BONI, Investrust Dispute Raises Questions over Investor Protection in Zambia

Emmanuel Addeh in Abuja

A dispute involving Nigerian investment firm, BONI, and Zambia’s financial authorities is raising fresh concerns about investor protection, regulatory clarity and the credibility of African capital markets, especially at a time when governments across the African continent are urging greater intra-African investment.

Checks by THISDAY showed that the controversy centres on BONI, led by global investor Michael Prest, and its failed investment in Investrust Bank Plc, a company listed on the Lusaka Securities Exchange.

Already, the case has begun to attract attention beyond Zambia, particularly within Nigeria’s investment community, especially due to the  implications it carries for market confidence and institutional reliability.

The matter has gained additional prominence following recent high-profile meetings in Lusaka between President Hakainde Hichilema and prominent Nigerian business leaders, including Aliko Dangote and Tony Elumelu. During those engagements, the Zambian government reiterated its commitment to transparency, predictability and reforms aimed at attracting foreign and regional capital.

According to details of the transaction, BONI acquired a 24.8 per cent stake in Investrust Bank Plc in 2021 through Pangea Securities, a licensed broker, and via the Lusaka Securities Exchange.

The shares were said to have been purchased in line with exchange rules and publicly available procedures, forming part of a strategy that included discussions with multilateral African finance institutions and plans to modernise the bank’s operations through a partnership with a major Asian financial technology firm.

Following the acquisition, BONI, THISDAY learnt, was informed that because Investrust Bank was a regulated financial institution, approval from the Bank of Zambia was required to formally recognise the shareholding.

Consequently, BONI submitted the necessary information and waited for regulatory clearance. However, it was gathered that was expected to be a routine process stretched into a prolonged period of uncertainty.

Over nearly three years, BONI repeatedly sought clarification on the status of its investment. During that time, it was not granted shareholder recognition or board representation. In January 2024, the Bank of Zambia formally informed BONI that it did not recognise the firm as a shareholder in Investrust Bank. Three months later, the central bank placed Investrust Bank into liquidation.

But BONI argues that while it was denied recognition as a shareholder when it sought governance rights, it effectively bore the full loss of a shareholder when the bank was liquidated, resulting in the wiping out of its investment.

While in most established exchanges, the purchase of listed shares automatically confers ownership rights, subject only to clearly defined regulatory thresholds for significant holdings, the BONI case, however, has prompted questions about whether share ownership on the Lusaka Securities Exchange is contingent on subsequent regulatory discretion rather than inherent at the point of purchase.

For instance, if investors believe that share ownership can be retroactively denied, confidence in the exchange’s role as a reliable platform for capital formation may be undermined.

Importantly, it was noted that the Bank of Zambia’s authority to vet and approve significant shareholders in regulated institutions is not in dispute, but the controversy centres on the absence of a clear resolution, including the non-refund of BONI’s investment following the refusal to recognise its shareholding.

Therefore, BONI is seeking the return of its capital and compensation estimated at about $40 million, a figure considered small compared to the potential reputational cost to Zambia’s financial markets.

Although Prest has publicly expressed respect for President Hichilema and his pro-investment agenda, describing him as a strong advocate for Zambia’s economic potential, he has also stressed that governance failures must be confronted transparently if confidence is to be maintained.

In that sense, the BONI affair has become a test case for whether institutional practices can keep pace with political commitments to reform.

The issue has resonated particularly strongly within African investment circles, where information travels quickly and perceptions shape capital flows. While Zambia continues to position itself as a regional gateway to a market of several millions of people, it is believed that unresolved disputes such as this, risk overshadowing those ambitions.

“What alarms them is the refusal, to date, of any Zambian authority — BoZ, LuSE or the Ministry of Finance — to return BONI’s funds. BONI’s claim for the return of its capital and $40 million compensation is modest compared with the reputational damage now hovering over Zambia’s markets,” one source said.

While  Zambia eagerly welcomed Dangote and Elumelu, observers say it’s curious that it did not appreciate how quickly news of BONI’s treatment would reach their peers, and how deeply it could shape perceptions of Zambia’s institutional reliability.