June 2011 - Bank of Zambia

Transcription

Mission
The mission of the Bank of Zambia is to formulate and implement monetary and supervisory policies
that achieve and maintain price stability and promote financial system stability in the Republic of Zambia
ZAMBANKER
A Bank of Zambia Journal
JUNE 2011
“Stop HIV/AIDS,
Keep the Promise.”
International Reserves
Exceed US $2.5bn
By Zambanker reporter
Zambia's Gross International
Reserves have exceeded the
US $2.5 billion dollar mark as
at end-June 2011 moving by
about US $0.5 billion from the
US $2.1 billion registered at
end-year 2010.
Accordingly, the country's
gross international reserves
months of imports coverage
has been rising steadily over
the past years, moving from
reserves covering 0.8 months
import cover in 2001 to 4
months import cover at end2010.
Data obtained by the
Zambanker indicates that
favourable developments in
the external sector was
spurred by increased metal
exports which had risen by
81.6 per cent to US $6,071.7
million between 2001 to 2010.
In 2010, the gross
international reserves
increased by 8.8 per cent to US
$2,093.7 million from US
$1,924.2 million in 2009.The
data showed that the
augmentation in foreign
reserves was largely explained
by tax receipts from mining
companies.
Other factors for the increase
were in-flows from cooperating partners and Bank
of Zambia net purchases of
foreign exchange from the
market.
However, the receipts were
partially offset by outflows
arising mainly from
Government's foreign
exchange needs for oil
procurement and debt service.
Meanwhile, a brief on
preliminary data reviewing
economic performance in the
second quarter of 2011 shows
that Zambia recorded a
favourable balance of
payments (BoP).
The overall BoP surplus in the
second quarter of 2011 surged
to US $445.8 million from US
$7 million recorded in the first
quarter.
The favourable outturn in the
overall BoP position was
driven by a notable
improvement in the capital
and financial account which
more than compensated for
the decline in the current
account surplus”, the brief
said.
The brief stated that in the
second quarter of 2011, the
capital and financial account
recorded a surplus of US
$408.7 million from a deficit of
US $220.5 million recorded in
the previous quarter.
This was largely attributed to a
lower increase in assets held
abroad by the private sector
equivalent to US $63.5 million
in the second quarter
compared to US $794.7 million
recorded the previous quarter.
Sovereign Credit Rating
Economic Events Right On
The Bank of Zambia has said
Zambia's current account
surplus at US$934.6 million at
the close of 2010 was 73.6 per
cent higher than US$538.4
million recorded in 2009. In its
2010 annual report published
in June this year, the Bank
attributes this development
largely to the surge in the
merchandise trade surplus to
US$2,624.8 million from
US$905.6 million recorded in
the previous year.
A n i n c r e a s e i n ex p o r t
earnings, which outweighed
the rise in import bills
explained this outturn.
The report explains that
merchandise export earnings
at US$7,261.7 million in
2010, were 71.2 per cent
higher than the US$4,242.8
million recorded in the
previous year.
This followed an increase in
both metal and nontraditional export earnings.
Metal export earnings grew by
81.6 per cent to US$6,071.7
million due to an increase in
both copper and cobalt export
earnings.
Copper export earnings of
US$5,767.9 million in 2010
were 81.4 per cent higher than
US$3,179.3 million realised the
previous year.
The increase in earnings was
mainly due to an upswing in the
realised average copper price
by 46.8 per cent to
US$6,877.92 per mt in 2010
from US$4,716.36 per metric
tone recorded the preceding
year.
Similarly, export volumes grew
by 24.4 per cent to 838,605.6
mt in 2010 from 674,096.9 mt
recorded in 2009.
Increased global demand for
metals, resulting from the
recovery of the world economy
from the impact of the global
economic and financial crisis
explained this outturn.
S i m i l a r l y, c o b a l t ex p o r t
earnings grew by 85.4 per cent
to US$303.8 million from
2009. This was largely
attributed to the 27.3 per cent
increase in the average realised
cobalt price to US$35,557.00
per mt from US$27,925.85 per
mt.
Consistent with price
developments, export volumes
grew by 45.6 per cent to
8,554.53 mt from 5,867.74 mt
in 2009.
“In the year under review, nontraditional export earnings
(NTBs) grew by 32.3 per cent to
US$1,190 million from
2009.
Increased earnings from the
export of copper wire, cane
sugar, burley, tobacco, cotton
lint, electrical cables,
gemstones, maize and maize
seed and wheat and meslin
explained this outturn. Increase
in NTEs was partly driven by
buoyant international
commodity prices coupled with
favourable real exchange rate
developments,” the report says.
It adds that during the same
period, merchandise imports
rose by 40.3 per cent to
US$4.788.8 million from
US3,413.4 million recorded in
2009.
The increase in the import bills
associated with commodity
groups, such as industrial
boilers and equipment,
chemicals, iron and steel and
items thereof, vehicles, plastic
and rubber products, electrical
machinery and equipment,
petroleum products and food
items explained the outturn.
Imports increased following an
increase in economic activity
evidenced by favourable GDP
growth.
Concerning the direction of
trade, the annual report says
Zambia's exports to all regional
markets increased apart from
the Common Market for Eastern
and Southern Africa (COMESA)
in 2010.
The non-European Union (EU)
Organisation for Economic
Cooperation and Development
(OECD) region continued to be
Zambia's top ranked major
To Page 16
INSIDE THIS ISSUE
Mozambican High Commissioner, H.E Maria Leocadia Tivane Mate stresses a point to Governor Fundanga and ZACCI Vice President Dr Francis Ndilila during a symposium held
on the sidelines of the Zambia International Trade Fair in Ndola
By Cynthia Chiyabu
Bank of Zambia ManagerReports and Statistics in the
Financial Markets
Department, Mr Douglas
Kalamatila has said sovereign
rating plays a vital role in
demonstrating transparency of
public sector and therefore
gives investors a second
independent evaluation to
their own credit assessment of
a client sovereign.
Mr Kalamatila said this helps
attract foreign direct
investment and leads to a
deepening of the domestic
capital markets.
He said this in Solwezi at the
13th Bank of Zambia Media
Seminar when he presented a
paper on Zambia's sovereign
credit rating and its
implications on the economy.
Mr Kalamatila said the rating is
important not only for the
Government, but also for other
institutions resident in the
country and abroad such as
banks, corporate institutions
and many other issuers of debt
who may seek to access
international capital markets
for financing.
He said a sovereign rating,
therefore, sets a basis on which
local institutions could borrow
on the international market, as
it allows an objective pricing of
Mr Kalamatila
a country's credit and
benchmarks credit ratings of
other institutions in the
international financial
markets.
He, however, said countries
obtain sovereign ratings so as
to provide an independent view
of a country's credit
worthiness.
“Usually, nations enjoy the
highest credit standing for
obligations in their own
To Page 16
Supplement for the Agricultural and Commercial Show
Society of Zambia: “Shaping tomorrow's World”
Mwape nods loan syndication
page 2
Strategic plan, a landmark
Page 3
Northern Province in currency sensitisation
page 5
Non Bank Sensitisation tours on
Page 6
No teamwork, no success
Page 8
BoZ awards deserving employees
page 9
Chisha 'saved' by artificial discs
Page 10
NEWS
Mwape Nods Loan Syndication
Deputy Governor-Operations, Dr Austin Mwape and Deputy Minister, Commerce, Trade and Industry Dr Lwipa Puma congratulating a speaker during the Zambia Sugar Syndication ceremony at the
Southern Sun Ridgeway as Southern Province Minister Elijah Muchima looks on
Deputy Governor-Operations
Dr Austin Mwape has said the
Bank of Zambia recognises the
syndication of loans as an
innovative avenue through
which banks can finance large
and long-ter m projects,
thereby enhancing economic
growth and development. A
loan syndication can be
described as a move by a group
of banks to provide a loan
facility jointly to a single
borrower. Several factors
contribute to the need to share
a large loan among several
lenders, paramount among
them is the banks' need to
achieve diversification in their
loan portfolios. In addition,
syndicated loans give
participating banks a chance to
lend to borrowers and
strategy to manage such risks.
He also explained that the
practice of loan syndication
plays an important role in
financing large projects,
noting that the world over,
loan syndications have become
an increasingly important part
of the financial landscape.
Speaking during the signing
ceremony of Zambia Sugar PLC
syndicate loan at Southern Sun
industries to which they might
otherwise have no convenient
access individually.
Dr Mwape further says the
Bank of Zambia stands ready to
support and facilitate well
str uctured syndications,
provided such syndications
meet the qualifying criteria
and that the underlying risks
are known by the participating
institutions with a visible
Human resource database launched
The Bank of Zambia has
launched a financial sector
human resource database
whose aim is to provide the
financial sector with an
accurate account of the
professionals deployed in the
sector at any one time.
Speaking at the launch in the
BoZ auditorium recently,
Deputy Governor Operations
Dr Austin Mwape said once
fully populated with
information from the
respondent stakeholders, the
database will be able to
provide a snapshot statistical
position of the various
professional skills employed
in the financial sector.
The database will show how
many accountants, actuaries,
economists, ICT systems
developers and other
professionals are employed in
the financial sector. This
information is a vital
ingredient in strategic
decision making with regard
to staff retention and when
prioritising the development
and training of staff with scarce
but vital skills.
The Deputy Governor said the
database, which was
developed under the auspices
o f t h e Fi n a n c i a l S e c t o r
Development Plan (FSDP) by
the BoZ Information and
Communication Technology
(ICT) department in
collaboration with the FSDP
secretariat, will be hosted by
the BoZ. The database will be
protected but accessible via
the BoZ website to registered
users only.
'The designated or authorised
persons in each respondent
institution will be able to view
the detailed personal
attributes such as names,
education, accumulated years
of experience and so on, of
their own staff only,' he added.
The designated persons will
however be able to view the
aggregate impersonal and
summarised reports about the
entire financial sector based on
consolidated figures only. With
A BANK OF ZAMBIA JOURNAL
this information, one will be
able to tell how many persons
of a particular profession are
working in the financial sector.
Dr Mwape said the Bank was
wary of earlier concerns that
some institutions may decide
to use such information to
poach staff from others. This
information will also be
available to the public but only
as aggregated or consolidated
statistics.
The rolling-out of the database
implementation which was
attended by representatives of
banks and non-bank financial
institutions, members of the
FSDP secretariat as well as
members of staff of the BoZ
was for the banking and nonbank sub-sectors.
This will be followed by the
sub-sectors under the
supervision of the Pensions and
Insurance Authority (PIA) and
ultimately by the capital
markets entities that are
supervised by the Securities
and Exchange Commission
(SEC).
The banking and non-bank
financial institutions will be
expected to upload their
human resource information as
at March 31, 2011 by the end of
May 2011 and thereafter
update it at least twice a year;
by end of July and the end of
January with the human
resource information as at
June 30 and December 31 each
year.
'There is consideration to the
effect that
once
fully
implemented, the database
could be extended to other
sectors beyond the financial
sector, to enable us capture as
many professionals as possible
to enable us tap into their
skills and experience,' the BoZ
deputy chief added.
The launch of the financial
sector human resource
database arose from one of the
recommendations made under
the first phase of the FSDP. The
FSDP has since been extended
to run into a second phase for a
3year period from January
2010 to December 2012.
2
Ridgeway in Lusaka recently,
the Deputy Governor said the
BoZ was also cognisant of the
fact that it was expensive for
banks to keep large amounts of
capital 'idle' only to meet the
financing needs of one of a few
customers. Hence, the pooling
of resources by several banks
that are able to syndicate a
loan is a very welcome move.
Dr Mwape observed that the
loan in question to Zambia
Sugar Limited, amounting to
K605 billion, was so far the
largest syndicated loan funded
by the Zambian banking
industry. He said currently, no
single bank in Zambia would,
on its own, be able to meet the
financing needs of this project
as the bank with the highest
capital as at end-march 2011
could only lend up to a
maximum of K 111.0 billion,
being 25 per cent of that bank's
regulatory capital. He added
that this clearly demonstrated
the fact that domestically,
individual banks did not have
the financial capacity to
finance large investment
projects of this magnitude
singlehandedly.
“Banks are limited by law in
the size of the loan they can
make to any one borrower.
Typically, a bank may not lend
to any one borrower an amount
in excess of 25 per cent of its
regulatory capital. Capital
constraints therefore, also
provide the motivation for loan
syndications. Banks that find
themselves with inadequate
capital for purposes of booking
large loans on their balance
sheets may choose, instead, to
share them with other banks
through syndication. In this
w a y, p a rt i c i p a t i n g i n a
syndicated loan allows banks
to provide large loans to
borrowers, which they cannot
do on their own. Hence,
considerations of capital and
diversification of risk
encourage the development of
loan syndications among
banks. By doing so, banks are
able to meaningfully absorb
the downside to such
exposures should the borrower
default. In Zambia too, we
have already began to see an
increasing number of banks
come together to provide
project financing,” he said.
Dr Mwape further explained
that as syndications hinge on
the creation of an alliance of
banks who by joining forces,
are able to meet the credit
needs of large borrowers, they
permit banks to make more
loans, while limiting individual
exposures and spreading their
risk within portfolios more
widely. He said that Banks'
interest in syndicating loans
was attributed to less risk
exposure since it is easier for a
bank to absorb the risk of
exposure to a small portion of a
large loan than exposure to the
total loan.
He added that the benefits of
syndicated loans cannot be
over-emphasized, as they do
not only benefit the lending
banks but also offers great
benefits to the borrowers. He
said typically, successful small
businessesevolve to the point
where they outgrow their
traditional bilateral borrowing
relationships with one or a few
banks. He elaborated that
borrowers can access much
cheaper funds and within a
reasonably short timeframe, in
the syndicated loan market
than through a series of
bilateral loans or by floating a
bond issue. Furthermore, Dr
Mwape said the benefit of
going to a syndicated loan
market is that borrowers can
receive positive publicity.
