Finance Minister Dr Situmbeko Musokotwane has said the government is aware of the challenges that local businesses and entrepreneurs are facing in accessing finance to grow their businesses.
During the launch of the new head office and new Longacres branch of Zambia Industrial Commercial Bank, Dr. Musokotwane said the number one obstacle to the growth of businesses in Zambia is access to finance.
He said the government want to see enhanced growth and increased productivity of local businesses because it is the most sustainable way to create wealth and alleviate poverty among the people.
“We are all here as witnesses to a budding Zambian story – a young locally-owned commercial bank is holding out a promise for the Zambian entrepreneurs and the local business community. The bank has been created with a mandate to specifically support the local businesses to grow into major commercial and industrial enterprises for the purpose of creating jobs for our youths and local wealth for economic development. Distinguished ladies and gentlemen as government, we have heard, and we are aware of the challenges that local businesses and entrepreneurs are facing in accessing finance to grow their businesses. According to the world bank’s 2019 enterprise survey, the number one obstacle to the growth of businesses in Zambia is access to finance (31 percent of firms that participated in the survey listed it as their biggest obstacle. This compares to 23% of firms in sub-sahara africa). 4 the report further shows that, in Zambia, only 10.1 percent of firms have a bank loan, compared to an average of 20.4 percent across sub-saharan africa. For sme’s, the number of firms that have a bank loan is even lower at 6.3% due to the presence of structural constraints, including firm informality, and high collateral requirements,” Dr. Musokotwane said in a speech read on his behalf by Labour Minister Brenda Tambatamba.
“These challenges, among others, have been cited by our sme’s as the major reasons for their low participation in our economic activities. Ladies and gentlemen, as government, we want to see enhanced growth and increased productivity of local businesses because it is the most sustainable way to create wealth and alleviate poverty among our people. We therefore need structured financial solutions and platforms to be deliberately created for the primary purpose of stimulating the growth of our smes and local businesses. i have been informed that the mandate of the Zambia industrial commercial bank (zicb) is to find solutions to the challenges being faced by Zambian businesses, particularly those in the sme sector. 5 I therefore take this opportunity to commend the shareholders of zicb for actualising their noble idea of forming a bank that would spearhead the commercialisation and industrialisation of Zambian businesses through the provision of business-friendly financial solutions. I have also been informed that the majority shareholder of zicb with a shareholding of 64.3% is the national pension scheme authority (napsa), whose investment in the bank is held through a special purpose vehicle (spv). The other government entities with a stake in the bank are the industrial development corporation (idc) at 30.2% and the workers compensation fund control board (wcfcb) at 4.7%,” he said.
Dr. Musokotwane further hailed the operation of the Zambia Industrial Commercial Bank.
“As such, our expectation, as government, is that zicb should open a new chapter in the banking sector in Zambia for the benefit of our people by having a deliberate focus on local businesses. With that said, we can look to the future with great hope and belief that zambian business houses and entrepreneurs have a bank they can definitively call their own. I have noted that the bank has been posting profits for the last two financial years. Let me take this opportunity to echo my message to all other state-owned enterprises (soes) regarding financial performance. I have said before and I am saying again that days of bailing out poor performing or loss-making soes are long gone. Our focus as the government is on stabilising the economic fundamentals of our country and delivering on our promise of a better standard of living for our people. Ladies and gentlemen allow me therefore to conclude with a commendation to the board, management and staff of zicb for driving the bank into profit since the third year of its operation. I the number one obstacle to the growth of businesses in Zambia is access to finance” Dr. Musokotwane said.