MMD President Dr Nevers Mumba recently made a statement on the limited access to genuine credit for local businesses in Zambia, despite the commercial banks posting huge profit before tax figures. In his statement, Dr Mumba congratulated ABSA and Zanaco for their impressive financial performance, particularly highlighting the leadership of women in these organizations.

“I wish to congratulate ABSA for posting a huge Profit Before Tax figure of K1.95 Billion,” said Dr Mumba. “I also wish to recognise the historic performance of our ever Big, Strong and reliable Zanaco for posting astronomical figures in Revenues. This shows that our Financial Services Sector is growing.”

Dr Mumba expressed pride in the leadership of women in these organizations, saying, “I am particularly proud of the fact that this moment of success is a toast to women in leadership as the success has been presided over by my dear young sisters Madam MIZINGA MELU and Madam Mukwandi Chibesakunda of ABSA and also ZANACO, respectively. Well done ladies, Zambia is so proud of you and your organizations.”

However, Dr Mumba raised concerns about the impact of the high profit before tax figures on the Zambian economy as a whole. “I have a question,” he said. “I would like to know what this very high profit before Tax figure for the Commercial Banks represents to the Zambian Economy as a whole.”

Dr Mumba questioned whether the banks’ focus on low-risk lending is causing local businesses to resort to borrowing from the black market, leading to defaults and higher interest rates. “At the same time, being a politician, I know that most businesses in Zambia that have been able to borrow money have been unable to meet the repayments as and when they fell due and they end up paying more interest in penalties and or losing the assets they pledged as security,” he said.

He asked, “If these banks are so profitable, then who are the businesses borrowing and defaulting to? Could it be that businesses can only manage to borrow from the black market now? Could it also mean that these Banks have now almost completely made the shift into only lending money to Projects or sectors that have near Zero Risk?”

Dr Mumba also questioned whether the success of the banking sector has come at the cost of local entrepreneurs, saying, “Has this success come at a cost to Local Zambian Entrepreneurs?”

Dr Mumba called for the creation of real support for local businesses through affordable access to finance, saying, “Is it not time we as a nation created real support to Local Business through affordable access to finance?”

He asked for data on the yearly losses of small businesses due to high-interest rates and loss of assets pledged as collateral, saying, “Does anyone have accurate data on how much Small businesses in Zambia are losing every year in form of punitive interest to Shylocks popularly known as Kaloba Lenders, as well as loss of Assets pledged as Collateral to these lenders over very small amounts of money purely because the Bank’s refused to fund their Projects on more humane terms or because their business turn around time was longer than the unreasonable period that they get to pay off this ‘KALOBA’?”

Dr Mumba also asked what the Ministry of Finance, Ministry of SMEs, and Bank of Zambia are doing to improve access to credit for local SMEs. He raised the question of whether banks should adjust their credit policies and requirements or if local businesses need to improve, saying, “What is the Ministry of Finance, Ministry of SMEs, and Bank of Zambia doing to improve access to CREDIT for Local SMEs.

Zambia’s Socialist Party President, Dr. Fred M’membe, has raised serious concerns over the ballooning domestic debt in the country. He says that the government has been borrowing money by selling government treasury securities to finance its operations while operating under a deficit, with little attention being paid to this growing problem.

“There is a serious maturity risk here because the government is managing the risk it by forcing local institutional investors to roll over their government treasury bills and bond holdings in order to avoid a balloon payout, which they may be unable to meet, causing a default on the domestic market,” warns M’membe.

He questions the government’s plans on the relentless issuance of government securities and asks, “What are the government plans on the relentless issuance of government securities to finance its operations, and when are we going to slow down on raising money by the issuance of government securities? This is what we are currently using to fund our budget deficit, but for how long and is this going to be sustainable?”

M’membe also highlights the need to know the debt ceiling on treasury bills and government bonds, asking, “Where are we at now?” He calls for journalists to ask the Bank of Zambia at the MPC briefing on February 14 where the country’s reserves currently sit and to know the details of any borrowing from China and other multilateral institutions.

“Let’s offer real checks and balances to avoid the country from crashing,” adds M’membe.

The Bank of Zambia’s recent decision to increase the statutory reserve ratio held by commercial banks has further added to the financial woes of Zambians. The Bank has instructed commercial banks to reduce money circulation by increasing the statutory reserve ratio to 11.5% from the current 9%.

M’membe states, “The decision by the Bank of Zambia to increase the bank reserve ratio means more money problems for Zambians. The move has effectively squeezed money out of circulation, forcing commercial banks to only deal or lend money to pristine clients like mines or big business.”

