Friday, June 14, 2024

Financial experts and advocacy groups criticize Bank of Zambia’s decision to increase Monetary Policy Rate, warning of detrimental impact on country’s economic growth


Bank of Zambia’s decision to increase the monetary policy rate from 9% to 9.25% has been criticized by financial experts and advocacy groups for its potential detrimental impact on the country’s economic growth. Financial Advisor Kingford Kalobi expressed his concern about the increase and said that it is detrimental to private sector participation and economic growth. He stated, “With the already constrained liquidity available on the market, any slight increase in the monetary policy rate adversely affects any prospect for growth, especially for the private sector. The cost of doing business is further likely to be negatively affected; a situation that must be revisited to enable startups to remain afloat.”

Kalobi further explained that increasing the Monetary Policy Rate will increase the cost of borrowing money from financing institutions to unacceptably high rates, making it difficult for businesses to operate. He added, “The private sector is the engine of growth for any economy, and therefore it is important to create an enabling environment for the sector to thrive. The increase in the Monetary Policy Rate will not achieve this objective.”

The Advocates for National Democracy and Development (ANDD) has also expressed concern over the increase in the Monetary Policy Rate. ANDD Executive Director, Samuel Banda, noted that the increase in the monetary policy rate is a disadvantage to the business sector. Banda stated, “Liquidity in the economy is already constrained due to the reduction of forex and the high cost of doing business. Increasing the Monetary Policy Rate, which entails high costs of accessing money from banks, will downplay all efforts made to promote business growth among the small-scale businesses, who are already challenged with financial capital.”

Banda called on the central bank to put in place measures that will grow the private sector rather than shrink its potential to contribute to national development. He added, “Factors such as load shedding and floods may present future economic challenges that should be cushioned in one way or the other. It is, therefore, essential for the government to work with the central bank to address these challenges and create an enabling environment for businesses to thrive.”

Financial experts and advocacy groups have called on the Bank of Zambia to reconsider its decision and implement measures that will support business growth and development. The increase in the Monetary Policy Rate, coupled with the already constrained liquidity in the market, could have a significant impact on economic growth and private sector participation. It is essential for the government and the central bank to work together to address these challenges and create an enabling environment for businesses to thrive.


  1. Instead of the increase in the monetary policy which translates into an increase in the interest rates charged on burrowing by commercial banks to firms and individuals why not discuss the exchange rate please? More brains are needed to tackle this challenge of a rapidly dropping Kwacha against the USD.

  2. It’s financial experts who do not hv regular access to financial and economic data at macro level who’re criticizing the central bank.

  3. Let’s analyse things as lay people but lay people equiped with knowledge…last year the govt removed amongst other taxes capital gains on interest from long term deposit accounts as a means to encourage savings from depositors, so you who deposited your pension into a high interest fixed account when the USD was $15.5 have completely lost out today when the USD is at $20 and rising. This completely erodes confidence in saving funds in the bank which in turn affects the overall economy because banks will not be able to circulate as much funds as they normally would. The exchange rate is the one and only factor we should all be discussing nothing else. The price of fuel, transportation and import of everything is dependant on the exchange rate.

  4. Ctn…So when banks fail to circulate more money into the economy due to few deposits being saved in those banks what happens? The commercial/ retail banks knock on the doors of the central bank to print more money, this printed money is like water that dilutes the actual money which had real value in the economy. The “diluted” money will lead to an increase in circulation which in turn leads to inflation and a reduction in the value of goods and services and thus more price hikes.
    Nations’ economies have fallen due to unsustained management of the exchange rate I am just baffled at how our economists and financial experts have failed to address this cardinal subject.

  5. Upnd should have made an effort as to the previous administration asked the man to resign.
    But everything was about politics and tribe.
    Our people are useful only when they are being supervised by a white man.
    We’re all suffering regardless of our region or political affiliation.

  6. Iam just wondering weather we have an intelligent leader in this nation as they used to preach to us ; what has really gone wrong what lenses is our leader using has he changed those clear lenses to something else and eloquency we were treated to , was it all that face impersonation from the power that be or are we just dreaming ?
    Is this the same Kalyalya who messed up in the previous regime and was kicked out and they cried foul, now he is back to do what he did mistakes after mistakes .
    Me as a lay man know that it is the private sector that employs more people and spar the economy to great hights but what we are seeing is the opposite of dynamics that propell the economy

  7. They have made things worse than they found them . This is a lesson to Zambians that education and wealth doesn’t make one a leader. Leadership is not learned. Leaders are born leaders like our father ecl.

    Hh rehired incompetent governor who we fired because of tribal links

    • Since it affects everyone, we have the right to discuss. When there are no drugs in the hospital we all talk but are we doctors. Bafeekala namusobana fye.

  8. The learned financial experts, your analysis is appreciated but not balanced. Have you thought about the adverse impacts on inflation and exchange rates if the MPR was maintained? BoZ looked at the bigger picture. Please it could be appreciated if u could also comment on the impact inflation and exchange rates viz-a-viz this increase in MPR.

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