Syndicated loans give growing
companies visibility in the
market and spur an increase in
bank competition for the
company's business.
“The signing ceremony we are
witnessing is testimony of the
spinoff benefits that
businesses can enjoy. It is
evident that Zambia Sugar plc
is at the moment enjoying the
attention this ceremony is
according the company. Banks,
after becoming aware of the
existence of a company that
has growth potential, have the
incentive to establish a
relationship with that
company. Such a relationship
may culminate in an
opportunity to better the terms
of engagement, particularly in
terms of lower cost of funds.
The Deputy Governor also
thanked all the parties involved
in providing financial support
for the important project.
And a press statement from
Illovo Sugar, the parent
company of Zambia Sugar
titled Zambia Sugar signs ZMK
605 billion syndicated term
debt facility announced the
successful closure of a ZMK
605 billion (US$128 million)
syndicated term debt facility
for its Zambia Sugar Plc
subsidiary in April this year.
The statement said this
landmark transaction was the
largest kwacha denominated
facility raised for a stand –alone
corporate borrower in Zambia
over the last three years.
The financing is being
undertaken by the company as
a partial refinancing of its
US$160million (kwacha
equivalent) 2007 syndicated
facility, which was undertaken
to support its expansion
programme undertaken
between 2007 and 2010. The
expansion programme has
resulted in the doubling of
capacity of the sugar mill to
over 430, 000 tons per annum
and an increase in the
commercial acreage under
cane to over 16, 700 hectares.
As a result of these initiatives,
Zambia Sugar's mill is
presently the second largest
sugar mill in Africa.
Zambia Sugar is an 82 per cent
owned subsidiary of Illovo
Sugar, the largest sugar
producer in Zambia and in
Africa, and is listed on the
Lusaka Stock Exchange.
The Syndicated Term Debt
Facility was signed in Lusaka on
th
14 April. The transaction was
significantly oversubscribed ,
with over US$170 million (in
kwacha equivalent) received in
lender commitments, with
both domestic and off-shore
lenders expressing interest in
participating in the facility.
The transaction was arranged
by Citibank N.A. and The
Standard Bank of South Africa
acting as Mandated Lead
Arrangers and Book runners. A
total of eight (8) banks and one
(1) fund manager participated
in the local syndication, with
the participant institutions
being Citibank Zambia Limited,
Stanbic Bank Zambia Ltd, Indo
Zambia Bank Ltd, Standard
Chartered Bank Plc, Barclays
Bank Zambia Plc, Zambia
National Commercial Bank Plc,
First Rand Bank (acting
through its Rand Merchant
Bank Division) and Finance
Bank. The participant fund
manager was Africa Life
Financial Services Ltd.
ZAMBANKER JUNE 2011
NEWS
Enhance Women's Economic Input
Deputy Governor-Operations,
Dr Austin Mwape has said that
a l t h o u g h w o m e n m a ke
significant and proven
contribution to business and
economic growth in Africa,
their vast potential as an
economic force has yet to be
realised.
He adds that the challenges
that women face along the
way are numerous and
include social norms and
customs, which sometimes
re-enforce inequalities and
limit women's upward
mobility.
Speaking at the Standard
Chartered Bank launch of the
“women can and do” advert in
Zambia, Dr Mwape said it was
no secret that a major obstacle
for women to start, grow and
strengthen their enterprises
lay in the lack of finance,
inspite of the good record that
women were much better
than men in servicing their
obligations.
He explained that investing in
women was critical and multilayered and that such
investment should include
encouraging talented female
employees to progress and
step up the ladder to take up
senior roles, ensuring that
young girls were able to stay
in school and gain a good
education, and providing
financial support to women to
enable them start businesses.
The Deputy Governor was
however, quick to mention
that women's participation in
business was fairly strong in
Africa, with reliable sources
indicating that women owned
approximately 48 per cent of
all businesses.
“There is an urgent need for
concerted efforts to ensure
that the participation of
women in economic activities
does not shrink. In addition,
the current positive
development must be
embraced as an opportunity
for women to make headway.
The desired investment in
women can come from
established organisations like
Standard Chartered bank or
non-profit organizations
which are able to reach
women at the grass roots
level,” he said.
Dr Mwape added that the
positive contributions of
Standard Chartered bank in
raising the visibility of women
and highlighting their
achievements in helping other
women was a welcome
development and
demonstrated how women
could and were changing the
world for the better.
He also said that he was
pleased that an increasing
number of financial
institutions were providing
financial services to women in
Zambia, causing them to
discover a new level of
economic independence
through gaining access to
credit and jobs that gave them
a decent standard of living.
He noted that the launching of
the advert was an activity
under the Standard Chartered
bank diversity and inclusion
programme which provided
the bank with a business and
working environment that
strongly cultivated creativity
and innovation.
Part of the innovation has
been the global mentoring
and women in leadership
programmes.
“I am aware that the global
mentoring and women in
leadership programmes have
a particular focus on
developing the bank's most
talented female employees in
key markets, including
employees on international
assignments.
The programme focuses on
key diversity and inclusion
related themes such as worklife balance, cross-cultural
working, and career and life
planning.
I hereby commend Standard
Chartered bank for
encouraging work in this area
that not only empowers
women within their
organisation, but also serves
female customers and renders
support to women in the
community,” he said.
The Deputy Governor
concluded that women's
potential to contribute to
development should be
acknowledged and that their
potential to drive change be
recognised because women
help to move their families
and communities out of
poverty.
And speaking at the same
function, Standard Chartered
Bank Managing Director, Mrs.
Mizinga Melu said her bank
celebrates the importance and
value of its women customers
and clients. She said as part of
her bank's commitment to
diversity and inclusion,
Standard Chartered strongly
believes in supporting gender
diversity in the workplace,
with customers and in the
community.
She explained that a
fundamental aspect of
Standard Chartered bank
approach was its belief in the
importance of supporting
women in business and that
as such, the bank also
recognises that women as
customers have unique
needs.
“For this reason, we offer
products and services
specifically targeted at
women. Poor access to finance
is often highlighted as a
particular challenge for
women seeking to start and
grow a business.
To continue to improve
women's access to finance, a
number of banks, including
Standard Chartered, have
begun operating or financing
microfinance and financial
education programmes for
women. We are proud that we
undertook an initiative called
support a woman
entrepreneur, in March last
year.
Under this initiative in which
we partnered with the
International Labour
Organisation and the Zambia
Association of Business
Women, we undertook to
support 10 women
entrepreneurs; through
mentorship programmes;
networking opportunities;
financial support, financial
and business planning.
Further, for the women
entrepreneurs receiving
support through this
initiative, this translated into
a need for access to more of
our banking services, this
initiative contributed to
poverty reduction and
economic empowerment to
women entrepreneurs under
the programme, I think a
common theme we all share
here tonight is the simple
belief that women do and will
increasingly play a larger role
in the global economy of the
future,” she said.
Deputy Governor-Operations, Austin Mwape with Stanchart MD Mizinga Melu and ZNBS MD Noreana Muneku during the launch of the 'Women Can and Do' Advert
Corporate Governance, a Major Topical Issue
By Cynthia Chiyabu
Bank of Zambia Governor, Dr Caleb
Fundanga has said that corporate
governance until recently was not a
topic that attracted much public
attention as it was reserved for
discussion in the board room and
academic environments. Recent
events such as the Enron scandal and
other corporate governance failures
including events that led to the recent
financial crisis had made corporate
governance a major topical issue.
The BoZ chief further said corporate
governance for banks and other
financial institutions is crucial and has
called on boards of directors and
management of banks to pay particular
attention to the interests of depositors
and other creditors.
Dr Fundanga said effective corporate
governance practices are essential to
achieving and maintaining public trust
and confidence in the banking system,
which is critical to the proper
functioning of the banking sector and
the economy as a whole.
He said poor corporate governance
may contribute to bank failures, which
in turn could pose significant costs on
the treasury and could have other
macro-economic effects like
contagion risks.
Dr Fundanga said this during the
Institute of Directors Business
luncheon on corporate governance and
its impact on financial institutions.
The Governor said poor corporate
governance could lead to financial
markets losing confidence in the ability
of banks to properly manage their
assets and liabilities, including
customer deposits, and this could in
turn trigger a run on a bank or
precipitate a liquidity crisis.
Effective corporate governance is
crucial for banks since it enhances
transparency. Ownership structures of
banks in Zambia are varied with some
banks being foreign owned, others
owned by private entities while others
have some degree of State ownership.
Dr Fundanga added that each type of
ownership structure poses governance
challenges, with transparency and
fairness in banks' lending and
investment decisions becoming a
critical requirement.
The Governor however said banks also
operate on the basis of trust and
therefore reputation risk becomes a
critical factor that can affect a bank
seriously if not properly managed.
''For this reason, banks need to adopt
good governance practices and
customer services standard in order to
build public confidence in the
credibility of their operations. It must
be remembered that banks operate in a
volatile environment where
perceptions in their dealings could
trigger a run on a bank's deposits,'' Dr
Fundanga said.
He further gave an example of the First
Merchant Bank Zambia Limited, which
in 1997 experienced a run and was
subsequently closed two days later
after a local newspaper reported that a
customer of the bank was involved in
money laundering.
He however said that the importance of
the payment system to an economy
could not be over emphasized.
Dr Fundanga further said that the
payment system provides the means
by which vast numbers of transactions
are made each day.
''The payment system involves many
3
different components, including
systems for settling large inter-bank
and inter-corporate payment
transactions and systems for handling
a number of small transactions,'' he
said. The BoZ chief however said the
payment system operators also face a
number of risks including operational
risks. The Governor clarified that the
payment systems operators need to
ensure that the systems for processing
payments, the bank-up arrangements,
and the internal governance structures
are robust.
He said a major operational failure in
the payment system has the potential
to cause severe disruption to the
financial system and the wider
economy.
At its worst, a major payment system
failure would bring countless
commercial transactions to an abrupt
halt, impede the operation of business
in virtually all parts of the economy and
fundamentally undermine investor and
business confidence.
Dr Fundanga said it is imperative that
banks and financial institutions as well
as payment system operators maintain
proper systems to enable them to
identify, monitor and control risks.
He said the recent financial crisis has
shown that the presence of a well
regulated financial sector and properly
run corporate entities is key to the
prosperity of any economy.
“In particular, the crisis was caused, in
par t, by excessive exposure
concentration, poor credit policies and
inadequate management of credit risk.
These risk management failures reflect
a breakdown in corporate governance,
poor management of key banking risks,
and poor oversight by boards of the
mechanisms for managing their
banks,” Dr Fundanga said.
He added that in some cases, lack of
independent directors on the boards
of banks was also a significant factor
in weakening the effectiveness of
boards with poor quality financial
disclosures and ineffective external
audit. Dr Fundanga said although the
financial sector in Zambia was not
adversely affected by the crisis in a
direct fashion, over the period 19952000, the sector experienced
numerous episodes of bank failures
that had adverse effects on the
confidence in the financial system.
He however stated that the Zambian
banking system was now stronger and
properly regulated than it was in the
1990, with the Bank of Zambia
periodically reviewing the Banking
and Financial Services Act (BFSA) to
bring it up to date with international
standards and current global
practices.
He also said one of the areas the
banks have continued to strengthen is
through the corporate governance
provision to ensure that the board of
directors and senior management of
banks and financial institutions
conduct the affairs of their institutions
prudently.
He then called on the institution to
work together with the Bank of Zambia
in the area of developing and
introducing ethics and corporate
governance code to the financial
sector.
The mission of the institute of
Directors is to ensure that there are
high professional and ethical
standards amongst directors and
boards on which they serve.
ZAMBANKER JUNE 2011
NEWS
BOZ Proposes Act Amendment
Bank Secretary, Mr Mathew Chisunka
has said the Bank of Zambia has
submitted proposals to Government to
amend the Bank of Zambia Act in line
with the principles espoused by the
Southern African Development
Community (SADC) Central Bank
Model Law which has been developed
by the Committee of Central Bank
Governors (CCBG) in SADC. Mr
Chisunka, who is also Chairman of the
Legal Committee of the CCBG,
explained that the long term objective
of the Model Law is to promote the
principles of operational
independence, transparency, and
accountability that will form the
cornerstone for a future Regional
Central Bank in SADC. For this reason,
SADC Member central banks are
expected to work towards
domesticating the provisions of the
Model Law into their national central
bank laws as they review and update
them. To this end the amendments to
the central bank laws in the region were
expected to be aligned to the Model
Law as closely as possible to ensure
consistency, cer tainty and
harmonisation within the SADC. SADC
central banks have since started the
process of reviewing their central
banking laws.
The model law was based on three
main premises, namely (1) to provide
for adequate power and independence
of individual SADC central banks for
them to effectively fulfil their
responsibilities;
(2) to provide
adequate mechanisms for good
governance, and (3) to provide for
accountability to government,
parliament and the public. The model
law also emphasises that the primary
objective of a SADC central bank in
carrying on such tasks as pertain to
central banking, should be clearly
stated to be the achievement and
maintenance of price stability. The
purpose of the SADC Central Bank
Model Law is to offer SADC countries a
set of internationally acceptable
principles of how a modern central
bank should be organised. These are
expressed in the agreed principles as
set out in Article 4 of annex 5 of the
Finance and Investment Protocol.
