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Financial Sector Overview

Economic Landscape

Zambia, a lower-middle-income country, has achieved sound economic performance due to significant foreign direct investments supported by a stable political environment since the country's independence. The average GDP growth was 5.38% between 2010 and 2017, far higher than for sub-Saharan Africa (3.87%). However, despite economic diversification initiatives, the country reliant on the extractive sector. Zambia is Africa’s largest copper producer and the 5th in the world. The mining industry's share of GDP increased from 4.2% to 14.6% between 2000 and 2014, while that of agriculture dropped from 23.8% to 6.8% over the same period. In addition to the vulnerability of its economy to commodity price fluctuations, the country faces several other challenges, including a high poverty rate of over 54 percent. Capital-intensive economic activities mainly fuel growth and render it less inclusive with no formal job creation. Zambia has prepared a 7th National Development Plan (2017-2022), aimed at achieving a diversified and resilient economy for sustained growth and socio-economic transformation with key emphasis on agriculture. The business environment has however deteriorated, with the country ranked 87th in the 2018 World Bank's Doing Business ranking, down 11 spots relative to 2010. 

Financial Sector Overview

In 2017, the Zambian financial system consisted of 17 banks, 34 microfinance institutions and 8 leasing companies. In 2016, the country had 242 pension funds and 34 insurance companies (22 for non-life insurance and 12 for life insurance). Zambia's financial system is underdeveloped and dominated by the banking sector, with assets that stood at 17.5% of GDP in 2016, while those of the non-banking sector were 7.3 percent of GDP. Banks account for about 67% of the financial sector's total assets. Microfinance institutions account for 8% of total non-bank financial sector assets, while insurance companies hold only 12% of these assets. The 1994 Banking and Financial Services Act and related regulations and prudential guidelines confer on the central bank (Bank of Zambia) the power to license, regulate and supervise banks and other financial institutions. In this regard, the purpose of the Bank of Zambia is to guarantee the promotion of a sound financial system. Non-bank financial institutions regulated by the central bank include leasing companies, currency exchange businesses, microfinance institutions, construction companies and development banks. The insurance and pension funds sector is regulated by the Pensions and Insurance Authority.

Banking Sector

Banking Market Structure - The banking sector is dominated by primarily foreign-owned banks, mostly bank group subsidiaries that account for about 83% of total bank assets. Banking sector assets have increased each year from Zambian Kwacha (ZMW) 34.3 billion (USD 2.6 billion) in 2012 to ZMW 71.7 billion (USD 5.5 billion) in 2017, mainly due to gradual increase in investments in government securities and offsets with foreign financial institutions. However, this growth has been slowing down since 2016 (-1.3%), due to credit restriction to the private sector. The level of sector assets as a percentage of GDP declined in 2016 (29.9% against 34.8% in 2015). Loans and advances constitute the majority of bank assets (33.6 and 31.1% respectively in 2016 and 2017) and have been on a downward trend since 2015. Deposits, which accounted for 85.8% of liabilities in 2017 (83.2% in 2016), over the period, peaked in 2015 (25.3% of GDP) before experiencing a relative decline from 2016.

Banking Sector Credit and Deposits Structure - Credit to the private sector amounted to ZMW 22.3 billion (USD 1.7 billion) in 2017, or 9% of GDP. However, credit growth was marked by a negative growth rate in 2016 (-12.8%), due to difficult economic conditions (slowdown in economic growth, sharp decline in copper prices, electricity shortages after prolonged droughts, a restrictive monetary policy and intense pressures on budgetary financing) and the combined outcomes of reduced borrowing and lending respectively because of high lending rates and credit portfolio deterioration. Bank loans are dominated by personal and primary sector loans, which on average account for 28% and 18% of total loans and advances respectively, between 2015 and 2017. Bank deposits reached ZMW 53.7 billion in 2017 (USD 4.1 billion). They are dominated by overnight deposits accounting for 63.9% of the total. 

