Minister of Finance and National Planning, Situmbeko Musokotwane, says the government will develop regulations that supports Zambians seeking to formalise their money-lending businesses while protecting borrowers from exploitative lending practices.
Dr Musokotwane said the government is open to engage with stakeholders in order to refine the proposed regulations under the amended Banking and Financial Services Act of 2026.
The new law, which repeals the Money Lenders Act (Cap. 398), represents a significant overhaul of the lending industry by tightening regulation, curbing abusive practices, and strengthening consumer protection.
Dr Musokotwane said the government is prepared to consider submissions from stakeholders to ensure that the regulations were fair and practical.
The Minister was responding in Parliament, during the questions for oral answer from Patriotic Front (PF) Kamfinsa Member of Parliament, Christopher Kang’ombe, who wanted to know whether government was aware of complaints from money lenders regarding the new rules governing the registration and operation of money-lending businesses and what measures were being taken to address the concerns.
“It provides inputs into the construction of these regulations so that the points that are wrong that you’re raising can be taken care of,” he said.
Dr Musokotwane stressed that the intention of the regulations is not to hinder business growth but to ensure that the lending sector operated in a fair and transparent manner.
“Why would we want to create regulations that stop progress when we have been elected into office by those same people?” he asked.
The Minister encouraged business operators, particularly local entrepreneurs involved in money lending, to come forward and present their views during consultations.
Dr Musokotwane, however, expressed concern over what he described as ‘predatory’ lending practices, especially among online and mobile-based lenders.
He cited cases where borrowers were subjected to extremely high interest rates and unfair collateral arrangements.
“I think many of us have had situations whereby a money lender lends someone K500 and after one month demands K1,000 in repayment. If you convert that into interest rates, it is extremely high. That is an example of predatory lending,” he stated.
He explained that some lenders also demanded collateral whose value far exceeded the amount borrowed, resulting in borrowers losing valuable property over relatively small debts.
“The lender would lend K500 and ask for collateral such as a flat-screen television whose value is much higher than the amount borrowed. If the borrower fails to pay after one month, the lender grabs the asset and disposes of it,” Dr Musokotwane explained.
He said such practices trapped borrowers in perpetual indebtedness and underscored the need for stronger regulation of the sector.
The Minister urged borrowers and money lenders to participate in consultations so that lending conditions could become more acceptable and balanced.
Meanwhile, Mr Kang’ombe appealed to the government to consider categorizing lenders according to their financial capacity in order to protect small-scale Zambian operators from being pushed out of business by large finance competitors.
The Kamfinsa lawmaker observed that some foreign-owned businesses had easier access to liquidity and could readily comply with expensive licensing requirements, unlike many young Zambians trying to enter the sector.
“If you ask some of these operators to pay K20,000 for a license, they can easily pay because they have access to liquidity. But young Zambians who want to do money lending cannot comply with all those regulations,” he said.
Mr Kang’ombe proposed that larger operators be classified under microfinance institutions while smaller-scale money lending businesses be reserved for local entrepreneurs.
He said such an arrangement would promote citizen economic empowerment while maintaining order in the financial sector.
A bit late seeing as we opted for a free market economy 35 years ago.
This is how informal money lending works in zambia in case the minister is not aware and that is how people are able to borrow or lend. Now if you bring a law that says you can’t charge so much interest do you think anybody will be willing to lend?