The model law lays the foundation for
SADC member states to harmonize the
legal and operational frameworks of
central banks which shall culminate in
the creation of a Regional Central Bank
as contemplated by the Regional
Indicative Strategic Development Plan
(RISDP). The RISDP is designed to
provide strategic direction with respect
to SADC programmes and activities,
and in particular: to align the strategic
objectives and priorities of SADC with
the policies and strategies for
achieving its long term goals, to
provide an indicative framework to
guide Member States and the SADC
Secretariat in the implementation of
the SADC objectives.
The SADC Central Bank Model Law
was approved by the SADC Ministers
responsible for Finance and National
planning at their July 2009 meeting
held in Johannesburg South Africa and
is designed to assist SADC Member
States to update their central banking
legislation in order to address existing
disparities in SADC central bank laws.
Giving a brief on the harmonisation of
legal and operational frameworks for
central banks in the Southern African
Development Community (SADC), Mr
Chisunka said SADC has 15 member
countries with each country having its
own central bank organised and
governed by its own central bank
statute. He said the nature of the
legislative framework varies widely
across SADC member countries,
including the relationships between
government and central banks. He said
despite sharing common functions,
central banks within the SADC region
have widely differing powers and
different legal frameworks. These
variations are a consequence of
historical, political, social and
economic circumstances in individual
countries, at the time the legislation
was enacted. The period when these
statutes were enacted ranges from
1974 to 2005.
Mr Chisunka said the background and
basis for harmonisation of the legal
and operational frameworks of SADC
central banks is embedded in the
SADC vision of a common future within
a regional community to be achieved
through economic cooperation and
integration. The SADC Treaty provides
Mr Chisunka
the legal basis for the existence of
SADC as an international organisation
and embodies the objectives and the
aspirations of its Member States. He
said central to the strategy and
objectives of SADC is the regional
economic integration agenda
comprising several elements which
are aimed at:removing
barriers that prevent or restrict
economic relationships between
countries (i.e. trade barriers, exchange
control, cross-border controls on
investment and labour movement);
harmonising the regulatory and legal
environments across Member States;
and facilitating the ability of the region
to operate as a single economic
Transparent Pricing in Zambia
market.
Mr Chisunka said specific milestones
for achieving the set objectives under
RISDP include a range of economic
integration targets which include: Free
Trade Area – 2008, completion of
negotiations of the SADC Customs
Union – 2010; completion of
negotiations of the SADC Common
Market – 2015; diversification of
industrial structure and exports;
macroeconomic convergence on
targets for inflation, fiscal balance and
public debt; other financial indicators
and; establishment of a SADC
Monetary Union, and a SADC Central
Bank by 2016, and a regional currency
by 2018.
Mr Chisunka said the targets in RISDP
are being operationalised through a
range of
SADC Protocols, including the
Finance and Investment Protocol (FIP),
which is one of the protocols entered
into by SADC member states to give
legal and practical effect to their
commitments under the SADC Treaty.
The FIP has several annexes to it and
these represent a series of various
Memoranda of Understanding (MOUs)
covering key areas of the economic
integration agenda. These include
MOUs on:
Exchange Controls;
Harmonisation of Legal and
Operational Frameworks of SADC
Central Banks; Payments, Clearing
and Settlement Systems; Information
and Communication Technology and
Banking Supervisors.
”The (CCBG) was established in 1995
pursuant to the FIP and has been
mandated to implement the aspects
that are allocated to it though the
various MOUs which form the annexes
to the FIP. One of the objectives of the
CCBG is to promote co-operation of
member states towards regional
economic integration and to serve as a
vehicle for co-operation in the area of
monetary policy and central bank
activities in the SADC region. Of
relevance to this submission which is
the MOU on the Harmonisation of Legal
and Operational Frameworks of SADC
Central banks,” he said.
He further explained that the
Memorandum of Understanding on the
H a r m o n i s a t i o n o f Le g a l a n d
Operational Frameworks of Central
Banks in SADC (Legal MOU) outlines
the broad principles intended to
eliminate the disparities and
contradictions in the national and
multilateral legal frameworks of central
banks of Member States. The
objectives of the Legal MOU are to:establish principles that will facilitate
the creation of a coherent and
convergent status in the legal and
operational frameworks of SADC
central banks; promote the adoption of
principles that will facilitate the
operational independence of central
banks; create best practice in the legal
and operational frameworks of central
banks; and provide a framework for the
creation of a SADC central bank model
statute, which will be considered and
approved by the Ministers responsible
for national financial matters.
In order to achieve the above objectives
and to foster harmonisation of the legal
and operational frameworks of SADC
central banks, the SADC central banks
have agreed through this MOU to
uphold certain principles. These are (1)
principles for convergent status; (2)
principles for operational
independence; and (3) principles for
transparency and accountability.
These principles have found
expression in the SADC Central Bank
Model Law.
Mr Chisunka said the process towards
To Page 9
Strategic Plan, a Landmark
Governor Dr Caleb Fundanga delivering his speech during the official opening ceremony of the Transparency Pricing Initiative in Zambia at Southern Sun Ridgeway Hotel in Lusaka
By Cynthia Chiyabu
Microfinance Institutions in Zambia
have over the years played a
significant part in the provision of
financial services, although access
to finance still remains low
par ticularly for low-income
households, Bank of Zambia
Governor has said.
Dr Caleb Fundanga said the provision
of financial services to the majority of
people and the small and medium
enterprises who have traditionally
been excluded from the formal
banking sector is a key element to
poverty reduction and economic
development.
He said this when he officiated at the
launch of the Transparent Pricing
initiative in Zambia.
He said that the recent Finscope
Survey confirmed that levels of
access to financial services continue
to be low with only 37.3 per cent of
Zambia's adult population reported to
have access to financial services.
He said the survey however showed
that the number of people accessing
microfinance was on the increase.
He said the Bank of Zambia has
continued to receive a number of
customer complaints on the high cost
of micro loans in the country adding
that interest rates charged by some
institutions exceeded 300 per cent per
annum in some cases.
The BoZ chief also said in most
instances the effective rate of interest
and other charges are not disclosed to
the customers resulting in them
paying much more than what was
initially publicised to them.
Dr Fundanga said this had raised
e t h i c a l q u e s t i o n s re g a rd i n g
transparency and the role of
microfinance institutions in poverty
alleviation and economic
development in Zambia.
He said the interest rates of
microfinance loans vary significantly
relative to the duration and size of the
loan.
He said it is incumbent upon all
microfinance institutions to provide
clear information on the cost of the
loans and options available.
“It is therefore imperative that all
institutions provide the price of their
loans in terms of the annual
percentage rate rather than a monthly
bureau now operational, to which I
believe most of these institutions,
subscribe and access credit
information on their borrowers, it is
expected that the levels of
delinquencies that the sector used to
suffer through the non-repayment of
loans by customers would decline,”
Dr Fundanga said.
The Governor implored all
microfinance institutions to comply
with the Bank of Zambia directive of
December 2008 regarding the use of
t h e c re d i t re f e re n c e s y s t e m
submission of credit data.
The BoZ chief urged microfinance and
other financial institutions to continue
revising their interest rates and
charges in tandem with the
movements in key macroeconomic
indicators such as inflation.
He also called on the institutions to
make financial services more
affordable to the majority of people as
well as small enterprises in order to
expand their operations, employ more
people, and thereby provide an
impetus to significantly reduce
poverty levels in the economy.
percentage”.
In this way, transparency is enhanced
and consumers would have a clear
picture of precisely how much they
need to borrow relative to their income
levels which would result in
responsible lending and a more
c o m p e t i t i v e a n d t r a n s p a re n t
microfinance industry,” he added.
The Governor went on to say that the
training which will be offered by the
Transparent Pricing Initiative on
transparent pricing, collect and
publish data on the prices of
microloans offered in Zambia, will
complement the Bank of Zambia's
effort of enhancing transparency
through the quarterly publication of
financial charges, fees, and
commissions for accounts and other
general services applied by financial
services providers.
Dr Fundanga said one of the reasons
advanced by microfinance institutions
to explain the high interest rates
charged for their services in the past
has been the high risks of default and
lack of credit information on the
borrowers.
“However, with the credit reference
4
Deputy Governor-Administration, Dr
Tukiya Kankasa-Mabula has said the
Bank has so far achieved significant
milestones in the current cycle of the
strategic plan.
She says these
achievements would not have been
possible without management's
resilience and commitment.
Speaking during the Strategic
Leadership workshop for senior
management at Sandy's Creations
recently, Dr Tukiya Kankasa-Mabula
explained that the role of senior
management was to provide strategic
direction for employees in the Bank and
instil a high sense of performance
culture, which was capable of
achieving the goals and objectives
enshrined in the Bank's strategic plan.
She said this was important for the
Bank to realise its vision of being “a
modern, dynamic, credible and
effective Central Bank, adding that one
of the toughest aspects of strategic
leadership was turning the vision into
reality.
She called upon senior management to
articulate the vision of the Bank
because they were the drivers of
change and vision-carriers of the Bank.
She said she was expectant that
management could at every forum
seize the opportunity to sensitise
employees on the direction the Bank
was taking to discharge its mandate
and realise its vision. She explained
that the vision should be articulated
until it becomes an integral partof the
Bank of Zambia culture.
The Deputy Governor added that
strategic leadership was about the
ability to understand the broader
environment in which one operated and
discern trends in a rapidly changing
world. She said strategic
planning also involved
formulating goals and
inspiring employees to achieve a vision
as well as mobilising resources
required to achieve a vision and to lead
the process until the goals are
achieved.
“Concerning the current cycle of our
strategic plan this year, I want us to use
this opportunity to acquire the tools that
will provide useful input into the
formulation of a new strategic plan for
the Bank. The change that we are
experiencing is fundamental because it
affects virtually every aspect of our
lives. Everywhere the forces of change
are in full flood. They are obliterating the
familiar and comfortable landscapes in
which we are operating. Every facet of
our lives is being affected by change.
Change is therefore inevitable and
unpredictable. Some of the major
developments that have fundamentally
transformed the world were entirely
unforeseen only twenty-five years ago:
think of the internet and the world-wide
web, e-commerce, scale of HIV/AIDS,
emerging economic power of china,
new challenges faced by the financial
sector and the changing and evolving
role of central banks,” she said.
Dr Tukiya Kankasa-Mabula
ZAMBANKER JUNE 2011
REGIONAL OFFICE ROUND UP
Real sector developments still anchored on mining
Mr Musuku
By Lombe Mulanda
The Regional Office Economics team
recently released a report on the Real
Sector Developments on the
Copperbelt for the first quarter of
2011 which provided an economic
analysis of the performance of
selected industries in relation to
production by volume on the
Copperbelt. The report gives an idea
of the direction of productivity as an
indicator of economic performance
and also provides an insight into the
factors affecting production in each
selected industry.
Regional office Senior Economist Mr.
Steven Musuku informed Zambanker
that this report focused on selected
industries' performance in terms of
production in the first quarter of 2011
in comparison with the preceding
quarter.He further explained that the
report showed that the performance
of the various sectors was mixed with
some sectors showing growth while
others slumped. The recorded
sectors' performance was as a result
of increased mining activities on the
Copperbelt, as well as seasonal
factors unique to the beginning of the
year's general economic conditions.
The sectors that were considered
included manufacturing, tourism,
agriculture and gemstone mining.
The manufacturing sector included a
selected sample of companies
involved in wood processing, textile,
metal products, beer, shoe and
cement production. Under the
tourism sector a sample of entities
engaged in hospitality were
considered while firms in poultry and
beef production were covered under
agriculture.
Mr Musuku said during the quarter
under review, the manufacturing
sector's performance generally
reduced as compared to the
preceding quarter. The reduction was
attributed to a number of factors
which included seasonal factors and
low demand due to imports. The
wood processing industry
plummeted due to reduced raw
materials owing to seasonal factors,
as a result of the Zambia Forestry and
Forest Industries Corporation
Limited (ZAFFICO)'s tree
conservation measures, break downs
and maintenance of machinery.
The textile industry recorded both
negative and positive strides. The
spinning textile industry's
performance progressed owing to
increased efficiency resulting from
new machinery in the industry.
However, the weaving textile industry
performed negatively as a result of
industrial breaks during the festive
season.
Metal products production slumped
on account of reduced demand and
increased imports by the mines.
In the shoe industry, there was no
production of plastic shoes as a
result of lack of demand because of
the population preferring cheap
imported shoes. Nevertheless, the
production of leather shoes went up
on account of high demand by many
contractors with the mines and
increased number of investors who
have to meet safety requirements of
their workers.
Beer production plunged as a result
of low demand emanating from many
people having financial
commitments in the first quarter.
Cement production recorded a
decline as a result of seasonal factors
as at the climax of the rain season,
extraction of raw materials for the
production of cement is quite
difficult.
Under the tourism sector, the
hospitality industry did not perform
favourably owing to a reduced
number of clients. The local bed
occupancy reduced and was mainly
attributed to a low number of
workshops and meetings conducted
in the area.
The agriculture sector registered an
increase in egg production while that
of milk, chicken and beef recorded a
decrease. The escalation in the
production of eggs was arising from
increased number of chickens
coupled with a significant number of
pullets graduating in to full
productive chickens.
The drop in milk production was
attributed to the slaughtering of old
stock and re-stocking it with young
stock coupled with the introduction
of a quota system by the major
industry buyer (Parmalat Zambia
Limited), leading to drying off the
animals.
The reduction in the chicken
production was due to the high
demand experienced in the fourth
quarter as a result of the festive
season celebrations.
The decline in beef production during
the quarter under review was on
account of replenishing of stocks
with young animals. The dwindling in
the number of animals was owing to a
high demand in the fourth quarter
2010.
The gemstone mining sector's
production was deemed to be poor for
the period under review. This was as
result of extraction of the minerals
taking place in areas that had less a
favourable atmosphere for
mineralization, and this situation was
mainly attributed to lack of advanced
equipment for detecting areas with
mineralisation.
