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Sunday, April 18, 2021

Commercial Banks Interest Rates are too High – Mutati

Economy Commercial Banks Interest Rates are too High – Mutati

Government has observed that the high interest rates being charged by commercial banks are not in tandem with the reduced inflation rates in the country.

Commerce, Trade and Industry minister Felix Mutati said bank interest rates are currently challenging despite the good macro economic policies put in place by government.

Mr. Mutati said this when he officiated at the official launch of Access Bank Zambia in Lusaka today.

He however challenged the bank to ensure that it attracts Zambians that are currently not bankable adding that only 10 percent of the Zambian population are bankable while the majority are not in the banking sector.

Mr. Mutati also observed that the coming of Access Bank Zambia to the country’s banking sector will help address various challenges the sector is faced with as it will compete with other existing banks to provide quality banking services to the public.

The minister also urged the bank to aggressively bring competition into the banking market in order to help improve product variety and access to unique banking services that are beyond a traditional bank.

Meanwhile, Mr. Mutati has further challenged Access Bank Zambia to open its doors to small and medium scale entrepreneurs in order to enhance their growth and contribution to the growth of the country’s economy.

He assured the bank of continued government support adding that the entry of the bank into the country’s economy has further attracted other African investors from other countries who have expressed interest to invest in the country.

And speaking at the function, Access Bank plc deputy managing director Herbert Wigwe said Access bank Zambia is aiming at improving the quality of banking services in the country.

Mr. Wigwe said his bank intends to develop and implement financial consultant services with specific and unique products targeted at various segments in the economy.

He said this will be achieved by leveraging the international partnerships the Access Bank group has built with other international financial institutions and multi lateral agencies to the advantage of the Zambian economy and banking sector.

Mr. Wigwe also observed that there is need for a financial stimulus to help grow economies in developing nations adding that his bank will also help bring foreign investment to help grow Zambia’s economy.

He disclosed that Access Bank Zambia will also introduce gender empowerment programmes in Zambia under SME’s to help women entrepreneurs grow their businesses.

And Access Bank Zambia limited managing director David Chewe said the issuance of a license to enable the bank operate in the country represents trust, loyalty and commitment to render world class financial services to Zambia and south/central African markets.

Access Bank plc is a Nigerian bank which ranks in the top six commercial banks of that country with a capital base of 1.5 billion dollars and has been in existence for close to two decades.

Access Bank Zambia limited was today officially issued with a license by the bank of Zambia to operate as a commercial bank in the country. The bank has 25 percent equity in vestment by Zambian investors.

22 COMMENTS

  1. Mutati spot on, but stop borrowing from the same banks as us the common man, so you Mutati you do not see that the rates are high because Government is also borrowing heavily. Inflation sat 11%, the banks have to cover that so manage the inflation and stop borrowing there will be more money for us, ain’t you arranging a loan facility to procure crude oil or what is that? Nonsense

  2. 28% personal unsecured loan, some are negotiated but they never go below 19% which the lowest base

  3. High risks and lack of a credit system and culture must be remembered in the zed interest equation – we have a long way to go, starts from the top – now Kavindele wants to be a mobile operator before he liqudates his debt at DBZ, what is this?

  4. #3 thanks for the info. I can never obtain a loan from there unless I start a business that has no competition. 28%!!! Wow that a lot of interest. US Rate is at 2% now. China is in the single digits. We are definately in a third world.

  5. Winner # 5, you are lying throug your teeth. The 2% rate you are referring to is the REPO rate – rate (minimum) at which the Reserve Bank can lend to Commercial Banks. Commercial Bank rates range from 5.25% (10 Year Fixed Mortgage Rate) to 13.99% (Credit card rates). For some borrowers, the rate can be as high as 21% depending on their credit rating.

  6. In fact, the 28% rate in Zambia is not very far off given the Credit Rating for Most Zambians. The sad part is that the standard rate is applied to all borrowers irrespective of the credit standing. It’s high time that the Credit Bureau in Zambia put in place mechanisms to protect the interest on sincere borrowers.

  7. 28% is just too much. Is the government just going to comment or do something about it. Who controls interest rates? is it the bank of Zambia or the market.

  8. Yeah the rates are pretty high, but considering the global credit crunch, Reserve banks are trying to reduce spending by higher interet rates which in turn are being passed over to the common man. Thanks a lot US….

  9. EJ # 11, it is actually the opposite. In situations of global credit crunch (as you put it), Reserve Banks are reducing the Base Rate thereby encouraging commercial banks to lower interest rates and stimulate lending/borrowing. With increased lending/borrowing spending would increase. The Federal Reserve Bank in USA has lowered the base rate to 2%, what is the base rate in Zambia? The lower the base rate, the lower the interest rate. The opposite is equally true. The first step in this issue is for the Government, through Bank of Zambia, to lower the base rate instead of putting blame on commercial banks.

  10. #3 Thanks for the info,i didnt know any jack.My roomy was asking me just yesterday about the interest rate in zed,to which i failed to respond.the question was prompted after watching on BBC that the Japanese Parliament have unanimously agreed if not voted to keep the rate at 0.5%.Iam really shocked with the figure28%.Its not only unzambian but criminal.

  11. While the 28% Interest Rate is too high for Zambia, it is a fair reflection on the economic situation in the country and SADC region at the moment. I Have taken time to compare the interest rates in Zambia and South Africa (which has an advanced financial market). Interest Rates for Individual Customers – ABSA BANK are as below:
    Product
    Current Interest rates per annum – Existing customers

    Straight
    Budget
    Credit

    Purchases
    Cash/ Garage

    Electronic 30.00%
    30.00%
    25.50%
    2.50%

    Medical 24.50%
    25.00%
    25.50%
    2.50%

    Student 24.50%
    25.00%
    25.50%
    2.50%

    Classic 30.00%
    30.00%
    25.50%
    2.50%

    Silver 23.50%
    25.00%
    25.00%
    3.00%

  12. Gold 22.50%
    24.00%
    24.00%
    3.25%

    Platinum 19.00%
    22.00%
    22.00%
    4.00%

    Private 17.00%
    17.00%
    17.00%
    5.00%

  13. No 12 you are spot on. Anyway where is Bank of Zambia these days. Can the Bank of Zambia Governer comment. Someone is not doing their job and needs to be reminded/reprimanded.

  14. I beg to differ with #4 on Kavindele…that loan is a developmental loan to farm coffee production and has a long repayment period bcoz of the nature of the crop. Whilst still in parliament he challenged all to visit the plantation and indeed i was impressed to see what he has done. EK is a risk taker not like most of us who fear even greeting an employee of DBZ!!!

  15. #17 Fear is the biggest enemy to a human. But to an extent to where you fear someone from DBZ, is that a joke??. My first question to some who works there is when the next loans would be given. Coz I need one!!

  16. Africa will continue to be the ‘cash cow’ for the rich. each time someone brings this up, he/she is shut-down. The Banks ibn Zambia continue to rip off the people through the Account Maintenance Fess, interest rates and even for mere services like checking your Bank Balance-something that is never done in the developed world. So where do these Zambian Banks copy their exploitative systems? The developed world takes into account the retired people, the students and those unemployed by giving them concessions; this is never heard of in Zambia, why? why? why? We Zambians are toothless and weshall continue to make the rich richer-hence we even pay US$5,20 for a 2Kg packet of Sugar!!!

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