GOVERNMENT has reiterated the need for commercial banks to provide affordable lending by lowering interest rates. Commerce, Trade and Industry deputy minister Keith Mukata said high interest rates in the country have prevented people from accessing capital for various economic activities.
Mr Mukata said this when First National Bank (FNB) launched a vehicle and asset finance product that seeks to finance acquisition of new and used vehicles and equipment.
He said commercial banks should innovate products that meet customers’ needs and spur economic development.
Mr Mukata said the launch of vehicle and asset finance by FNB will encourage long term financing for purchase of equipment in various sectors and unlock opportunities in commerce, trade and industry.
“Financing motor vehicles and assets in the commercial and industrial sectors represents the largest portion of capital investment outlay of any business. It is often the most painful part of the creation of business sustainability because of the huge costs involved,” he said.
Mr Mukata said FNB should also use the product to support small and medium-scale enterprises that are the largest source of employment and yet face a lot of challenges. And FNB Zambia chief executive officer Sarel Van Zyl admitted that high interest rates remain a huge challenge in the country saying commercial banks are working closely with Government and Bank of Zambia to reduce the cost of borrowing.
Mr Van Zyl said the bank is committed to provide long term wealth for all stakeholders through affordable finance. He said the bank’s interest rates currently stand at 17 percent, two points lower than the prevailing rate on the market but is committed to reduce the rates further.
“FNB’s aim is to unlock opportunities that create sustainable wealth for all stakeholders…we want to reduce the cost of borrowing,” he said. Mr Van Zyl said despite the reversal in the acquisition of Finance Bank recently, the bank will remain committed to expand its network in the country.
Meanwhile,Investrust Bank has answered Government’s call for lower Kwacha base lending rate by reducing it from 20 percent to 16 percent per year.
This measure is with effect from tomorrow (November 1, 2011).
Investrust Bank managing director Friday Ndhlovu said the reduction follows numerous appeals and complaints from customers and other stakeholders over the high interest rates prevailing in the country.
Mr Ndhlovu said in a statement issued in Lusaka yesterday that the reduction relates to facilities to be granted after October 31. “The bank took advantage of the strategic planning workshop held last week to discuss this very important subject and after a careful review of the various factors that we always take into account when determining interest rates, we found it necessary to review our base rate downwards,” he said.
Mr Ndhlovu said the bank reviewed its cost structure to ensure it optimises its operating costs and enhance the level of efficiency for the bank to be able to afford such significant reduction.
“The move is aimed at supporting Government’s desire for a vibrant local economy and we are hopeful that with the reduced cost of borrowing, as many businesses as possible will be able to access affordable credit to grow their businesses,” he said.
Mr Ndhlovu said as a local bank, its passion is for a flourishing local private sector and will remain committed to supporting efforts aimed at having a vibrant local economy.
[Zambia Daily Mail]