Deposit and Lending Rates - The tightening of monetary policy between 2012 and 2016 sought to mitigate inflationary pressures and exchange rate volatility. Lending rate trends are marked by a gradual readjustment, in accordance with monetary policy guidelines. The steady increase in lending rates between 2013 and 2016 is also due to the credit crunch following the rise in non-performing loans. The lending rate reached 15.5% in 2016. In November 2017, the central bank reduced this policy rate to 10.25% and the reserve requirement ratio from 18.0% to 8.0%. The credit rate revolved around 7% between 2010 and 2012, before rising again to 10.78% in 2016.

Financial Soundness of the Banking Sector - Between 2012 and 2017, the banking sector was well capitalised. The ratio of risk-weighted capital (Tier 1) to total regulatory capital were in line with established standards. The liquidity situation remained satisfactory and has been rising since 2015, for both the liquidity ratio and the liquid assets ratio. The sector is, however, marked by deteriorating asset quality due to the challenging economic environment. Non-performing loans have steadily increased since 2014 to reach 12% in 2017, thus exceeding the 10% prudential limit. In 2017, the primary sector accounted for 32.7% of non-performing loans. The rise in non-performing loans pushed commercial banks to hold more risk-free government securities, a situation facilitated by the easing of liquidity conditions in 2017 through reduction of the reserve requirement ratio. The hedge ratio for non-performing loans trended down from 83.2% in 2013 to 66.5% in 2017, reflecting a relative decrease in the ability to absorb risk. The banking sector maintained profitability between 2012 and 2017, with positive ROA and ROE.

Financial Inclusion

Zambia’s National Financial Inclusion Strategy ( 2017-2022), aims to provide universal access to a broader range of affordable and quality financial services for individual and business needs.  The proportion of adults with an account increased by 28.9% since 2014 to reach 45.9% in 2017, above the sub-Saharan average (42.6%). The share of adults with a mobile money account has more than doubled and the inclusion of lower-income adults has increased by 49.3%. In November 2015, the central bank eliminated the interest rate ceiling to improve access to financial services. Besides, the adoption in 2016 of a law on the use of movable guarantees is supposed to boost access to financing.

Progress made by Zambia on financial inclusion focuses mainly on individual’s account ownership and related areas, while SME inclusion remains marginal. Despite these advances, less than half of the adult population is financially included. More than 3.5 million Zambian adults (about 41 percent of the adult population) are financially excluded and more than 5 million Zambian adults (about 60 percent of the adult population) use neither the products nor financial services of authorized suppliers. Constraints to financial inclusion include the high concentration of financial access points in densely populated urban centres (about 18% of Zambia's districts are not served by licensed financial institutions), insufficient distribution networks for insurance products and the low use of non-bank financial services such as microfinance institutions (MFIs).          

The Microfinance Sector - In 2017, Zambia had 34 MFIs including both business lending MFIs (MFI 1) and consumer credit MFIs (MFI 2). Business lending MFI assets were ZMW 492.7 million (USD 37.5 million) in 2017, or an increase of 8% from 2016 due to a 10.6% increase in loans and advances. Loans and advances amounted to ZMW 365.2 million (USD 27.8 million) or 74.1% in 2017 and constituted the most significant component of the assets of business lending MFIs. Loans and advances also represent the largest proportion (86.9%) of consumer credit MFIs' assets, which stood at ZMW 3 892.7 million (USD 296.2 million) in 2017. The capitalisation of MFIs remains in line with regulatory requirements, although improving asset quality remains a priority, given the rise in non-performing loans towards the 10% ceiling. Supply ratios trended downwards despite their recovery in 2017. Only 4% of adults report using the products and services of microfinance institutions. The sector also suffers losses by business lending MFIs. Moreover, resource costs and the inability to adapt to regulatory and macroeconomic changes are impediments to the development of MFIs.

