Lubinda Haabazoka

By Dr Lubinda Haabazoka

What is company listing?

Company listing is the process of issuing shares on the stock market. When a company lists on the stock market, it converts from being a limited company to a Public Limited Company. The process of listing involves courting two markets:

1. The Primary Market i.e the market for initial public offers (IPO). In most cases when shareholders allocate a certain percentage of shareholding for listing, they do not offload the shares directly to the public. Doing so can lead to negative consequences such as under subscription. Where there is under subscription, a company incurs losses due to costs related to the listing process. To hedge against demand risk (risk that shares won’t be bought), companies normally offload their allocated shares to institutional investors in a process known as underwriting. institutional investors include among others banks and other fund managers. The process of selling shares to institutional investors is known as initial public offer. Households have no access to this market. It is at this stage that the company listing gets its capital from listing and surrenders its shares.

2. The Secondary Market i.e the market for resale of shares. In most cases at this point, the shares now belong to institutional investors. When Institutional investors purchase all the shares, they now offload them on the secondary market such as the Lusaka Stock Exchange to households and other market participants. It is very difficult to know who will actually buy the shares because in most cases, institutional investors can be many and shares are offloaded to everyone with access to the stock market at the same time. The higher the demand, the higher the price. Institutional investors make profits during this stage. No one person can with 100% be certain to purchase all the shares on this market.

Why do companies list shares?

– To raise capital for capital projects
– A way of cashing on initial investments by venture capitalists etc.

The Case of Parastatal companies

Going public does have positive and negative effects:


– Strengthens capital base,
– A way of attracting FDI and Technology,
– makes acquisitions of state owned companies easier by citizens because of affordable share prices,
– diversifies ownership,
– increases prestige,
– forces disclosure to the public making citizens aware on the performance of a particular company,
– Listing gives an opportunity to citizens to take part in the partial privatization unlike direct sales where citizens can be out done by foreign companies with huge resources.


– Puts pressure on short-term growth,
– imposes more restrictions on management and on trading,
– makes former business owners lose some control of decision making depending on the percentage of shares offloaded.


– For ZAFFICO, it is important to grant a certain percentage to employees and Saw millers through some form of trust as in the case of ZANACO
-Strict monitoring to ensure that ZAFFICO continues to grow trees to avoid a desert in Zambia


Instead of politicking, Zambians should see this as an opportunity and prepare resources to purchase ZAFFICO shares. Shares are a form of savings for citizens. Looking at the rate at which the global construction sector is growing, we only expect ZAFFICO shares to boom especially if the diversified shareholding will enhance efficiency as in the case of Lafarge, ZANACO, Zambia sugar company and other similar companies.
I hope this will help bring the ZAFFICO debate back to objectivity.



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