Zambia 'needs flexible financial policies'

Dec 21, 2009

Although the forthcoming entrance of new commercial banks into Zambia are deemed as helping to reduce the cost of lending in the country, one writer has called for more changes to the nation's financial infrastructure, particularly for the central bank.

Although the forthcoming entrance of new commercial banks into Zambia are deemed as helping to reduce the cost of lending in the country, one writer has called for more changes to the nation's financial infrastructure, particularly for the central bank.

Writing for the Post, Sambwa Gabriel Chifwambwa points out there needs to be "vigorous but flexible interventionist policies for developmental purposes".

He claims while Finance Minister Dr Situmbeko Musokotwane declared that the introduction of new banks in the country "would reduce the cost of lending through induced competition", the Bank of Zambia needs greater powers to lower the cost of lending.

Mr Chifwambwa claims Zambia is "fairly unique" in having a central bank that does not have the legal and regulatory powers to set base lending rates, something which causes a "house-of-mirrors setting" for asset valuation, long-term savings and project investments.

And as the economy struggles and unemployment is high, he notes that such developments could help Zambia through the downturn.

Last month, Bank of Zambia Governor Caleb Fundanga pointed out that although moves by banks to expand their services to areas outside the central business district is encouraging, he stated those handing out loans without passing through the credit reference bureau will face regulatory action and punitive measures.