Northern Province in currency sensitisationstint
The Currency office at Regional Office
recently conducted sensitisation and
awareness campaigns in Northern
Province whose aim was to enlighten
the general public and other relevant
stakeholders on various issues
concerning the Zambian currency.
The team on its five day tour in
Northern Province visited Kasama,
Mpika, Isoka, Chinsali and Nakonde
and was comprised of Kamuti Chama
Shichilenge – Assistant Manager
Currency Accounts, Misozi Chileshe
Mapala – Section Officer Verification,
Brian Mulenga – Note Examiner and
John Simutenda, a driver from
Procurement and Maintenance
Services.
Ina report availed to the Zambanker,
Mrs Shichilenge who was the
sensitisation campaign team leader
said that upon arrival in Northern
Province, the team paid a courtesy
call on the Office of the Permanent
Secretary in Kasama – Mr Mwalimu
Simfukwe, who had also arranged
meetings with the District
Commissioners and other Heads of
Departments in the towns that the
team was scheduled to visit. She said
the sensitisation campaign was
mainly conducted through meetings
held with heads of departments, civil
servants, public meetings at markets
as well as the distribution of currency
posters and brochures.
Mrs Shichilenge said the public
meetings in markets were aided with
the help of local ZANIS officials who
brought translators.
Radio interviews in Kasama in English
and Bemba were conducted at the
community radio station – Radio
Mano.
In Chinsali, Mrs Shichilenge said the
Team was invited to sit in on a
meeting for the District's Marketing
and Agricultural Committee Task
force team which was making
preparations to go round the
surrounding rural areas in readiness
for the crop marketing exercise.
Mrs Sichilenge further said the
people across the province were very
thankful to the Bank of Zambia for the
sensitisation campaign which came
at the time when the maize marketing
season was about to start.
She further informed the Zambanker
that the main objective of the
sensitisation exercise was to ensure
that the public knew their banknotes
and some features on the notes which
made it easy to detect counterfeit
notes.
The Assistant manager also added
that the public must be made aware of
the importance of cash handling and
storing of notes as this was also an
effort to prolong the lifes pan of the
notes in circulation.
The public was encouraged to
exchange unfit notes for fit notes at
commercial banks or at the Bank of
Zambia either in Ndola or Lusaka. Mrs
Shicilenge said some people were
completely unaware that they could
actually exchange unfit and mutilated
currency for fit notes in commercial
banks and the Central Bank.
Mrs Shicilenge said it was sad that
many people still did not have access
to commercial banking services and
that made it difficult for them to
replace unfit notes for fit ones.
The sensitisation also revealed that
some members of the public were
throwing away soiled notes because
commercial banks had been rejecting
them.
Some of the issues that were raised
during the sensitisation campaign
were queries on why the K20 notes
and the coins were not in circulation.
Members of the public wondered
whether these notes and coins were
still legal tender as in most instances
they were not accepted by traders and
shop owners.
Other issues were that while members
of the public were aware of the
existence of counterfeit notes, most of
them were not aware of the security
features that defined the genuine
notes.
Some people were apprehensive
about reporting counterfeit notes to
the police because of the manner in
which the police handled and
responded to the reports.
Mrs Sichilenge mentioned that as
much as people were happy with the
sensitisation programme in the areas
visited, the campaign should be
extended (in terms of time and areas
to be covered) so that information
could spread out to as many areas of
the province as possible.
Northern region growth slows down
The recently released Survey of
Business Opinion and Expectations
report of the northern region which
reviewed the performance of
companies during the first quarter of
2011 and presented expectations for
the second quarter of 2011 showed
that high commercial banks interest
rates and energy costs have highly
contributed to the slowdown in
economic growth of the Northern
Region in the first quarter of 2011.
Furthermore expectations were that
the unfavorable trend was likely to
spill over in the second quarter of
2011.
The report covering manufacturing,
merchant, services, tourism,
agriculture and construction sectors
in the Northern Region which was
released by the Economics team at
Regional Office headed by Senior
Economist Mr Steven Musuku
showed that during the first quarter
of 2011, all surveyed economic
variables moved in an unfavorable
fashion with profits declining in
most sectors while costs increased.
From a business perspective, the
high cost of energy had a negative
effect on activities in the face of lack
of demand for goods and services
both locally and internationally
leading to declining profit margins.
Moreover, in the ensuing quarter,
respondents expected profits to
continue plummeting mainly due to
anticipated high cost of energy and
continued high cost of borrowing from
commercial banks.
Almost all respondents spoken to
lamented on the high costs of
borrowing and wondered why
commercial banks interest rates were
not going down as was expected,
especially when the country was
experiencing unprecedented growth
across all sectors of the economy.
High commercial bank interest rates
have clearly resulted in most firms
relying on retained earnings for their
long term finance and working capital.
It was noted however that most of the
respondents expected the exchange
rate to remain stable due to the
favourable microeconomic
environment in the country and
predicted that the exchange rate
would continue to fall between
K3,500 and K6,500 per US dollar,
while inflation was expected to
increase in the second quarter of
2011 mainly on account of non food
factors and increased cost of
production.
Inadequate demand was also cited as
a constraint during the review period.
Despite the challenges experienced
and expected, respondents expect
their firms and consequently the
general economy to continue being in
balance and assisted mainly by the
increasing copper prices and the
bumper harvest which will be partially
offset by high cost of energy.
Regional office managers on the lower deck of the Southern Belle in Siavonga
Managers Circle retreats on the Southern Belle
Members of the Managers'
Circle were treated to a
luxurious three day cruise.
The houseboat has 21 cabins, a
conference room for up to 30
delegates, lounge, sundry
shop, restaurant, two bars and
a splash pool. The Southern
Belle's three decks feature
comfortable and spacious
public areas and each of the 21
cabins is en-suite, designed
with a modern, light and airy
feel.
All cabins are equipped with
satellite television, air
conditioning, luxury linens
The Regional Office Managers
Circle, which has been in
existence for sometime now
recently undertook its seventh
team building exercise when
the members took time out to
visit Siavonga and in particular
the Southern Belle.
The Southern Belle is one of
the largest houseboats in
Southern Africa. Located on
Lake Kariba, the Southern
Belle provides a unique
cruising experience on one of
the largest manmade lakes in
the world, the Lake Kariba.
5
and amenities. The Managers
Circle team was treated to a
range of activities and a
variety of dining experiences,
from sundowners on the top
deck and dinner under the
stars, to dinner dances and
outdoor braais.
The Southern Belle, which was
originally operated from
Zimbabwe, has undergone
extensive renovations which
included repairs,
maintenance, a new design
and decoration and
modernisation of facilities.
The coming of the Southern
Belle, which is operated by
Protea Hotels Zambia and is
franchised to the Lake Kariba
district, is a great tourism
boost for the area which also
boasts of some of the finest
tiger fishing in Zambia and is
also an ideal base for
exceptional game-viewing.
Game species include
elephants and buffalo. It is
hoped that the addition of the
Southern Belle to the Protea
Hotels Zambia stable will help
raise the profile of Lake Kariba
and Zambia amongst the
international market.
ZAMBANKER JUNE 2011
FEATURE
Increasing Access to Finance The Borrower's Role
By Banji Milambo
Introduction
Increasing access to finance is
a major objective of
Government and the Bank of
Zambia. The magnitude of the
problem of lack of access to
finance in Zambia is well
documented in studies
conducted on the supply and
demand for financial services.
The most recent survey
indicates that approximately
63 percent of the adult
Zambian population does not
have access to any form of
financial services.
Various efforts and strategies
have and are being formulated
and implemented to improve
the levels of financial
inclusion. These efforts also
include activities aimed at
improving access to finance,
particularly by small and
medium enterprises and
economic agents with
entrepreneurial ideas that
would have the effect of
improving economic welfare.
The success of these strategies
and activities rely on a number
of factors. One of which is the
responsiveness of the
economic agents being
t a r g e t e d . Fo r i n s t a n c e ,
economic agents need to have
basic knowledge on the
requirements to access
financial resources, including
knowledge of factors that
financial service provider
consider when deciding
whether or not to grant loans.
Financial Sector and Financial
Resource Allocation
One of the major roles of the
financial sector is
toallocatefinancial resources
amongst economic agents in
the real sector. It is an
infrastructure that enables the
flow of financial resources
from persons that have surplus
(or who do not have immediate
use for money) to persons that
require these resources either
for consumption or, more
beneficially, production. This is
a process that is termed as
financial inter mediation.
Simply put, banks and other
deposit taking financial
institutions collect money
from the public, mostly
through savings deposits.
These institutions then lend
out the money deposited to
bor rowers. An effective
financial sector is one that is
able to efficiently and
effectively obtain surplus
resources from the surplus
units and allocate it to the most
productive producers and
consumers.
Considerations in Financial
Resource Allocation
A prudent credit provider will
exercise care in determining
whether or not to extend a loan
to a potential borrower.As the
case is with many valuable
resources, money is a scarce
commodity. Not every person
or business has equal access to
this commodity. For a potential
borrower, access to such
finance depends largely on the
ability of that borrower to 'bid'
for the money. Therefore, in
order to increase one's chances
of accessing credit from a
credit provider, one has to be
able to demonstrate to the
financial service provider that
they are a risk worth taking.
How is this done? A good
startingpoint would be to
understand the criteria that
credit providers use in
assessing a borrower. This
means having an idea of what
is sometimes known as the 4
Cs of credit. These are:
Character:This refers to a
potential borrower's financial
history; that is, what kind of
"financial citizen" is this person
or business? Character is most
often determined by looking at
the credit history of the
borrower.A borrower with a
good character is one that is
assessed to have a good history
of honouring financial
obligations. In Zambia, a
database on each borrower's
willingness to repay is being
built up with the introduction
of the credit reference system.
Capacity:This refers to a
potential borrower's ability to
generate sufficient revenues
or income to pay back the loan.
A person that can show a
positive cashflow (where
income exceeds expenses) for a
sustained period of time has a
good chance of getting a loan.
Conversely, it is more difficult
to assess a potential borrower
who has no demonstrated
cashflow. This would be the
case for a new or
proposed business. For
s u c h a n e n t i t y,
projected financial
statements based
on realistic
e c o n o m i c
assumptions need
to be provided as the
main basis for
assessing capacity.
Capital: Capital refers
to the capital assets of
the business. Capital
assets might include
machinery and
equipment for a
manufacturing company,
as well as product
inventory, or store or
fixtures.Capital can
be called upon
particularly
d u r i n g
periods of
w e a k
Mr Milambo
venture for which a loan is
being sought. The summary,
though being the preamble to
the document, is typically the
last section to be written.
Description of Product or
Service: the plan must provide
an accurate description of a
product or service. That is,
what the product or service is
(or is about), how it works and
brief outline of its distinctive
features.
Market Research and
Analysis: This section would
provide information on where
the product or service fits into
the market. The estimated
d e m a n d , m a r ke t s h a r e ,
expected competition etc. The
section should include
assumptions about pricing,
product promotion distribution
etc.
Marketing Plan:This section
should discuss the marketing
strategies for the product or
service. Ideally, this is a
description of plans of
differentiating the product or
service in order to increase
market share or create a niche
market.
Manufacturing or Operation
Plan: This section is important
were there are processes of
manufacturing to be
described. In writing this
section, care would need to be
taken to ensure that overly
technical language is avoided.
An explanation of the
manufacturing or operational
process would have to be
explained in a manner that is
easily understood yet shows
that the borrower understands
the requirements.
The Entrepreneurial Team
(Management): This is a
critical element of the business
plan. A credit provider will
want to know whether the
team that it is providing funds
to is competent, has the
appropriate business acumen
and is of adequate integrity.
Financial Documentation:A
good business plan will include
projected financial statements
that are based on realistic
assumptions. The statements
to be provided are the income
statement, cashflow and
balance sheet. The projected
period of the statements
should be long enough to cover
the period of the loan being
sought and should enable an
evaluator to assess the
performance of the business
and the ability for the borrower
to meet the loan obligations.
cashflow by converting assets
into cash in order to meet
financial obligations.
Furthermore, capital acts as a
fall back on which a credit
provider can rely to recoup
unpaid obligations. Credit
providers consider capital,
primarily as a fall back
consideration, because if the
businessfails, they are left with
assets that have depreciated
and they must find someplace
to sell these assets, at .
Collateral: Collateral is the
cash and assets a business
owner pledges to secure a loan.
In addition to having good
credit, a proven ability to make
money, and business assets,
credit providers will often
require a borrower to pledge
his or her own personal assets
as security for the loan. The
collateral is important in
mitigating 'moral hazards'. If
an owner didn't have to put up
any personal assets, he or she
might just walk away from the
business failure and let the
credit provider take what it can
from the assets. Having
collateral at risk makes the
business owner more likely to
work to keep the business
going, even in the event of
hardship.
Therefore, economic agents
that have the best chance of
obtaining financial resources
from a credit provider will be
those that:
! have an excellent credit
record;
! are able to prove that their
undertaking(business) will
generate revenues to pay
the loan;
! show that the business
assets have value in case
they need to be sold to pay
off the loan, and
! pledge their own assets in
case the undertaking fails.
The Role of the Business Plan
In order to compete for scarce
financial resources, a borrower
(particularly in the case of a
business) is required to make
its case to a credit provider
through a business plan. A
good business plan will
identify the essential elements
needed by credit providers to
make a decision as to whether
to extend a loan or not. It is
important that the business
plan be concise, yet thorough.
It should be clearly written and
include essential details with
supporting documents and
well articulated assumptions.
The business plan will assist a
credit provider in assessing the
knowledge that the borrower
has of the business idea for
which financial resources are
sought. Therefore, a borrower
that is able to articulate the
business proposal clearly and
convincingly is likely to be
more successful in obtaining a
requested loan.
