Finance and National Planning Minister Ngandu Magande has urged the Bank of Zambia (BOZ) to stringently supervise macro-finance institutions in the country.
Mr. Magande says through supervision, the Central Bank could strengthen the banking
sector as this would evoke consumer confidence.
The Minister said this in Lusaka today when he commissioned the Foundation for
International Community Assistance (FINCA)Â Matero branch.
Mr. Magande noted that the participation of Micro-finance institutions is critical
to the socio-economy of the country.
He said empowering communities to have access to loans gives people an opportunity
to invest in income generating activities which in-turn help households to attain
better standards of living.
Mr. Magande has since commended FINCAÂ for coming on board to work in partnership
with government in promoting wealth creation in communities.
And speaking earlier, FINCA Africa Regional Chairman, Anthony Singleton, said
empowering communities and women in particular is central to poverty reduction.
The proliferation of so-called micro financing institutions should be reviewed.The offer of easy credit is increasing the indebtedness of individual Zambians and i wonder whether “responsible lending” is a motto in this growing sector of the economy.What has happened to the financial markets(sub prime) in the US is not a joke and could happen here as well.Irresponsible lending results in high rates of default and because most of these loans are “insured” this results in abnormal payout pressure on insurers!! ( acturial imbalances)……bottom line let us closely regulate and enact laws to protect the consumer as well as the lenders!!Micro finance lending is also a good money laundering option.Even though there is a risk of default…it is insured and clean money(insurance payouts) from dirty money results.I hope more the erudite economists can comment on my theory!!
# TOP, The traditional banking system requires that a borrower have collateral to receive a loan. The world’s poorest people have no such collateral. Further, traditional banks are not generally interested in issuing small loans — $50 to $150 — as the interest benefits do not exceed the transaction costs. That said, how has microfinance been so successful? On Saturday, October 14, 2006 PARIS, Oct. 13 — Bangladeshi economist Muhammad Yunus and the Grameen Bank he created won the Nobel Peace Prize on Friday for leveraging small loans into major social change for impoverished families.
The Grameen Bank’s pioneering use of micro-credit has been duplicated across the globe since Yunus started the project in his home village three decades ago. Loans as low as $9 have helped beggars start small businesses and poor women buy cellular phones and basket-weaving materials. Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty,
ethe Norwegian Nobel Committee said in its citation released Friday in Oslo. “Micro-credit is one such means.” The committee praised Yunus, 66, as “a leader who has managed to translate visions into practical action for the benefit of millions of people, not only in Bangladesh but across cultures and civilizations.” Susan grew up in a poor, rural area of Kenya. She was the only one of her siblings to attend school but was forced to drop out after fourth grade when her family could no longer afford the school fees. Her parents kicked her out when she became pregnant at 17. Hoping to find work, Susan and her infant son moved to Nairobi, where she married and had a daughter. Her husband left her when they learned she was HIV-positive. Unable to find work and with no means to support her two small children, Susan ended up in prostitution.### The Origin Pundit think of these before you critise MFI and Magande it has worked and it can help to achieve the MDGs. Can you imagine of a world…
ctd.. 2 where all adulties can earn monies and finance there Maslow hierachy needs and wants. Can the world be a better place to live in???
Ba Easy,i was not criticizing but merely encouraging caution.The facts, as you have presented,clearly show the benefits of MFI’s.The proliferation of these institutions in Zambia which doesn’t have a well developed regulatory framework, worries me.The credit culture in Zambia is infantile at grassroot level and it is possible more poverty may result among the all too frequent defaulters we have among us.The interest rate structures the MFI’s are using in Zambia are exploitative and i just don’t see any long term benefits accruing to our citizenry.Would i be wrong to expect the dreaded ” borrowing from Peter to pay Paul” syndrome to take root in Zambia??
It’s an interesting concept to say the least..