the role of lead arranger/ underwriter etc in the 2 bond issues for DBZ and Lafarge! You see what I mean I think that was a squandered opportunity for that journalist. What I am saying in short is that journalists must know the topic well to ask the right questions, elicit answers that build confidence in the investing public. This environment is still quite fragile and some people may still rely on public utterances (to gauge direction) to make their investing decisions!

Q: You have been at LuSE for a year now…
A: Almost a year. I was recruited as general manager from the market. There was an advert in the newspapers and I was one of those who put in a bid and was successful.
Q: How has been your first year at LuSE?
A: Very exciting. Before I came here, I was fund manager for the biggest pension fund in Zambia (NAPSA). I had dealings with the stock exchange but I didn’t know as much as I do now.

What I am saying to you now is what I should have heard when I was on the other side. As companies trying to raise capital or as investors, we need to get information to you out there pretty quickly about what is available at the market for investors, for them to make informed decisions.

This is a major challenge. So far, what I have learnt about the stock exchange is really phenomenal. The LuSE must increase visibility to constantly be in the investors’ face; to be part of their options every deciding day. The LuSE must not be an afterthought!

Before I came here, I did not know half the benefits of investing in equities, the results are known to all who invest. This year alone the returns have been in excess of 100 per cent!
Listing of debt capital is also a cost effective method of raising capital. Speak to a broker, they will show you how.

Q: How challenging is this job for you because I was informed that you are the first woman to head this institution from inception and that you are only the second woman chief executive to head a stock exchange market in the whole world…

A: Yes, there are only two women in the world so far.
The only other woman who is a chief executive of the stock exchange is in Nigeria. I have had the pleasure and privilege of meeting her. She is a fantastic lady, very knowledgeable about these things. But when I wake up in the morning and coming to work, or even when I am reminded of this fact that I am the only other woman heading a stock exchange in the whole world, it doesn’t change anything. What I know is that I have a job to do and I should do it to the board and public’s expectation.

Q: What is your message to the girl-child especially that most of these top executive jobs are associated with the menfolk?
A: The girl-child per se has no problem. The problem is in the socialization. Parents and guardians challenge all your children the same.

The doors are actually open to both gender. It is refreshing to see child achievers either gender because the country will be built by both contributing. The beauty about school or education is that you can shelve it, do something else and come back to continue.

I personally would encourage all who may have shelved their education to go back. The females especially, if you shelved school to have kids, good, they are grown up now, you can go back and continue and reach your full potential.
Q: And talking about being educated, could you give me your education background?

A: I have reached masters level. But I did not do it all in a row. When I make the recommendation above about going back to school, I am talking about myself. I have kept on learning. So others can do it too.
If you go to universities or colleges now, you will find that there are mothers and fathers who had put things on hold. It all depends on your motivation and aspirations.

I can start a new career even when I am 55 years or 60. I can go back to the university and study law and become a State Counsel. For as long as one lives, one must dream and realise their dreams, both for the girl-child and the boy-child.
Q: Alright, could you just walk me through your education background?
A: Like I hinted above my school started many years ago at Lusaka Girls School. Back then it was exclusively a bazungu school. I was not put off because the language was strange. Then I went to Kabulonga Girls Secondary School. After that I went to the University of Zambia and therein started my working career.
Q: What did you study at the university?

A: I studied economics. Of course those days after university, you either joined a parastatal company, a bank or the government. But I joined the bank because banks were paying better. With you came the narrow focus on money, of course.
A: I joined as a fresh graduate so the banks had their own induction and training programmes for specific purposes. After some years, I made a career move and went into pensions.

This was in 1998. I stumbled into pensions my mistake. Co-incidentally, I had based my long paper in my final year at university on the then NPF.I cannot what the topic was about but I did some research and submitted the paper which passed. But pleasantly for me,coming back to NPF and through the transformation in 2000, it was something that I enjoyed immensely. Though my role was in investments, I got exposed to pensions and it is an interesting field.

The pensions industry of course pools lots of money from members. And the activities of the pensions on the capital market is significant and beneficial for us to have their participations; they are looking for long-term assets to cover their long-term liabilities so buying into instruments is central to their investing activities. I know we can work together.

Q: For as long as you remain at LuSE, what is your vision?
A: I have set a benchmark. When I came to LuSE, I found awareness at a certain level. By the time I am ready to exit, I want the awareness level to have increased substantially, by more than 50 per cent. I want LuSE activities to be well known everywhere. I want to walk into the supermarket and be able to buy shares at a designated counter. I want easy access to information on investment opportunities in the news papers, on your cell phone, in your car radio. I want to see LuSE related stuff everywhere.

I would like people to talk market prices when they are routinely talking in bars and other places. I want your children to identify a logo of a listed company as soon as they see it anywhere. I want investors to transmit, to reflect or to communicate that we are invested and these are the benefits. For listed companies they must show affinity, recognition, in their relationships that they are listed and these are the benefits. This kind of awareness, this need for people to align themselves to the benefits of being listed or invested in the stock market, this kind of commonness I would like to see during my time. I want a relationship between LuSE and everybody; school children, marketers, the sophisticated, everyone.

If you walk into a bank or any institution that is listed this association is not visible, it is not there; that is what I want to change. I want them to live the part like a Masai person. It should reflect in everything they do that they are listed. It should reflect in the adverts, their billboards and in their company premises. I think that will increase understanding and awareness and will encourage others to want to follow suit.
Q: Before we conclude the interview, could you talk about your family?
A: I have a mom and dad, still living and many brothers and sisters. I am married and we have three sons. There are two of them at Cape Town University.
Q: Who is your husband?
A: Well, my husband is Dr Patrick Nkanza. He works for TEVETA.
Q: In conclusion, I would ask you to say anything about LuSE which you think the public should know…

A: The Lusaka Stock Exchange is a capital market. It is a compliment to the financial markets. Many a time when you read in the papers, you get a feeling that people think we are a bank and therefore we are competing with the banks. We are not competing with the banks. We are a compliment. We deal in company securities. Just like with the banks, you have merchant banks and retail banks. The merchant banks take care of the big deals, the wholesale deals while the retail banks go right down to the grassroots.
Even in that market, there is no competition between the two. In the same way, the capital market is not a bank. It is a place where you raise capital, both short and long term although we are designed for long term. Also you can raise capital here without yourself being listed.

I want, especially the business people to know this.
Our major challenge is one of achieving growth. But the opportunity in that challenge is integration. We can intergrate with othe stock exchanges in SADC for example.

Information dissemination, I talked of partnerships.
LuSE is also looking to increased efficiency, so we are automating our processes this year. An expensive move but it is necessary.This will bring us in line with other stock exchanges.
Last but more importantly, we are introducing an SME tier. This is where the future lies. We should achieve the common appeal once many SME’s start to use the LuSE.
Q: Well, may I thank you sincerely for this opportunity.
A: You are welcome.