The Bank of Zambia has clarified that not all Small and Medium Enterprises will be able to benefit from the K10 Billion Stimulus Package.
The Central Bank says because these funds are a loan, SMEs need to fulfill some minimum criteria required by their Financial Service Providers.
It said there are Financial Service Providers that specifically service SMEs that are eligible to participate in the Facility and can, therefore, benefit from the facility particularly through the FSPs that already serve small and micro-enterprises.
And the Central Bank says ensuring that the facility trickles down to the intended beneficiaries is one of the requirements stipulated under the terms and conditions of the Facility that Financial Service Providers should demonstrate how the benefits obtained on the Facility are passed on to their clients.
The Bank says it will regularly monitor performance and any Financial Service Provider that will fail to comply will be subject to mandatory repayment as provided for under section.
And regarding interest rates, the Bank of Zambia says it has provided incentives for Financial Service Providers that offer lower interest rates to their clients.
In its publication dubbed “The K10 Billion Stimulus Package. FREQUENTLY ASKED QUESTIONS”, the Central Bank says Financial Service Providers will determine the interest rates at which the funds will be on-lent to their clients.
However, the Bank of Zambia said Financial Service Providers are obliged to pass on the benefits of lower interest rates, fixed interest rates, and the possibility of a payment holiday to their clients.
It said it will check on the benefits being passed on prior to the disbursement of funds.
Further, BoZ has provided additional incentives to Financial Service Providers which lend to their clients at no more than 5 percentage points above the cost of funds from BoZ.
It said if Financial Service Providers borrow the funds at 12.5% from BoZ and lend to clients at no more than 17.5%, then they have access to more funds from the facility.
The Bank of Zambia says it has put in place mechanisms to ensure adherence to the set terms and conditions.
“Firstly, access to the funds on the Facility by any Financial Service Providers is subject to the terms and conditions as provided for under section 2.4. and all Financial Service Providers are subject to regular reporting to the Bank and this is in addition to the Bank’s continuous surveillance through on-site and off-site inspections”, it said.
The Central Bank said failure to report appropriately shall result in sanctions as guided under section 14 and the imposition of such sanctions is without prejudice to the Bank’s use of its regulatory powers as provided for in the Bank of Zambia Act and Banking and Financial Services Act.
MY HUMBLE REQUEST FINANCE MINISTER PAY RETIREES AT PSPF.
You have stopped bars and night clubs from operating for two months now and clearly these sectors are not going to benefit from this so called stimulus fund. The president has to come out in the open and offer salvage packages to this sector for as long as they remain closed. People’s lives cannot continue to be stiffled. The so called New Normal entails that we continue with our lives but observing the measures of physical distancing, washing hands and sanitization and masking up. There is no more reason to continue keeping bars closed.
It makes sense for Financial Service Providers to be middlemen because they can be monitored more efficiently and if they fail, they have assets that can be ceased to pay off the loans. SME’s are being provided protection.
I went to ask my bank Atlas Mara about how to access this loan and they said they had no idea about anything like this from BOZ.
I suggest the bars owners to obtain licences to operate as bottle stores where people are allowed to just buy as takeaway and drink at their respective homes. This is the same new-normal practice allowed in the chain stores which are all owned by foreign business institutions. Let, therefore, the Zambian also be eased in this perspective and hence contribute to the recovery of our country economy. The bars owners who are eligible to benefit from the K10 billion can also access the loan appropriately.
I wish if BOZ can help the imaging Non Banking SMEs so that they can also benefit unlike saying not all the SMEs will benefit, otherwise, Bravo the President for good initiative and BOZ can you help SMEs to grow the future employer and Tax payers.