He further adds, “The ordinary already poor Zambian shall suffer even more as money is squeezed out of the market and suppliers are not paid, it’s going to be tough for many poor Zambians. What Zambians need is more money and not less money – more, and not less, money in circulation.”

M’membe believes that there is pressure on the Bank of Zambia to keep the exchange rate low, as promised by Mr. Hakainde Hichilema, but warns that “This will mean more money because increasing the (reserve requirement) ratios reduces the volume of deposits that can be supported by a given level of reserves and, in the absence of other actions, reduces the money stock and raises the cost of credit.”

He explains that while reserve requirements are one of the monetary policy tools used by the Bank of Zambia, “an over-employment of changes in reserve requirements to enact monetary policy can be very detrimental. Open market operations are a much more precise tool.”

M’membe concludes, “The impact of changes in reserve requirements is difficult to estimate. Each change has the potential to affect depository institutions in different ways, depending on each institution’s deposit base. Changes in reserve requirements may also lead to changes in pricing schedules for some bank services, because some bank fees and credits are set based on reserve requirements.”

Opposition Economic Freedom Fighters (EFF) President Kasonde Mwenda has said the New Dawn Government must abandon the International Monetary Fund (IMF) deal because it will destroy Zambia beyond redemption.

Mr. Mwenda said the IMF will never have an interest in developing any nation.

He charged that it will be the ordinary Zambians who will suffer as a result of harsh IMF conditions.

Mr. Mwenda said President Hakainde Hichilema and his group will not suffer because they are already benefiting in billions through taxpayers allowances and kickbacks.

“IMF want their borrowed money back and last week the IMF chief rushed to Zambia because they were concerned why Zambia was slow in implementation of harsh austerity economic measures as were instructed and warned our leader to implement ALL IMF conditionalities (SAPs) with immediate effect regardless of how they will hurt the poor Zambians provided the country raises the money to pay back the $1.3 billion debt. The IMF also demands that it be prioritized for repayment above old debt and China whom we owe $6.6 billion is very displeased. China wants to talk directly to Zambia but HH is afraid of the Americans who unfortunately owe the Chinese like us,” Mr. Mwenda said.

“The IMF must go before life becomes too unbearable. Mr. Hakainde Hichilema and his group will not suffer, they are already benefiting in billions through taxpayers allowances and kickback’s, it is the ordinary Zambian who will perish if we just sit and watch our country being grabbed from us by the West. The solution is to have visionary Fresh Generation Leadership which is selfless and firm.IMF has and will never have interest in developing any nation, it is NOT their objective. Their professional objective is to make sure all countries keep participating in international trade so the developed Western world continues benefiting from cheap natural resources and having a market for their products. They do this by providing liquidity to keep governments running by helping them balance payments. Yet we have leadership that is either just naive or just deliberately lies to people that they got a “bailout package from IMF. That backward thinking,” he said.

Mr. Mwenda said Zambians must wake up and claim their country back from foreigners.

“IMF and World Bank are technically US projects to serve western interests. This even President Hakainde Hichilema knows but he is now their puppet. He is now too weakened and afraid to tell them to stop dictating hurtful policies such as increase of electricity tariffs, liberalization of our economy, devaluation of our already weakened kwacha, removal of subsidies on farming inputs, deregulation of the economy, selling of public estates and the loss of sovereignty. This is how powerful nations conquer and take over weaker nations in this modern era. So as we speak we are a conquered nation. Of course the visionless PF started the mess and now the hopeless UPND is worsening it. Zambians must wake up and claim their country back otherwise the end will be bad,” he said.

Mr. Mwenda said only Zambians can properly develop their nation.

“We have all the potential to develop ourselves because we have the resources the world needs. With our Cobalt, Lithium, Copper we can develop Zambia with the AV batteries technology value chain even more than Dubai which used their oil advantage. But the West won’t allow that and they will use their puppet Presidents in Africa to stop Africa from developing so that we continue being dependent on them. Mental slavery indeed, that’s why we open mines but avoid establishing value adding plants. We can change that narrative in this generation if we unite and work together for our country and continent of Africa. Wherever we want to go our feet will take us there,” he concluded.

IMF Managing Director Kristalina Georgieva last week dispelled fears among Zambians that the institution’s bailout package for the country will come with harsh conditions that will negatively affect the citizens.

Speaking on ZNBC TV’s Sunday Interview, Ms. Georgieva said the IMF was aware of fears among some Zambians that its bailout package for the country will come with harsh conditions.

She said the IMF over the years has transformed into a better global institution that means well for nations seeking bailout packages like Zambia.

“I was meeting university students who asked the same questions about harsh conditions. I told them this is not the IMF of your grandmothers. Look at me and other people in the institution who include Africans. We promote good governance,” she told ZNBC’s Sunday Interview.