Digital Finance - According to the World Bank, the proportion of adults who made or received a digital payment in the previous year increased by 35.3% between 2014 and 2017. This improvement resulted from the growing use of digital transaction accounts. Zambia had 5.92 million registered digital transaction accounts, compared to 2.9 million registered bank accounts as of 31 March 2016. In late 2018, the value of mobile money transactions reached ZMW 22,192 million (USD 1.7 million) for a volume of 304 million transactions. The digital finance sector continues to face several challenges. Only 250,000 adults (8.2% of the adult population) used mobile money monthly in 2015, out of 8.5 million mobile subscribers, with a mobile telephone ownership rate of 52%. The low performance is attributed to limited knowledge of services, high costs of using digital financial services, lack of confidence in the security and confidentiality of systems, and a general preference for cash transactions. Besides, the sector is characterized by a low motivation of mobile agents, due to the high level of exclusivity of these agents: 91% of agents work exclusively for a single supplier, and their profitability level remains low.

SME Financing - Access to financing by SMEs has deteriorated, although individual financial inclusion has increased over the last five years. 53% of small businesses (5 to 19 employees) had their last loan application rejected, although the rejection rate is virtually nil for large firms. The high cost of credit, when available, weighs on the ability of SMEs to pay. Nominal interest rates applied by commercial banks can reach up to 40%. Only 8.8% of small businesses took out a loan, compared to 22.6% for sub-Saharan Africa.

Several structural constraints limit access to financing for SMEs, including stiff collateral requirements and precarious lending instruments designed for SMEs. Collateral requirements generally include real estate such as land and buildings that many SMEs cannot afford. A movable property (security) law promulgated on 6 April 2016 improves the legislative framework by allowing movable property to secure lending. Besides, most small businesses are informal, due to limited access to registration centres and a lack of tangible benefits that may encourage them to formalize. The lack of alternatives to traditional bank financing and the high level of non-performing loans on credit facilities offered by microfinance are further impediments to SME growth in Zambia.


As at 31 December 2016, the insurance industry had 361 entities, including 22 non-life insurance companies, 12 life insurance companies, 50 insurance brokers and 240 agents. The insurance sector recorded an overall increase in turnover of 17%, with gross premiums rising from ZMW 2,107 million (USD 160.4 million) in 2015 to ZMW 2,455 million (USD 186.8 million) in 2016. The sector is dominated by general insurance. Non-life insurance assets stood at ZMW 1,514 million (USD 115.2 million) in 2016. The "motor vehicle" branch, which accounted for 43% of business in 2016, dominates the sector, followed by the "goods" and "accident" branches, representing respectively 27% and 10% of gross written premiums. Life insurance is dominated by the “life” branch, which accounted for 73% of business underwritten in 2016, followed by the “health” branch, which accounted for 26% of gross premiums. Insurance sector assets reached ZMW 1,303 million (USD 99.2 million) in 2016. The penetration rate remains low at 1.69% and 1.9% respectively in 2015 and 2016. Only 2.8% of adults had taken out insurance in 2015. The sector remains characterized by low awareness of existing products and a lack of innovation in terms of appropriate insurance products adapted to the needs of low-income households, including those living in rural areas (climate insurance and crop insurance for farmers). Moreover, governance issues have been identified, in addition to low control over management risks and overheads.

The Capital Market

Capital market performance is limited to the Lusaka Securities Exchange (LuSE), which is the only active regulated market. Activities of the Lusaka Securities Exchange slowed in 2018. The overall index fell by 1.5% to 5,248.4 as a result of lower share prices for some companies in the manufacturing, banking and services sectors. As of 31 December 2017, the Lusaka Securities Exchange consisted of 36 listed companies, 6 brokers and 9 collective investment schemes.

Similarly, capitalisation of the stock market increased by 8.0% to ZMW 62,350 million (USD 4.7 billion) in 2017, or 12.07% of GDP, an increase fuelled by a rise in the price of certain listed shares. The capital market remains underdeveloped and lacks appropriate investment products for the average household.