There is no single preferred
format for a business plan. The
structure and complexity of
the plan will depend on the
nature and complexity of the
business for which funds are
sought. It will also take into
consideration the information
requirements of the recipient.
A good plan however, should
include the following:
Executive Summary: This
should be a short 'appetiser' or
abstract of the proposed
Conclusion
Government and the Bank of
Zambia have an obligation to
provide an appropriate
environment that enables
effective and efficient
allocation of resources in the
market. With the objective of
promoting access to finance,
policies and strategies being
formulated and implemented
will be more successful where
the target population is
receptive and reacts to the
enabling environment and
initiatives being implemented.
Those seeking financial
resources have an obligation to
acquire the skills and
knowledge that would enable
them obtain funds and improve
their economic welfare.
Therefore, an understanding of
the factors that credit
providers consider and
appropriate response to these
considerations constitute an
essential step to improving
financial inclusion and
promotion of access to finance.
6
Non-Bank Sensitisation Tours On
Mr Mwanakatwe
Director Non-Bank Financial
Institutions Supervision
Department Mr Chisha
Mwanakatwe has said his
department will continue to
roll out provincial sensitisation
tours across all the provinces
in order to reach more
districts. This follows a pilot
phase of tours that were
conducted during the fourth
quarter of 2010. He adds that
his department has received
significant feedback from the
pilotphase of the sensitisation
tours and will use them to
tailor future sensitisation tours
to address the prominent
issues.
Mr Mwanakatwe said that the
sensitisation tours were
motivated by low levels of
inclusion and financial literacy
observed following the 2005
consumer survey on the
demand for financial services
in Zambia. The tours,
therefore, were in line with the
BoZ's 2008 - 2011 Strategic
Plan, which has the promotion
of financial inclusion as one of
its strategic objectives.The
campaign targeted people who
have specific financial
education needs but who,
more importantly, have the
capacity to act as 'force
multipliers' by passing on the
message to others within the
wider society. In this regard,
the target audiences were the
civil servants and
economically active
individuals in the informal
sector. The choice of these
target groups was also based
on the fact that they are easily
accessible and are exposed to
the risk of financial
mismanagement and are
susceptible to fraud and
financial crime.
The Director said the
sensitisation tours were very
successful in respect of
disseminating information. He
said the tour also afforded the
BoZ an opportunity to interact
with people from the different
districts in order to obtain
information that influences
policy development. He stated
that the tours revealed that
there are significant
knowledge gaps in the country
about the role of the BoZ and
the financial sector in general.
This has contributed to the low
levels of financial inclusion as
well as misinformed
expectations on the role of the
BoZ.
The success of the tours was,
to a great extent, due to the
invaluable support provided by
the respective District
Commissioners and local
business associations who
provided logistical support. Mr.
Mwanakatwe further
acknowledged the support
received from other
departments which included
Financial Markets and Bank
Supervision Departments, as
well as the Public Relations
unit.
Mr Mwanakatwe said the
sensitisation programme,
which included radio shows
in English and vernacular
languages at provincial radio
stations, covered the
following four themes:
Role of Bank of Zambia in the
Financial Sector: This was
designed to be an
introduction to the
supervisory role of the BoZ.
It provided a brief description
of the BoZ, and specifically,
its role in supervision and
regulation of banks and other
financial service providers.
Dealing with licensed
Financial Service Providers:
The message was aimed at
sensitising the public on the
need to conduct business
with authorised financial
s er vice providers.
It
highlighted the real risk of
dealing with unlicensed
institutions. Materials were
developed in response to a
number of complaints the
BoZ had received from
members of the public who
had been defrauded by
unlicensed institutions.
Emphasis was placed on the
public's need to appreciate
that their interests are better
served by dealing with duly
licensed financial service
providers.
The ABC of Loans: The
objective was to empower
borrowers on credit issues, to
enable individuals to develop
t h e k n o w l e d g e ,
understanding, skills and
confidence needed to
adequately appraise and
understand their rights and
responsibilities as credit
holders and the various
credit options available to
them. This is premised on
the fact that consumer
awareness would enable
individuals to know where to
look for important
information, obtain objective
advice or help if they need it.
Empowered borrowers are
likely to make informed
decisions about how to
protect themselves and their
relatives, to adopt proactive
and responsible behaviour as
regards their credit. They
will develop basic abilities of
financial planning as regards
their credit, taking into
account their possible future
income and life-cycle
changes and understand the
consequences of bad credit
choices, decisions or
behaviours.
The presentations included a
demonstration of the cost of
borrowing and an
explanation of the role of the
market as regards interest
rates in a liberalised
economic environment.
The Credit Reference
System: The objective was to
sensitise the audience on the
credit reference system. The
presentations projected the
benefits that accrue to both
borrowers and lenders from a
well-functioning credit
reference system.
Mr Mwanakatwe stated that
the next set of tours will build
on the lessons and
recommendations arising
from the pilot tours. The
tours will continue to focus
on the objective of sensitising
the general population on
issues in the financial sector
as well as obtain pertinent
information and views that
will be used to influence
financial sector policy.
ZAMBANKER JUNE 2011
RISK CORNER
The BoZ Risk Management Framework
By Evans Luneta
The previous article discussed the
Balanced Score Card (BSC) system
focusing mainly on the methodology
for formulating the system, its
benefits and applicability. The article
also highlighted the fact that the BSC
system can be applied to any
organisation regardless of size and
whether for profit or otherwise. The
focus of this article however, is on
the Bank of Zambia Risk
Management Framework
(hereinafter called the Framework or
RMF).
The proceeding ar ticles shall
discuss the linkage between the BSC
system as a strategic plan
implementation tool, the Framework
and the performance management
system.
The Bank of Zambia Risk
Management Framework was
formalised in February 2006 when
the Board approved the
establishment of the Risk
Management Department (RMD) to
be a focal point to coordinate Bankwide risk management activities.
The Board also approved the Risk
Management Policy, the Risk
Management Philosophy and the
Business Continuity Management
(BCM) Programme, as an integral
par t of the Operational Risk
Management Framework.
The Risk Management Policy is a
high-level document aimed at
providing guidance in the
formulation and implementation of
the risk management process. The
Policy also outlines the risk
management governance and
functional structure, and apportions
responsibilities to the various risk
management organs. With respect
to the philosophy, the Bank's risk
management philosophy is that risk
management is an integral part of
management culture and therefore,
an essential attribute of good
corporate governance. To that end,
every effort should be exerted
towards the integration of risk
management into business
operations and practices. Further,
the BCM Programme was
established to enhance the Bank's
business continuity capabilities to
respond to and manage major
disruptive incidents that could
threaten the availability and
continuity of mission-critical (or
essential) business processes. The
Bank's BCM Programme therefore,
is targeted mainly at two things; first
to building institutional resilience
against major incidentsand
secondly, to protect and ensure
availability of mission-critical (or
essential) business processes, at all
times.
Definitions
Before we proceed into the details of
the Framework, it may be prudent to
define a few terms that are
commonly used in the Bank, such
asRisk and Risk Management
Framework. The
Australia/New
Zealand Risk
Manageme
n
t
Standards
(AS/NZS
4360:20
0 4 )
define
Mr Luneta
Mr Luneta
Risk as the chance of something
happening that will have an impact
on objectives. From the foregoing,
we can deduce that risk can either be
positive (upside) or negative (down
side). I know most people would not
agree with me as they would
usuallyassociate risk with negative
outcomes, which is not always the
case. For instance, positive risk is
the probability that actual events
might turn out better than expected,
e.g. sales volumes being higher than
planned.
Positive risk therefore, is always
seen as an opportunity, which the
organization should take advantage
of and maximise its outcomes. On
the other hand, negative (down side)
risk is the probability that something
bad might happen, e.g., fallingill,
road accident, etc.
Suffice to mention here that this is
the commonly held view of risk!
Negative risk therefore is always
seen as a threat that the organisation
should strive to minimise.
Whichever way you look at it,
positive or negative risk can have an
impact on the Bank's strategic
objectives, henceforth they both
need to be managed.
Risk Management Framework is
defined as the totality of the
s t r u c t u r e s , m e t h o d o l o g y,
procedures and definitions that an
organization has chosen to use to
implement its risk management
process. In the case of the Bank the
Framework comprises the risk
management and BCM policies, the
operational risk management and
BCM procedures manuals, risk
appetite (tolerance), the various
business continuity contingency
plans, the disaster recovery site, the
BCM Centre, the Command Centre,
and the risk language commonly
used by staff in the Bank. All the
above therefore, comprise the Bank
of Zambia Risk Management
Framework.
Why Establish a Risk Management
Framework?
There are varied reasons why the
Bank established the Risk
Management Framework. Primarily,
the Framework was established to
provide reasonable assurance to the
Board and other stakeholders.
Secondly, the Framework was
established to ensure that the Bank's
strategic objectives and goals are
met within the context of the
consideration that resources are
allocated and used optimally; Bank
assets are safeguarded; financial
and operational information, as well
as communication is reliable and
disseminated timely; Bank policies,
procedures, and guidelines are in
place to support critical internal
business processes; and Bank's
compliance with the obtaining laws
and regulations is
e n h a n c e d . A d d i t i o n a l l y, t h e
establishment of the Risk
Management Framework could be
seen as a step towards enhancing
good corporate governance
practices within the Bank and the
Zambian financial sector, at
large.
Risk Management
Framework Model
The Bank of Zambia Risk
Management Framework is
designed along the
Enterprise-wide Risk
Management (ERM) model,
which provides reasonable
assurance, not a guarantee, to
senior management and the
Board that the risks faced by
the Bank are managed in a
comprehensive,
consistent and
systematic manner.
The ERM model has
gained wide-spread
acceptance and
usage in the corporate world largely
due to a number of reasons,
including but not limited to increased
transparency and accountability,
flexibility, easy to adopt and
implement, scalability, relevant to all
organisations whether public or
private, for profit or not for profit, to
mention but a few. ERM therefore
increases the likelihood of achieving
the Bank's strategic objectives by
bridging the gap between strategic
objectives implementation and
achievement of strategic targets.
objectives and targets of the Bank.
On the other hand, policy riskis the
risk of the unintended impact of
deficiency in design of monetary and
supervisory policy models and
implementation of policies.
In other words, policy risk is the
uncertainty in policy outcomes that
could be attributable to a number of
risk factors, such as,inadequate
policy design, poor implementation
of policies, inadequate procedures,
lack of qualified and/or skilled
professional staff, inadequate data
and IT systems applications,
imperfect knowledge in an uncertain
world, etc.
Risk Categories
The Bank of Zambia being a central
bank faces a myriad of risks ranging
from operational to reputational
risks. In light of the above, the Bank
has come up with four broad risk
categories to facilitate ease of risk
assessment, monitoring and
reporting.
The fourbroad risk categories are:
Strategic & Policy risks; Operational
risks, including business continuity
management; Financialrisks; and
Project risks. By classification,
project risks are an integral part of
operational risk. However, the Bank
has decided to detach project risks
from the operational risk
management framework to
ensurededicated attention to
management of projects and their
inherent risks considering their
critical role in the attainment of
strategic objectives.
Further, policy risk could be caused
by:
· Conflicting objectives –
monetar y policy vs. foreign
exchange policy. For instance, in
price targeting regimes, raising the
level of interest rates against inflation
attracts foreign capital, hence raising
the stock of money supply, which
may be detrimental to the
achievement of the inflating target.
· Conflicting incentives –
monetar y policy vs. asset
management. Reducing the level of
interest rates has a negative impact
on the Bank's asset revenues in local
currency.
· Inappropriate decision
making structures. This could be as
a result of the Bank's decisionmakers being subjected to a lot of
pressure from both internal and
external stakeholders thus, leading
to the legitimacy of their decisions
being questioned by public opinion.
Policy risk could manifest itself
through a number of ways, including
ineffective monetary policy, financial
· Strategic & Policy Risks
Strategic risks are risks associated
with the formulation and execution
of the strategic plan, departmental
business plans and strategies, as
well as non-achievement of strategic
Table 1. Operational Risk Drivers
No.
Risk Factor
Risk Events (Drivers)
1
People
2
Systems
3
Internal Processes
4
External Shocks
·
Quality of staff
·
Quantity of staff
·
Ethical conduct of staff
·
Integrity
·
Confidentiality
·
Availability
·
Capacity
·
Errors
·
Complexity
·
Policies, Procedures, etc.
·
Internal fraud
·
Capacity
·
External fraud
·
Change in legislation
·
Reliance on third parties
·
Competition
·
Natural disasters(fire, earthquake, flooding, etc.)
·
Man-made disasters (terrorism
, hawking, etc.)
Table 2. Operational Risk Attributes
No.
Characteristic
Description
1
Endogenous
Since every organization is different from another, there are n
o two
institutions that can have similar way s of utilizing their staff (people),
processes, IT infrastructure,as well as interaction with external environment
during the course of conducting their business operations.This implies that
each organisationhas different business culture andhas its own unique way
of utilising its resources. Operational risk therefore, is one such risk that is
specific to an organisation.
2
Heterogeneous Because operational risk has many risk factors, it tends to have a wide
spectrum of risks which are controlled by different mitigants
thus, leading to
difficulties in coming up with a single exposure indicator.
3
Dynamic
Operational risks keep on evolving.
4
Fat-tailed
Operational risk always compriseslarge number of risk events which have
low likelihood (probability) of occurrence but high impact (consequence)
when they occur, e.g. earthquake, or have high frequency but minor impact.
Such events usually result in a lot of uncertainties about the true exposure
facing the organisation
.
5
Pervasive
Usually operational risks have a tendency of cutting across business units.
