LUSAKA STOCK EXCHANGE: Scarcity Is Not Growth by George N. Mtonga, MBA
The Lusaka Securities Exchange has posted impressive numbers in recent months. Share prices are climbing, turnover headlines are glowing, and some are quick to call this “market growth.” But we must pause and ask: is this true value creation, or simply scarcity in disguise?
The structure of our market tells the story. Only about 28–30% of all shares on LuSE are available for trading. The rest are locked away in government holdings, foreign parents, and institutional vaults. That means the prices we see moving are based on a sliver of the real equity—thin floats that exaggerate every wave of buying or selling.
Take Airtel Zambia (ATEL) as a case study. Recently, the stock gained nearly 6% in a single day, adding K8 per share. At first glance, this looks like strong investor confidence. But remember: only about 4% of Airtel’s shares are actually in the public float. In such a thin market, even modest buying interest can ripple through the stock, sending prices higher—not because the company’s fundamentals changed, but simply because there weren’t enough shares to sell.
This is the danger of celebrating scarcity as growth. When floats are this small, valuations can become detached from reality. The risk is that investors, both local and foreign, misinterpret thinly traded rallies as evidence of corporate strength or macroeconomic stability. In truth, the signal is weaker: it’s about supply and demand in a shallow pool.
Why This Matters
If our capital market is to truly reflect Zambia’s economic story, we need:
Larger free floats so share prices represent genuine investor sentiment.
Broader participation by local retail investors, so demand and supply are balanced.
Stronger fundamentals driving growth, not scarcity-driven spikes.
Conclusion
The recent rise in LuSE prices should not blind us to reality. When only 3 out of 10 shares are free to trade, scarcity—not performance—is often what drives the chart upwards. Airtel’s price jump is just one example of this distortion.
True market growth comes from profitability, productivity, and transparency—not from the illusion created when too few shares chase too many kwacha.