Access to Financial Services in Zambia

Despite the deep financial sector reforms undertaken in Zambia in the early 1990s, the expected benefits of establishing a market-based banking system have not materialized yet. In 2005, the banking system continued to be small and under-developed. Credit to private sector by banks represented only 8% of GDP in 2005, which is slightly lower than the level registered in 1990. As in the early 1990s, only large corporations and a few small and medium enterprises have access to credit in 2006. Moreover, less than 8% of Zambia’s adult population had a bank account in 2005. This paper analyzes the factors that have prevented the development of a large and inclusive banking system in Zambia and highlights possible actions that may help improve access to finance in Zambia in both the short and long terms.