Fig. 1. The Bank of Zambia Risk Management Process
Communicate and Consult
Establish
Context
Identify
the
risks
Analyze the
risks
Monitor and Review
7
Evaluate
the risks
Treat
the
risks
instability, inadequate consumer
protection and ineffective payment
systems.
The foregoing has highlighted the
fact that both strategic and policy
risks are at the core of the Bank and,
as such, all efforts should be geared
to the success in monetary and
supervisory policies, as they are the
mainstay of the Bank's mission.
In this regard, the Board decision for
Bank staff to enhance their
qualifications and skills sets could
be seen as one step towards
treatment of strategic and policy
risks in the Bank.
· Operational Risk
The Bank for Inter national
Settlements (BIS) defines
Operational Risk as the risk of loss
resulting from inadequate or failed
systems, processes, people and
external shocks. This definition
however, excludes reputation, policy
and strategic risks.
We can deduce from the definition
that operational risk can manifest
itself through various avenues,
including but not limited to the ones
listed in Table 1 below.
Globally, operational risk is known to
have caused significant financial
losses to and/or failure of a number
of big international financial
institutions, e.g. Barings bank.
Compared to other types of risks,
operational risk is unique in the sense
that it contains certain attributes
which cannot be found in other
categories of risks.
Table 2 below highlights the unique
characteristics of operational risk.
The Bank has put in place a myriad of
measures aimed at mitigating
operational risks. For instance, the
Bank has developed elaborate
procedures manuals, guidelines,
policies, etc., to provide guidance to
staff in the conduct of their business
operations.
Additionally, the requirement that
every employee proceeds on annual
leave is an operational risk mitigant
and should be enforced, as it allows
To Be Continued
About Money Laundering
By Patrick Luvota
Introduction:
Banks and other financial institutions
may be unwittingly used as
intermediaries for the transfer or
deposit of funds derived from criminal
activity. Criminals and their associates
use the financial system to make
payments, transfer of funds from one
country to another, to hide the source
and beneficial ownership of money and
provide storage for bank notes through
safe deposit facility.
These activities are commonly referred
to as “money laundering”. Money
laundering schemes range from the use
of cash in the financial system or in
business operations that can either be
legitimate or illegitimate.
Drug trafficking has been one major
source of laundered money, although
there are other illegal activities such as
poaching and car dealings that support
this scourge. drug trafficking is one
among forms of money laundering, as
you are aware of late some of the
Zambian women have been prosecuted
after found in possession of drugs as
they export outside the country.
Over the last years, specific efforts have
been directed towards tackling the
problem of money laundering.
Money laundering is not only a cash
related process but there are some
many forms of transactions that take
place, it could be either acquiring some
property, obtaining loans, or shares
illegally, and as such there is very little
documentation to prove a laundering
transaction. However, over the years
non-cash transactions have been used
for the laundering schemes. This is
done through the use of monetary
instruments, for example purchase of
bankers cheques form a financial
institution can be used to conceal the
source of money and would result into
placement of these funds in the banking
system. It could be either acquiring
some property, obtaining loans or
shares illegally.
Money laundering is usually a
cash related process and as
such there is very little
documentation to prove a
laundering transaction. Also
over the years, non-cash
transactions have been used
for the laundering schemes.
With major efforts to combat
the money laundering process
taking place in most
developed countries, the
problem may now be shifting to
transitional economies.
This is because the pace of policy
implementation and reforms is
faster than the regulatory
framework, a situation that could
result into major loopholes.
What does the term money
laundering mean?
There are different definitions of what
constitutes money laundering.
According to the prohibition and
prevention of money
laundering(ammenment) act no44 of
2010.
The Money Laundering Cap 44 of
2010 defines money laundering as:
(a) Engaging, directly or indirectly,
in a business transaction that
involves property acquired with
proceeds of crime.
(b) R e c e i v i n g , p o s s e s s i n g ,
concealing, disguising,
disposing of or bringing of any
property derived or realised
directly or indirectly from illegal
activity.
(c) The retention or acquisition of
property knowing that the
property is derived or realised
from illegal activity.
However, one essential element
common to all, is that this is a process
that attempts to obscure the source of
money, it is done through complex
money laundering schemes that are
designed to make the proceeds from
criminal activities usable without
being easily linked to the crime.
Money laundering can be split into
various stages and these are as
follows;
The author of the article Mr.
Patrick Luvota is a member of staff
in the Bank Secretariat Division.
Sources: “ How to combat Money
Laundering and Terrorist Financing”
Authors include; Kern
Alexander,R.Barry Johnston, Richard
Parlour and Martin Owen.
Financial Sector Development And
Money Laundering-Nathan. C.DeAssis
Prohibition and Prevention of Money
Laundering Act, of 2001
To Be
Continued
ToMr
BeLuvota
Continued
ZAMBANKER JUNE 2011
THE BOZ WAY
Media Influential in Decisions
Deputy Governor Operations Dr Austin Mwape presenting opening remarks at the 13th Media seminar in Solwezi. (l-r) Head - Public Relations Mr Kanguya Mayondi, Director Regional office
Mr Morris Mulomba and Bank secretary Mr Mathew Chisunka
By Zambanker Reporter
Deputy Governor-Operations,
Dr Austin Mwape has said the
media is important to national
development in that it conveys
important information about
the economy as well as the
business environment and
financial performance of the
c o u n t r y, i n d u s t r i e s ,
institutions, households and
individuals. He says this
information is useful to a wide
range of users in making
business and financial
decisions.
Dr Mwape says that as the
economy grows and the
business environment remains
attractive, the need for
accurate, current information
and news about the domestic
economy and financial
markets, the region and wider
global market becomes ever
more pressing. He says it is
imperative, therefore, that
media reporting is
understandable, relevant,
reliable and comparable. He
says this requires conveying of
economic, business and
financial developments,
including interpretation and
expression of complex figures
and technical jargon into
simpler language for easy
grasping and understanding by
large sections of the
population.
He says it is for this reason that
the Bank of Zambia finds pride
in organising media seminars,
whose objectives are to
interact with the media so as
to:share information on the
role of the Bank of
Zambia;discuss recent
developments in the Zambian
and global economy; and
provide an outlook on future
economic and financial
developments. He explains
that through this interaction,
the Bank seeks to clarify
certain economic and financial
No Teamwork, No Success
Deputy Governor - Administration, Dr Tukiya Kankasa-Mabula discussing HR issues with Assistant Director-Human Resource Development, Mrs Victoria Mupwaya
Assistant Director-Human
Resource Development, Mrs.
Victoria Mupwaya has said
teamwork is extremely
important to the growth and
success of the Bank of Zambia
as it is the contribution of
employees individually, as well
as collectively, that determines
the attainment of the corporate
mission. Speaking during the
Supervisory Programme for
Bank employees at Mwiza
Lodge in Lusaka recently, Mrs.
Mupwaya said teamwork and
unselfishness created the
backbone of successful
organisations.
She said what works in an
organisation in reaching its
goals was not measured at
individual level, but properly
through integrated teamwork.
She said the main reason was
that considering the vastness
and the very nature of the work
that an organisation engages in
was not possible for any one
individual to even think of
taking the entire load upon his
or her own shoulders.
She explained that teamwork
requires many factors to
simultaneously be developed
and these included continuous
commitment to the overall goal
of the organisation, of which an
important factor was
relationship management. She
elaborated that two other
factors to take into
consideration were talent and
perseverance of team
members.
“Most of all, the development
of teamwork requires the
experience of working together
for a considerable period of
time in order to iron out all the
issues between different
employees from different
backgrounds and their
different work ethics.
Concerted coordination
between team members forms
the watchword in the
development of teamwork in an
organisation and therefore the
team coordinator's role
becomes paramount.
An organisation that succeeds
the type of job they do.
'For instance, much as office
assistants (orderlies) are lowly
placed in the structure of the
Bank, they are such an
important lot that if not
properly handled they may leak
confidential information
leading to reputational risk
exposure for the Bank”, he
said.
He said the only way to keep
people productive and content
was to show them that they
were important to the
organisation and to reward
them for doing what they do
well.
“You must always remember
that an employee who feels
valued and important is much
more likely to come to the job
with pride and do the work as
well as humanly possible. If we
want employees to be
productive, we need to dignify
their jobs and help them see
that their performance has a
significant impact on the
success of the organisation,” he
said.
in reaching its targets,
therefore, has to inculcate the
culture of teamwork in its
human resources. Without
teamwork and mutual
understanding between teams
of employees, the
organisational juggernaut can
never grind its wheels like a
well-oiled machine in perfect
symbiosis between the
different subsystems that
comprise it,” she said.
And speaking during the same
programme, Assistant
Director-Risk Management Mr
Evans Luneta said it was
imperative to instill confidence
in all employees in order to
increase loyalty and employee
retention. He said this was
indispensable for the long term
success of the Bank. He said the
first thing for all supervisors to
remember was to take steps to
build trust, confidence, loyalty
and goodwill among all their
subordinates. Mr Luneta also
said there was need for
supervisors to respect their
subordinates irrespective of
8
terminologies and jargon that
are frequently used in
economic or business
reporting.Dr Mwape was
speaking at the official opening
of the 13th Media Seminar
organised by the BOZ in
Solwezi recently.
“I cannot overemphasise the
importance of the media to
national development; you are
the window to the world and
environment around us. Your
reporting conveys important
information about the
economy as well as the
business environment and
financial performance of the
c o u n t r y, i n d u s t r i e s ,
institutions, households and
individuals. This information
is useful to a wide range of
users in making business and
financial decisions. Therefore,
as Journalists, you bear a great
responsibility of keeping us
well informed and must report
factually and accurately,” he
said.
And giving an update on the
Zambian economy and future
outlook, Dr Mwape said the
economic reforms that the
Zambian authorities had been
implementing since 1991 had
started yielding positive
results as evidenced by the
robust economic growth
recorded in the Zambian
economy, especially over the
last ten years. He explained
that real Gross Domestic
Product (GDP) growth
averaged 4.8 percent over the
past ten years. He said
between 2005 and 2010, real
GDP growth averaged 5.4
percent, while in 2010 alone,
real GDP growth was
registered at 7.6 percent,
reflecting a robust and
growing economy, while it is
projected to grow by 6.8
percent in 2011. He said this
growth had been broad-based,
extending beyond the mining
sector to the: agriculture,
forestry and fisheries,
manufacturing, construction,
wholesale and retail trade,
transport, storage and
communications, financial
intermediaries and personal
services sectors. Consistent
with the positive real GDP
growth, per capita GDP has
been increasing from US
$332.2 in 2000, to US $627.5
in 2005 and US $1,232.4 in
2010. This indicates a 270.9
per cent increase over the last
decade.
He explained thatamong the
factors that have contributed
to strong economic growth
recorded in recent years
include privatisation of most
companies and the
achievement of relative
macroeconomic stability that
have led to increased capital
flows in the form of foreign
direct investment (FDI) and
portfolio investment into the
country. FDI inflows have
amounted to US $7.5 billion
between 2000 and 2010, with
the mining sector accounting
for US $4.5 billion or 60 per
cent of the FDI whilst
investments into
manufacturing accounted for
US $1.3 billion or 17.3 per cent
over the same period.
He said Zambia's external
sector had also registered
significant improvements over
the last ten years, with the
Balance of payments (BoP)
position having improved from
overall deficit balances
between 2001 and 2005 to
overall surplus balances
between 2006 and 2010. The
overall balance of payments
improved from a deficit of US
$383.4 million in 2001 to a
surplus of US $821.6 million in
2006 and US $83.3 million in
2010. He said the favourable
outturn was largely attributed
to improvements in the current
and capital accounts,
particularly the debt relief of
2006 following the country's
attainment of the Highly
Indebted Poor Countries
Initiative (HIPC) completion
point.
“The current account surplus
widened to US $614.7 million
in 2010 from the US $ 142.8
million recorded in 2006,
largely due to the significant
improvement in the balance on
goods surplus, which more
than doubled to US $2,703.7
million in 2010 from US
$1,307.0 million in 2006. This
improvement was on account
of higher increase in export
earnings relative to import
bills. Total merchandise export
earnings grew by 85.4 percent
to US $7,261.7 million in 2010
from US $3,890.7 million in
2006, explained by an increase
in both metal and nontraditional earnings. Metal
exports rose by 89.1 percent to
US $6,071.7 million in 2010
from US $3,175.4 million
recorded in 2006. Similarly,
non-traditional export (NTEs)
earnings grew by 68.9 percent
to US $1,190.0 million in 2010
compared to US $715.3 million
in 2006. Consistent with this,
the country experienced an
increase in gross international
reserves equivalent to 4.0
months of import cover in 2010
from 2.2 months in 2006,” he
said.
Dr Mwape further explained
that to ensure sustainable
economic growth, the Bank of
Zambia had been pursuing
appropriate monetary policy,
supported by prudent fiscal
policy. To this effect, inflation
had declined from the double
digits of the early 2000s to
single digit levels recorded in
recent years. He elaborated
that the annual rate of inflation
declined from 35.6 percent in
December 2000 to 15.9
percent in 2005, and 7.9
percent in December 2010.
Although it rose to 8.9 percent
in May 2011, the Bank of
Zambia is committed to
reducing inflation toward the 7
percent end-year target set for
2011.
He added thatowing to relative
stability in the exchange rate
and the decline in the rate of
inflation, interest rates have
generally declined. He
however said the rate at which
commercial bank lending rates
had come down had not been as
significant as the fall in
inflation and yield rates on
Government securities.
