Saturday, June 22, 2024

Low update on the K10 billion stimulus package is not a surprise-Sean Tembo


Leader of the Opposition Patriots for Economic Progress Sean Tembo says he noted the confession that was made by the Minister of Finance Dr Bwalya Ng’andu that the K10 billion COVID-19 economic stimulus package has received very low uptake as it has not been warmly embraced by potential beneficiaries.

Mr Tembo says this has not come as a surprise because his Party advised the Minister against such a model for an economic stimulus package, but the Minister of Finance in his infinite wisdom decided to proceed with the current model, against all advice and logic.

He says any model for a sustainable COVID-19 economic stimulus package must address three critical issues namely the mode of delivery, targeting of specific sectors of the economy and qualifying criteria for intended beneficiaries.

Mr Tembo says the current COVID-19 economic stimulus package has failed because it did not properly address the three issues above.

He said the commercial banking system is not an appropriate delivery mode for a sustainable COVID-19 economic relief package, for several reasons among them commercial banks generally have to charge interest rates which reflect the credit risk of each individual customer.

“Given the generally poor trading conditions in the economy, almost each and every business’s credit risk has risen significantly and therefore, commercial banks will require to charge even higher interest rates to reflect the increased credit risk of potential beneficiaries of the COVID-19 economic relief package. This is likely to be unaffordable to most intended beneficiaries”, he said.

Mr Tembo added that commercial banks generally require collateral for the loans that they issue out however, most of the Zambian businesses that have been adversely affected by COVID-19 social-distancing guidelines may not have property that can be used as collateral by the bank.

He said this automatically eliminates a lot of potential beneficiaries from being covered by such an economic relief package.

He added that any sustainable COVID-19 economic relief package cannot apply to the general economy but has to be targeted to specific sectors of the economy, which have been significantly affected by COVID-19.

Mr Tembo said whereas some sectors such as private education, hospitality, passenger transport and entertainment have been badly affected by the COVID-19 pandemic, certain sectors such as mobile network operators, internet service providers, pharmaceuticals among others are enjoying a huge surge in business as a result of the COVID-19 pandemic.

He said it is therefore senseless for Government to seek to implement a COVID-19 economic relief package which applies equally across the board to businesses that have been positively impacted as well as those that have been adversely affected, without any form of targeting.

He said a sustainable COVID-19 economic stimulus package must not utilize the stringent qualifying criteria that are applied by commercial banks to potential lenders, but must formulate its own unique qualifying criteria that can be used to select potential beneficiaries.

Mr Tembo said such qualifying criteria must be less stringent and must take into consideration the fact that the primary objective of the economic relief package is to assist businesses and individuals that are in economic distress.

He said the COVID-19 economic relief package should achieve just that; economic relief and it should not be a source of additional economic burden on the targeted beneficiaries.

Mr Tembo has advised the Minister of Finance to consider withdrawing the current K10 billion COVID-19 economic relief package that is being implemented by the Bank of Zambia through commercial banks to allow for consultations with key stakeholders in tailoring a fresh COVID-19 economic relief package that will have the right mode of delivery, will be targeted to specific sectors of the economy and will have a qualifying criteria that is less burdensome to intended beneficiaries.

He said in terms of the mode of delivery, the Minister should consider utilizing institutions such as the Citizen Economic Empowerment Commission and the Development Bank of Zambia saying it is a pointless endeavor for Government through BOZ to extend cheap financing amounting to K10 billion to commercial banks, who will then charge any interest rates of their choice to their customers, thereby allowing them to make supernormal profits at the expense of taxpayers.

Mr Tembo added that in order to cure a disease, the medicine should be applied on the patient and not on bystanders.


  1. Tembo you are just a trivial little man. The issue here is the laissez affair attitude of majority of zambian businesses. You cannot force a horse to drink water. You want us to beg people to claim money that is being given on a silver plate? As I said this seems to be an inherent attitude of our race as blacks because sean.combs last week also said the same about black Americans not taking advantage of similar packages there. Are you going to also say that the American model is flawed? Let us be honest and deal with our shortcomings as black people. Most zambian businesses lack the drive and zeal needed to succeed. Kz

  2. Sir can you help us get to this fund or advice on how to go about it?will appreciate it!have tried several channels to no avail.but hope is there.thanks in advance.

  3. You involve Citizen Economic Empowerment Commission and the Development Bank of Zambia…all the money will go to cadres and bootlickers, remember the Fred Membe debacle

  4. The Kwacha closed the day yesterday at K18.52 to a Dollar when someone boasted that it opened the day at K17.01. We were called donkeys for saying the Kwacha isn’t stable. What business can stand with such a volatile currency?

  5. The last but one paragraph is spot on! These Commercial Banks will make a killing out of this cheap money! However, the idea of giving this stimulus package through CEEC and DBZ is equally a risk as Tarino Orange has already alluded to…bazazidya zonse ba kawalala aba! They will share it all among the likes of bene Mwanakatwe (1.5 bn which I believe still remains unpaid to date!) Am sure Mukumbuta is salivating at your proposal! Another cadre!

  6. Mr Tembo has a point on the delivery mode of the K10 billion Covid-19 Economic Relief package being implemented by BOZ through commercial bakns. The impact on businesses by Covid-19 varies differently to each business in its sector. In fact where as other businesses are benefiting from the pandemic , others are adversely affected that without any assistance will simply fold up. Its important therefore, criteria to qualify from the financial relief offered needs targeting and offer free loans to critically analysed businesses that are essential to the economy. The other consideration is the role commercial banks should play in the implementation of this relief fund. BOZ should not create business for the commercial banks as they are used as channel of disbursing the funds. In other words…

  7. I agree that the criteria of the loan offering must change from what it is now. Secondly maybe the low response to the the loans are also caused due to the fact that bars, casinos, restaurants, hotels, airlines were either halted or partially stopped from trading. Secondly with other countries closing their borders it adversely affected those companies that trade based on imports and exports, the businesses that didn’t close must have had a surge in revenue that probably made it unnecessary for them to seek a loan that would only pile extra costs or unwanted expenses to their businesses. Maybe now that many businesses will begin to operate the response to the loans may improve.

  8. 10 Bn is too much. Give 1 Bn to clear all the retirees at PSPF. Dont listen to KZ he is always in the negative. Government consider the plight of the RETIREES with 10 Bn.

  9. This is the issue I have with our leadership. Lies, sugar coating, spin etc. This is not something i expected from the Finance Minister. Be honest for once. Communicate the truth directly. The thruth. This is not an economic relief package but a LINE OF CREDIT to the COMMERCIAL BANKS who, under the terms, must charge interest at a rate of no more than 17%, AT THE SAME TIME THE BANK TO THE FULL COST OR DEFAULT/CREDIT RISK. GRZ through BoZ does not intend to lose any ngwee and will pounce on the Banks who are their Counter-party not the SME.

  10. GRZ DOES NOT have money, be it reserves or surplus funds so has never been in a position to distribute money to citizens

  11. Now. Which banking or financial business do you think would be so foolish as to build a huge suicidal liability from this credit line when the are few viable businesses opersting right now to on lend to. The bank has most likely already has financing arrangement in place with these business and cannot increase credit exposure to these businesses. Giving DBZ or CEEC is a non starter and these institutions distressed and technically insolvent from in ability to collect on their loan portfolio with over 60% in default, non performing and bad.

Comments are closed.

Read more

Local News

Discover more from Lusaka Times-Zambia's Leading Online News Site -

Subscribe now to keep reading and get access to the full archive.

Continue reading