Let me quickly go over some of the most important changes to the primary market: •  Following the liberalization of interest rates in 1992 the auction system for Treasury bills was introduced to create a more transparent and market-based system of price determination that would encourage broader investor participation. •  Alongside the introduction of the auction system, the maturity structure was extended from the only existing term of 91 days to include 28 and 182 days in order to meet the various liquidity needs of investors. •  In 1995, Government bonds with a maturity term of 12 month and 18 months were added to the list of securities. •  Following the increased depth of the market, the structure of Government securities was streamlined with the termination of the 28 day Treasury bill issuance and the subsequent introduction of the 273 days maturity term. •  In 2005, reforms of the Government securities market continued with the cessation of the 12 months and 18 months Government bonds. In their place, a 364 day Treasury bill was introduced alongside the 3 and 5 years bonds. •  More recently, in August 2007, a portfolio of Government bond maturity terms was further increased to include the 7, 10, and 15 years. Since that period, the size of the outstanding issues has grown from 7% of GDP in 1994 to 17% by the end of 2007. With regard to secondary market, policy efforts have been initiated at different stages in the development of our market.
You may wish to know that the Bank of  2  BIS Review 26/2008  Zambia and the Lusaka Stock Exchange are already engaged to develop an efficient settlement stream within the RTGS payments system. It is my belief that once this initiative has been fully developed, settlement risk will be reduced and more credibility will be added to securities trading. Chairperson, I know there are still formidable challenges in building a vibrant secondary market. Hence, in my concluding remarks, let me reiterate what I said earlier; that setting the primary market off the ground has been a challenging task. To set up secondary markets is even a more challenging task. Yet it is not an impossible one. With the participation of every stakeholder, the challenges that seemingly look insurmountable can easily be overcome. We all know that the development of a vibrant secondary market for securities is necessary. When I look at all of you gathered here this morning, I see a determined optimism that we can get there. Each and every one of us has a role to play, be it Government, corporate institutions, or indeed a small investor. On our part as Bank of Zambia, you can rest assured that we will continue doing our part in facilitating the development of this market. Thank you very much and I wish you a very successful workshop. BIS Review 26/2008  3