Nonetheless, the commercial
banks' average lending interest
rate declined to 26.2 percent in
March 2011 from 54.5 percent
in December 2001. He said
with lower inflation, stable
exchange rate and a generally
stable macroeconomic
environment, the expectation
was that commercial banks
should do more to lower the
lending interest rates. He
added that it was hoped that
with the further deepening of
the Zambian financial markets,
banks will diversify their
income sources to enable them
reduce their overdependence
on interest income which
accounts for almost 60 per cent
of commercial banks' total
income. He said it was the
expectation of the BoZ that this
development would
complement current efforts to
see interest rates come down.
ZAMBANKER JUNE 2011
THE BOZ WAY
Zambia's Prospects Upbeat
Deputy Governor-Operations
D r Au s t i n M w a p e h a s
described the medium to longterm economic growth
prospects for Zambia as bright
Dr Mwape further says the
c o u n t r y i s ex p e c t e d t o
continue attracting foreign
direct investment inflows as it
grows. Speaking during the
media seminar in Solwezi
recently, Dr Mwape said the
financial sector in Zambia had
been growing and continues to
develop. He said on aggregate,
the banking sector, which
accounts for more than 80 per
cent of the financial sector's
total assets, remained
adequately capitalised, while
the asset quality, earnings
performance and liquidity
position remain satisfactory.
He explained that between
2001 and 2010, the number of
commercial banks increased to
18 from 11 while the number
of branches rose to 266 in 2010
from 158 in 2003. As regards
the size of the banking sector,
the total assets rose from
K3,459.8 billion in 2001 to
K23,038 billion in 2010,
representing a 20.9 percent
increase over the decade.
Similarly, the deposit liabilities
of commercial banks which
have been the main source of
funding grew by 21.8 percent
to K17,244.0 billion from
K2,404.9 billion over the same
period.
In addition, the financial
performance and condition of
the non-bank financial
institutions (NBFIs) continued
to be rated fair; whilst leasing
finance companies,
microfinance institutions and
bureaux de change have had
adequate regulatory capital,
fair asset quality and liquidity
position.
“The sector has also been
growing rapidly. In this regard,
I wish to note that the number
of leasing finance companies
increased to 11 from 5;
building societies to 3 from
just one in 2001; whilst
microfinance institutions rose
to 24 in 2010 from one in 2001.
Further, the number of Bureau
de Change has increased to 44
from 35 over the same period,”
he said.
The deputy governor said
apart from the growing
number of financial
institutions, a number of
innovations and product
development in the banking
system have been recorded.
These include a modern and
advanced electronic payment
and clearing system as well as
various financial products
which include different types
of accounts, loans, financial
services and payment
methods, including ATMs
whose number increased from
133 in 2006 to 489 in 2010.
Further, a number of mobile
phone and internet banking
ser vices are also being
introduced.
He said these developments
have not only increased
competitiveness in the
financial sector, but also
improved financial access and
inclusion across the country.
Dr Mwapealso said the Bank of
Zambia as financial sector
licensing authority continues
to receive numerous
applications from institutions
seeking to establish
themselves in the financial
sector.
Dr Mwape also said the Bank of
Zambia has been refining its
monetary and supervisory
tools and is currently assessing
the possibility of shifting the
Monetary Policy Framework
from strict use of money
supply to short-term interest
rates to better anchor inflation
expectations. To this effect, the
Bank of Zambia introduced an
overnight lending facility in
2009 to assist commercial
banks manage their liquidity
more efficiently. A framework
to facilitate secondary market
trading of Government
securities and other debt
instruments has also been
formulated.
And giving a vote of thanks on
behalf of the Journalists after
the seminar, Mr Chris Mfula of
Reuters News Agency called
on reporters to use the
information leant from the
seminar to enhance their
reporting. He also commended
the BOZ for its efforts in
ensuring that various
s t a ke h o l d e r s w e r e w e l l
informed about its operations.
Meanwhile guest speaker Dr
Isaac Phiri, a lecturer of Mass
Communication at the
University of Zambia says
reporters need to know and
understand that local as well
as international occurrences'
had an effect on the economic
performance of the local
economy and that they should
interpret these in their report.
“You should be honest in your
reporting because your work
would impact decision making
both positively and negatively.
Uphold truth telling, truth
discovery and protect sources.
You should also be ethical to
improve society and to make
Zambia a better place to live
in,” he said. He further urged
the media to conduct adequate
and unbiased research in their
reporting.
Members of the press and BoZ staff who attended the 13th BoZ media seminar in Solwezi
BoZ Awards Deserving Employees
certain of their employment
and have freedom to express
themselves through social
dialogue in solidarity without
fear of having their contracts or
temporary employment not
renewed.
The union chairperson
emphasised that there can be
no meaningful job security,
equity and human dignity at a
workplace where employees
do not enjoy social dialogue
and social protection that
underpins workers' rights.
“I know that many of us are still
pondering the question, what
is secure employment? Secure
employment sums up the
aspiration of the employees of
having decent work that
provides a living wage,
freedom of expression through
social dialogue and adequate
social protection that has
additional benefits beyond
employment, such as health
care, training and pension
scheme in their working lives,”
he said.
Mr Chiwowa also called for
equity at the place of work
where all persons are the same
and enjoy the same conditions
of service as well as having the
same access to Bank facilities,
and most importantly where
they have a say over their
conditions of service through
ZUFIAW-Bank of Zambia (BoZ)
Lusaka branch chairperson
Luka Chiwowa has reiterated
the Union's call for BoZ
management to do away with
policies that create job
insecurity and lack of social
protection, which in his view
leads to the lack of social
dialogue and which in turn
denotes lack of freedom and
human dignity or self-esteem
in workers.
Meanwhile, BoZ Governor, Dr.
Caleb Fundanga has
commended ZUFIAW-Bank of
Zambia union for its effort in
sustaining a cordial
relationship with management
as well as a peaceful working
environment.
Mr. Chiwowa said ever y
employer would like to secure
continued high productivity
and high quality output.
“Policies that support indecent
work cultures like contractual
employment, secondment,
temporary or casual
employment and up-scaling of
job qualifications without
enhancing the job itself
demoralise employees,
thereby leading to low
productivity,” he said.
The union chief added that
secure productivity can only be
achieved where workers were
social dialogue in solidarity.
“There can be no equity in
employment where you find
employees of the same job
grade being subjected to
different conditions of service.
There can be no equity where
one cadre of employees have
social protection whilst the
other is not protected. Equity
in employment means having
decent work for all with a view
of promoting opportunities and
benefits to all without
discrimination,” he added.
Mr. Chiwowa extolled BoZ
management for the efforts
that the Bank is making
t h r o u g h t h e Vo l u n t a r y
HIV/AIDS Scheme in
mitigating the deadly
HIV/AIDS disease.
“Regrettably, the HIV & AIDS
scourge, even with this
scheme in place, has not
spared the Bank employees.
Further, I would like to
acknowledge the efforts the
Bank is making through
Human Resources department
a n d Pe e r E d u c a t o r s i n
organising HIV/AIDS and
Substance abuse Awareness
programs to our dependants,”
he said.
Mr. Chiwowa urged all the
employees to seriously get
involved in the programs that
the Bank arranges through the
Peer Educators and abstain
from activities that put them
at risk of contracting the HIV
Virus.
He further encouraged those
who have not yet joined the
scheme to do so without much
delay.
Mr. Chiwowa said this during
this year's BoZ Labour Day
and award giving celebration
held at the BoZ recreation
club.
And BoZ Governor Dr. Caleb
Fundanga has called for
continued peace and unity
between the union and
management, including all
the employees.
Dr. Fundanga, who was guest
of honour at this year's Labour
Day celebration, said BoZ
management recognises the
importance of freedom, equity
and dignity in the workplace.
“We all need to create a
working environment that
allows better dialogue
between management and
unionised workers, we need
an environment that
promotes productivity and
encourages peace and
prosperity in the workplace,”
he said.
The Governor said BoZ will
always support social
To Page 11
BOZ Proposes Act Amendment
From Page 4
the development of a model law began
with a study titled “Legal and
Operational Frameworks of SADC
Central Banks: A Comparative Study,
2002” whose objective was to
summarise the legal and operational
structures of all central banks in SADC;
analyse the differences in these
structures and determine, where
possible, the reasons for the diverse
situation; and to propose steps and
avenues to reach more comparability
and concurrence among the central
banks in the region.
He said it was observed that most
central bank laws did not address the
pertinent issues relating to modern
central banking and, in particular, the
trend towards central bank
independence. Moreover, most of
the current SADC central bank
legislation provided for multiple
objectives for the central banks, the
consequence of which was lack of
clarity in relation to the powers and
functions of the central bank.
He explained that the decision by the
CCBG to formulate model legislation
on central banking was taken in
response to the need to drive the SADC
agenda forward and also due to the fact
that in a number of countries, in the
region, the existing legislation
governing central banking was
inadequate and outdated.
The
preferred approach was for the various
central banking legislation in the
region to be revised and replaced by
modern legislation that would contain
principles expressed in the SADC
Central Bank Model Law.
Union Chief Mr Luka Chiwowa giving a speech at the 2011 Labour Day celebrations. With him are (l-r) Deputy Governor Administration Dr Tukiya Kankasa-Mabula, Governor Dr Caleb Fundanga
and Deputy Governor – Operations Dr Austin Mwape
9
ZAMBANKER JUNE 2011
FEATURE
Dr Chola Milambo talks about his studies
Dr Milambo (second from r) with friends and family on his graduation day
By Kafusha Kapema
Born in a family of eight, seven boys
and one girl, Dr. Chola Milambo is an
economist by profession. He studied at
the University of Zambia where he
attained his Bachelors' Degree (BA) in
economics and later went to the
University of Nairobi and attained his
Masters (MA) in 2001, under the
A f r i c a n E c o n o m i c Re s e a rc h
Consortium (AERC).
Dr Chola Milambo is married to
Chisha 'Saved' by Artificial Discs
Financial Markets' Kennedy Chisha
would probably have been paralysed
and confined to a wheelchair had it
not been for two operations he
underwent in India recently following
some prolonged discomfort that he
was experiencing in his
back.
From August 13, 2010 to the time of
his first operation on 1 January 2011,
Mr Chisha had been experiencing
great pain and untold discomfort due
to 'degenerated discs' in his spine
which could not be treated locally, as
it turned out.
After an MRI scan, X-ray and other
tests, the recommendation was that
he undergoes treatment that required
to be done under ''microscopic view''
and as delicate as the spine is, this
had to be done abroad.
Zambanker staffer, Marvin Ilunga
caught up with a fully recovered and
smiling Mr Chisha to answer some
questions and shed more light about
the illness:
Q: When and how did you learn
about your illness?
A: I fell ill last year in May, 2010 after
experiencing prolonged discomfort
in my lower back for at least three
months. The pain was excruciating,
especially when I tried to sit down. I
suspected it was due to the pressure I
was putting on my spine because I
was busy with school chores,
besides work. The pain intensified and I
was unable to report to the office
occasionally and I eventually stopped
attending evening classes at Zambia
Centre for Accountancy Studies
(ZCAS) as well.
On August 13 2010, to be precise, I
attended a family wedding, though very
reluctantly largely due to the pain. I
thought I could be there for a short time
as the wedding was for a very close
relation. Everything was going on well,
particularly that my wife, Chikondi, and
I were special guests at the family
table. There was, therefore, little to do
at the reception but tackle the
sumptuous food and drinks. However,
little did I know that those were my 'last
moments' of enjoying Gods unmerited
favour of walking on my two legs. When
the master of ceremonies announced
to the guests that it was time to open
the floor and for the guest to join in the
dance with the newlyweds, I took to my
feet in an attempt to display my
dancing techniques. However, before I
could unleash the dance, my legs grew
cold and I could not move. Chikondi
came to my rescue and with her help I
was led to the car. We immediately
drove back home. The condition
became worse that evening and in the
weeks that followed I could no longer
walk and was confined to the bed.
Q: How many doctors or hospitals did
you visit in Zambia to have a definite
diagnosis of your illness?
A: I was examined by several doctors at
different hospitals. Eventually, I was
examined by Dr Goma at the Bank of
Zambia clinic, who then later referred
me to the Italian hospital to have my
spine examined by Professor Mulla.
His findings were that I had a slipped
disc, which according to his advice,
would return into position with some
physiotherapy. We tried this for three
weeks but to no avail. I was then
referred to the University Teaching
Hospital (UTH) through the help of Mr
Eddie Chekwe and Mr Mutumba
Mubiana of Human Resource
Department who were very proficient in
arranging for a spinal scanning, X-ray
and MRI investigations through Dr
Mikhail. The results were unsettling. I
learnt that a couple of discs had
degenerated and could not be 'treated'
and required to be replaced. Long story
cut short, the operation was not to take
place locally because the operation
was of a delicate nature as it involved
the spine. We learnt that the operation
needed to be done under microscopic
view using special equipment which
was unavailable at UTH. The immediate
concern by the doctor was the
imminent paralysis in the lower torso if
the operation was not conducted in
good time and without good
equipment.
Q: What was the identified disease and
what were the dangers if the illness was
not treated?
A resurgent Mr Chisha, already exhibiting signs of recovery after the first operation, captured on his way to New Delhi
for further treatment
A: Apparently the condition was not a
result of a disease, but circumstances I
cannot explain. The doctors I consulted
suggested that the condition I had
would normally be as a result of trauma
on the spine resulting from injury due
to impact on the spine. The interesting
thing though was that I never had such
an accident and so it was difficult to
comprehend. A named doctor was
assigned to counsel my wife and I in
December 2010, when the condition
had now become hopeless. At this time
I could hardly walk and had to be lifted
up each time I needed to move or
answer the call of nature.