Social Security

In 2016, Zambia had 242 pension plans, 7 pension fund managers and 6 pension fund administrators. The total number of registered pension plan members dropped from 112,157 in 2015 to 105,530 in 2016, i.e., a reduction of 6%, with active membership declining by 9% while retirees increased by 6%. Net pension assets reached ZMW 7,004 million (USD 533 million) in 2017, or 5.2% of GDP. Total assets used for investment purposes increased from ZMW 6,656 million (USD 506.5 million) in 2016 to ZMW 7,823 million (USD 595.3 million) in 2017, or an increase of 17.5%. These investments are dominated by listed shares (31%) and real estate (19%). According to the regulatory limits set in the investment portfolio, not more than 70% (not less than 5%) of assets may be allocated to equities and no investment in real estate may be made outside the country (not more than 30% assets in Zambia).

Contact Details Information of Banks Operating in Zambia - 2018







 Head office: 7393 Chainda Place, off Cairo Rd
PO Box 38173

 (+260) 21 122 08 40 / (+260) 21 122 08 35


 Lusaka Main Branch, Farmers House /Central Park, Corner Cairo Road / Church Road

 (+260) 21 122 72 27


 Ground Floor, ABC Pyramid Plaza, Plot 746B, Corner Church Road/Nasser Roads
P O Box 39501

 (+260) 21 125 79 70


 Plot No: 2339, Kabelenga Road
P.O.Box: 34550

 (+260) 21 123 86 86



 Bank Square, Cairo Road
P.O. Box 30080

 (+260) 21 122 88 88 / (+260) 21 122 89 03


 Elunda Office Park Addis Ababa round about Rhodespark
Private Bag E308

 (+260) 21 136 61 50 / (+260) 21 136 61 69


 22768 Thabo Mbeki Road
P.O. Box: 30705

 (+260) 211250056 / (+260) 211250057


 Finance House, Cairo Road
P O Box 37102

 (+260) 21 122 97 33


 284A Namambozi Road, Fairview
PO Box 35571

 (+260) 21 123 72 81



 (+260) 211227227



 Plot 682 Cairo Rd, Town Centre, Lusaka

 (+260) 211227941


  Plot 746B Cnr Church & Nasser Road, Ridgeway Lusaka

 (+260) 211 229025



 (+260) 211 257970


 P.O.Box 38474. Piziya Office Park Plot 2374, Thabo Mbeki Road Lusaka

 (+260)  211-360023


 Cairo Road
P.O Box 33611

 (+260) 21 122 89 79


  Alliance House, Plot 627, Cairo Road
P.O.Box 33959

 (+260) 21 122 93 05


 Kwacha Pension House, Ground Floor, Plot No. 4604, Tito Road

(+260) 21 136 87 50


 Plot No. 6907, Cairo Road
P.O Box 35411

 (+260) 21 122 46 53


 Ody’s Park, Plot No. 19028/9, Great East Road
P.O Box 32344

 (+260) '21 129 46 85


 Plot 2375, Addis Ababa Drive

 (+260) 21 137 00 00


 Plot 22768 Thabo Mbeki Road, Acacia Park Lusaka

 (+260) 21 125 59 51 / (+260) 21 125 59 53



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At a Glance

At a Glance Source
Population in thousands (2019): 17,861.03
GDP per capita (current US$) 2019 - World Average 10,721.61: 1,291.34
Account (%) age 15+) - (2014 vs 2017): 36% | 46%
Agriculture Orientation Index - Credit ( Agriculture, Forestry and Fisheries share of GDP) (2015 vs 2016): 3.47 | 3.54
Financial Inclusion Strategies: • National Financial Inclusion Strategy 2017-2022• SADC Financial Inclusion Strategy 2016-2021
Domestic credit provided by financial sector (% of GDP) 2017: 21.76
Made or received digital payments in the past year (% age 15+) (2014 vs 2017): 29% | 39%
Remittances % of GDP for 2018: 0.004
Mortgage Interest Rate / Mortgage Term (years): 28,5% | 15

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