Government has urged the banking sector in the country to complement its efforts in reducing interest rates.
Commerce, Trade and Industry Minister Felix Mutati said reduced inflation rates and appreciation of the Kwacha against major currencies is among the several efforts by Government to reduce the interest rates.
The Minister said this in his key note address to delegates at the on going Euro Money Investment Conference in Lusaka today.
Mr. Mutati said it is sad that despite several Government efforts to help improve people’s lives by ensuring that they have access to bank loans and other products, the banking sector has not been willing to reduce the cost of money.
He said Government has now opened up the sector to more investment resulting in more international and local banks joining the market in order to help promote competition.
Mr. Mutati disclosed that following the successful establishment of some international and local banks in the country more international banks have expressed interest to open their banks in the country.
He added that once more banks join the market, the situation will result in competition which in turn will compel the banks to offer unique and quality banking services.
Mr. Mutati has said the three economic zones, Government is establishing this year namely the Chambishi, Lusaka south and east are aimed at further industrialising the country.
He added that the economic zones are also aimed at adding value to the products created from the industries and creating employment to Zambians.
And Mr. Mutati has disclosed that Government will soon build one border post facilities at Nakonde and Kasumbalesa border posts in Northern and Copperbelt Provinces respectively to help reduce congestion and expedite cross border trade.
Mr. Mutati further revealed that Government will establish open plan offices with automated operations at the Immigration Department and PACRO offices.
He said the move will help reduce corruption as officers at both institutions will have less personal contact with clients.
At the same gathering African Development Bank Vice President for Corporate Services Arunma Oteh urged the Private sector to focus on building infrastructure such as roads and railways as part of its social responsibility.
Ms Oteh added that the Private sector should also help Government in complementing its efforts by investing in water and sanitation in communities where they operate from.
Meanwhile, the Commerce Minister has urged Zambian entrepreneurs to develop business partnerships in order to broaden their capital base.
Mr. Mutati noted that increased capital base can help entrepreneurs to grow their investments and present them with opportunities to capture a large market for their products.
In all civilised countries it is the Central bank or Reserve bank that sets the interest base rate every quarter. Debtors and creditors always look forward to this announcement by the monetary policy committees of either the Bank of England, Federal Reserve, or European Central Bank. No politician ever appeals to the commercial banks to reduce interest rates but they get the clue from the quaretely announcements of the central banks. So rather than Mutati and co boring us with these nonsensical appeals I would urge him and his friends to give the Bank of Zambia the powers that it deserves.
#1 you are right on. I doubt these guys are so out of touch, they are likely just playing politics (it’s the commercial banks’ fault not us) and taking Zambians for fools as usual.
Like BOZ encouraging Zesco to look at exporting power to Eastern Africa when Lumwana and the rest of the country is in jeopardy if there is no additional power supply in the country.
I am not concerned with this Mutati is saying above. I just want to let all those interested to know that the NCC has approved dual citizenship. Which means it will be stop being illegal having both Britsh and Zambian passports, American and Zambian, SA and Zambian passports etc once the once the NCC recommendations are enacted. In today’s post that point has been written. I thought i should gate crash this point here since I did not have any other forum. This is for those who did not know. Now we can continue with economic commentators about Mutati’s utterances.
#1 Mbulawa, #2 Dante. You are spot on. Caleb and his crew at BOZ should set the base rate. Secondly Kwacha exchange should be stable these wild swings (back and forth)between to 3200ZMK to 4500ZMK in less than 24 months are not helping. Something is just amiss in the exchange rate/inflation/interest rate relationships. I wonder whether some figures dished out by CSO & BOZ are “cooked”
#3, Levy will never sign off the dual citizenship clause, he has made it clear every time he meets us here in diaspora.
I doubt he or any other typical Zambian politician has the courage to include people who they are unlikely to corrupt, intimidate or fool in to the current voters registry.
Yes, that’s all he’s afraid of.
No. 1 is totally wrong. Zambia has a floating currency and the base rate is set by the Bank of Zambia. Caleb and his team are the ones responsibile for setting the interest rates; and what Mutati is talking about is the fact that despite BOZ reducing the base rate, commercial banks have continued to maintain high lending rates. Now this situation does not encourage economic growth as borrowing is expensive.
#6, I agree, BOZ carries out monetary policy by influencing short-term interest rates. It does this by raising and lowering the target for the interest rate (interest rate at which major financial institutions, Banks, credit unions etc… borrow and lend funds among themselves.)
The key point here is “influence”, if they can’t do this then their rates or forecasts are wrong, useless or imaginary because the law of supply/demand also rules in banking.
Always remember that banks charge those rates because they can do so and they do have customers (mostly the government itself in Zambia’s case).
Iyi exchange rate £1= K6,280.00 bushe ni maloza?
#4 Theoretician
Zambia adopted the flexible exchange rate, meaning it changes due to changes in the supply and demand for the Kwacha.
#6 Koshet
You are right. The interest rate is set by the central bank. It is up to commercial banks to adjust there interest rates. But lets not forget that commercial banks are also businesses. I think they set there interest rates on influences from the inflation rate and the amount of profit they want to make. Banks make there money by giving out loans. They have to set there interest rates above the inflation rate because what they give out today wont have the exact same value as next month given inflation. Also they have to add there profit in there
is our bank of Zambia independent or under government?
Those words alone by the boss cannot ease the exploitation of the Zambian people by the investors.I wonder why our heads/leaders don’t put in measures to regulate the running of banks in Zambia and other businesses.It’s a week kinda governance where leaders just come to complain on the media about ABC’s while they forget to focus on regulatory issues.For the past6 and half years i have been in this country,i have never head or read on issues relating to exploitation of locals.As a result their always is a practical economic boost in all areas of the economy.Give conditions and let them be followed.END OF STORY
Interest reductions rates reduction is basically to spur employment levels as the marginal effciency of capital falls for the maintenance of consumtion and the discouragement of over- thriftiness by the transfer of purchasing power frm rich to poor and eventually to keep the prices of goods stable or gently rising and this to encourage investiment.Which is good. But they have to take cognance of the fact that our balance of payment in real terms is not good enough. With the current Kwacha/dollar levels, our exports are too expensive.
Banks are now posting very huge profits. Rip off on this already distorted economy- Suger, Cement Labour etc
If i may ask,what is the current interest rate offered by our commercial lending institutions?
I thought interest rates go with the economical situation and the inflationary rate. The banks cannot just reduce rates in isolation, but it is indication of other prevailing conditions, not only political as Mutati may want us to believe. Ask the minister what his government and BOZ are doing to reduce inflation and the financial mkt?
You’re right #15. The current mortgage meltdown in the USA has led to the reduction in the prime rate (set by the Federal Reserve) from about 5% a few months ago to about 2% today. Nevertheless, banks are still charging high interest rates on mortgage loans just as before the credit crunch (above 5.5%) unless one’s credit scoring is in excellent condition-above 750 points (on a scale of 350-850). There are a lot of other conditions the banks consider before lowering their lending rates. Don’t believe anything politicians tell you!
The Zambian government abolished all controls, I mean ALL. This means that today, our government cannot bring to book any person on any issue related to business. We have no Bureau of Standards-anyone can import anything; we have no Consumer protection-anyone can sell anything; we have no ‘nothing’-Banks have taken advantage of this. They charge Ledger fees as they want regardless of someone’s status- and yet these very Banks do consider the retired people and students in developed world. Mutati and the like must just concentrate on their ‘tummies’ as they will look back at them regrettably later on in future once their time is gone. Pretend not to see; only when in trouble do we see