The doctor mentioned to my wife that
she had to brace herself and learn to
accept that I would probably never walk
again. This was quite difficult to take,
but we had to learn to look beyond the
words of the doctor and tap on the
everlasting hope and assurance from
God's holy word which clearly states
that 'Jesus was wounded for our
transgressions and chastised for our
iniquities and by his wounds we were
healed'. Anchored firmly on his word,
knowing with unwavering certainty that
his promises are 'Yes and Amen' we
decide to believe and not give in to fear,
knowing that God had a way out of the
trial for me either by supernatural
healing or through the wisdom he has
placed in our doctors.
To Be Continued
Mr Chisha at the airport on his way to New Delhi for his
2nd operation
10
Cecilia Milambo and they have three
children together, two girls and one
boy.
The Zambanker caught up with Dr.
Milambo recently, as he has just
returned from attaining his PhD in
Washington DC and spoke to him
about his journey, both academic and
otherwise.
Dr. Milambo said thatjoined the Bank
in the year 2002in the Financial
Markets Departmentunderthe
Liquidity Forecasting Unit. He said
that before that, he was with ZRA for 89 years, and also worked with the
Department of Taxes at the Ministry of
Finance.
Dr Milambo was awarded a Fulbright's
scholarship in 2006 under the US
State Department and as such left to
go and do his PhD studies at Howard
University in Washington DC.
”Attaining a PhD in economics has
been one of my achievements.
Receiving the Bank of Zambia Award
for best student in econometrics in
1997, when I was at the University of
Zambia (UNZA) is yet another of my
achievements.”
Dr. Milambo said that his academic
stay abroad had given him a lot of
experience and that he was nowable to
look at things in a different light.
“My experience duringmy studies
abroad was great because I learnt a lot
from people and also through
interactions with other universities.
The Fulbrightscholarship was another
great experience and it is something I
would recommend to someone
serious with advancing their
academics.”
“While pursuing my studies I also got
a chance to understand the
contemporary global issues since I
had could easily go to the IMF
headquarters to listen to staff present
their research papers. This helped me
in my own academic research.”
The title of his dissertation was,
'Financial Dollarization and
Institutional Quality in Sub-Saharan
Africa.' His focus on this dissertation
was on why foreign currencies have
being continued to be held by the
public in many Africancountries even
after the decline in inflation.
“Why would one rather hold a US
dollar instead of one's own local
currency?Why is dollarization different
among countries?” These are some of
the questions that Dr. Milambo asked
himself when doing his dissertation
research.
“I decided that I should do this
research because no one had ever
looked at the question seriously and
because I thought it would be a good
addition to the body of knowledge.
Instead, you find many studies on
Latin America. For instance, Peru,
which is a highly dollarized country,
understood its situation and was able
to change its monetary regime to
inflation-targeting.There are different
types of dollarization, where people
make payment, quote pricesor deposit
in a foreign currency. Dr. Milambo's
main focus was, however, on deposits.
Dollarization has its pros and cons.On
the one hand, it deepens the financial
sector by allowing dollars that would
have been held outside the country to
instead be held internally.. It however,
can undermine monetary policy
because most actions by a Central
Bank are undertaken in local currency,
for instance the Zambian Kwacha. In
effect, the larger the share of the dollar
deposits, the smaller will be the
influence in the money supply. An
example is Zimbabwe in the subSaharan Africa, which is highly
dollarized and cannot conduct
independent monetary policies. This
can lead to loss of monetary
sovereignty in certain countries.
Another example outside the region is
Cambodia, which dollarized when the
United Nations run the affairs of the
country after the exit of the Khmer
Rouge.
Mostly the public is forwarding-
looking when it comes to inflation, and
so the concern of the public revolves
around the store-of-value function of
money.Dr. Milambo adds that findings
of his study are that the public's
decision to holdforeign or local
currency depends on the strength of a
country's institutions. The outcome of
this decision is in effect the public's
confidence in the ability of fiscal and
monetary authorities in preservingthe
value of the local currency.
Dr. Milambo further said that he
underwent a lot of challenges during
his stay abroad. The time hewasthere
was the period when the global
financial crisis had hit and the cost of
living in Washington DC proved to be
very high. He said that he had to make
many adjustments in order to stay
there.
In 2008 after his two-year Fulbright's
scholarship ended, he was selected to
teach at the University in the
Department of Economics, taking up
two classes, Macroeconomics and
Statistics. He added that he had to
work to help cover for fees and
costs.Balancing his roles was a
challenge as well because he had to
teach, write his dissertation and also
meet family duties.
Dr. Milambo said that the teaching
however, refreshed his basics in both
the fields of economics and statistics,
an experience he describes as
professional.He, however, reiterates
that hard work and prayer are some of
the key learning points that were reenforced in him..
Following the completion of his PhD,
he wishes to first settle down and
understand the new environment. This
is because the Zambia he left is not still
the same, and that there are a lot of
changes, included a change in
people's mind sets. He adds that he
has found a stronger sense of
entrepreneurship.
Dr. Milambo further wants to change
the culture of research not only in the
Bank,but also in the arena of the
nation's public policy. He stated that
he wants to contribute to what he calls
“the Industry of Ideas.”
He added that he wants to be
instrumental in placing our country,
Zambia, on the map either through his
own effor ts or indirectly as
heencourages others to enhance their
studies.
“I believe the exit out ofto poverty is
through education. If several people
are educated, the general standard of
living improves since education is a
public good that has a positive spillout effect. I would also like to see a rise
in the country's stock of PhDs,
especially in the field of economics.
As of now I can say that there are only
no more than 40 people with PhDs in
economics, including those who are
still undertaking their studies. This is a
tiny percentage given a total
population of over Thirteen Million
people”, he said.
He added that “My wife Cecilia has
been very supportive of my plans. My
studies disrupted her professional
career and studies here at UNZA in
2006. She is a banker by profession
and a customer service specialistand
she worked at Bank of America and
Chevy Chase Bank. She took time to
study and got a bachelors degree from
the University of the District of
Colombia. She is now doing her MBA
at the University of Phoenix”.
Dr. Milambo said that he had
considerations of writing a book, either
a collective one or an autobiography.
He added that lately, he has had had no
time for leisure, but he is of the view
that he would start playing some pool.
In conclusion, Dr. Milambo said that
he would like to let everyone know that
it is never too late to go for studies. He
further said that studies are not the only
way to enhance knowledge – the
bottom line is to always read. He
implored each and every one to
continue buildinga keen interest in
advancing one's knowledge.
ZAMBANKER JUNE 2011
FEATURE/FAQ
Regulation and Supervision of
Banks
1. Is there a way Bank of Zambia
can regulate minimum
operating balances on bank
accounts in view of the low
levels of income in the
economy? Why are bank
minimum balances so high?
· Determining minimum balances
by banks is purely a business
decision based mainly on the
bank's business strategy and the
cost of maintaining the account.
In a liberalized market the Bank of
Zambia cannot compel banks to
maintain prescribed minimum
balances as this decision is
driven by the banks cost
str ucture. Maintenance of
minimum balances is one pricing
mechanism banks use to ensure
that a certain level of deposits is
maintained so as to meet its
operating costs.
· As regards rural Zambia for
example, due to the sparse
population and low income
levels, the characteristics of
banks and particularly their cost
structures, means that it is most
unlikely that they will be able to
provide the level of services
required in rural areas. The key
issue in this context is that
problems of achieving adequate
economies of scale in low
population density areas mean
that commercial banks are
unlikely to open up substantial
numbers of branches quickly in
the rural areas. The level of
minimum balances therefore is a
critical factor in determining
economies of scale and the cost
of banking services.
· Although there has generally
been an outcry over high
minimum balances in Zambian
banks, a decline has been
noticed in the recent past as
most banks are now providing a
wide range of accounts some of
which require very low minimum
balances.
'shop around' for cheaper
services. Although this
continues to be a useful tool for
comparing charges across
banks, the intended effect has
not been fully achieved and the
Bank of Zambia has continued to
receive complaints from
customers indicating that the
issue of fairness in fixing bank
charges still needed to be
examined and that the regulatory
framework obtaining could be
inadequate.
4. How are banks supervised?
· The Bank of Zambia has authority
to license banks wishing to
operate in Zambia and like other
supervisory authorities are
doing, has adopted a Risk Based
approach. Risk Based
Supervision enables supervisors
to identify activities of greater
risk to the soundness of the
banks and accordingly deploys
supervisory resources towards
the assessment of how these
risks are being managed by
banks.
Further, banks are
required to comply with the
provisions of the banking and
Financial services Act,
all
guidelines, directives and any
other regulation issued by the
Bank of Zambia.
2. The general bank charges and
interest rates on bank loans are
too high in Zambia. Shouldn't
the Bank of Zambia prescribe
the maximum bank charges
and lending rates in order to
make banking affordable for the
ordinary Zambians?
· The determination of bank
charges and the interest rates is
purely a business decision
mainly based on the bank's cost
structure and the associated
risks. However, in as far as the
interest rates are concerned the
Banking and Financial Services
Act (Cost of Borrowing
Regulations, SI No. 179 of 1995)
prescribes the general formula
for determining the annual rate of
interest. Further, banks are
required to disclose to the
borrower the cost of borrowing
at or before the time at which the
loan is made.
· The Bank of Zambia in 2004,
took an initiative to publish, on a
comparative basis, all charges
levied by banks in the national
press in order to address the
problem of high bank charges.
The publication is done on a
quarterly basis and it was
expected that this would assist
bank customers compare
charges across the industry and
thus give them an opportunity to
5. How is Bank Supervision
Department organised?
· The Bank of Zambia supervises
banks through the Bank
Supervision Department. The
department is organized through
three divisions namely;
o Bank Inspections
On-site inspections have two
primary objectives:
· To allow the supervisor to
understand better the business
and risks of an individual bank,
its risk profile and how qualified
its management and staff are;
and
· To obtain the assurance that the
regulatory framework is being
implemented correctly and that
banks are managed and
organised in a proper and sound
w a y, i n c l u d i n g t h e r i s k
management framework.
o Regulatory Policy Licensing
and Liquidations
Assesses the license applications
from banks, develops
regulations and approves
requests from banks such as
appointment of chief executive
officers. It also conducts
research on banking best
practice and undertakes special
projects. It is also responsible for
restructuring and managing
liquidations of failed banks.
o Financial Analysis
3. What is bank supervision?
· Bank Supervision refers to the
oversight function that
supervisory authorities carry out
in order to fulfil their objectives of
ensuring confidence in the
financial system and maintaining
financial system stability. In
executing this function,
supervisors use a combination
of on-site, off-site and other
supervisory tools in order to
understand the nature of the
business undertaken by banks
and to ensure to the extent
possible that the risks incurred
by banks are being adequately
Mr Kanguya Mayondi, Head of Public Relations
managed.
Views expressed in this publication are not necessarily
those of the Bank of Zambia Management or the Editor
Head Office
Bank of Zambia,
Bank Square, Cairo Road
P. O. Box 30080
Lusaka 10101, Zambia
Tel: + 260 1 228888/228903-20,
Fax: + 260 1 221764/237070
Telex: Za41560, E-mail:[email protected],
Website: www.boz.zm
Frequently Asked Questions
Regional Office
Bank of Zambia,
Buteko Avenue,
P. O. Box 71511
Ndola, Zambia
Tel: +260 2 611633-52,
Fax: + 260 2 614251
Telex: Za30100, E-mail:[email protected],
Website: www.boz.zm
Produced and Published by the Public Relations Division,
Bank of Zambia
The off-site supervision process
starts with the collection of
mostly quantitative information
that can provide the supervisor
with information about the past
and current financial condition
and performance of the bank.
Off-site supervision has three
main objectives:
· To monitor the development and
levels of risk at individual banks
and in a benchmarking exercise,
compare the bank with a peer
group of comparable
institutions;
· To m o n i t o r t h e b a n k ' s
compliance with prescribed l
limits; and
· To provide input for the
prioritisation of the supervisory
resources and for planning of
inspections.
6. Why doesn't Bank of Zambia
take action against
management / directors
involved in criminal activities?
· The Banking and Financial
Services Act does not allow
persons who are deemed not to
be fit and proper to hold shares in
a bank and to be directors and/or
managers of the banks. When a
S h a r e h o l d e r, D i r e c t o r o r
Manager of a bank engages in
any criminal activities, their
fitness and propriety will be
compromised and hence will
cease to be shareholders and or
Directors.
7. Why is it that the whole
institution is closed in
instances where it is only the
Directors at fault?
· When a Director, Manager or
Officer of the bank acts in a
manner that breaches the law,
threatens the safety and
soundness of the bank or indeed
in a manner that is contrary to his
duties as a director of a bank or
financial institution, the Bank of
Zambia can take action against
that particular Director. However,
where the bank through its officer
acts in a manner that threatens its
solvency or engages in
fraudulent or money laundering
activities, the Bank of Zambia has
the power to not only remove the
Directors but to take possession
of the bank.
To Be Continued
A section of employees who attended the Labour Day celebrations at the BoZ Social Club
BoZ Awards Deserving Employees
From Page 9
dialogue through a number of
activities that have taken place
over the years such as the
operation of the union office in
the Bank.
“The Bank recognises freedom
of association by allowing the
existence of the union and the
protection of the right to
organise meetings during
working hours provided
adequate notice is given to
management so that work
continues, ' he added.
D r. Fu n d a n g a s a i d h i s
management has also
encouraged equity at the
workplace through the
collective bargaining approach
during negotiation.
Dr. Fundanga said that the
Bank has always endeavoured
to improve the welfare of its
employees and this is evident
from the Memorandum of
Understanding (MoU) BoZ
management signed with
commercial banks, to allow
BoZ unionised and nonunionised workers have access
to loans from commercial
banks without any challenges.
The Gover nor said that
management is alive to the fact
that in order to make BoZ
effective, it is important to
reward people properly in that
BoZ is one of the institutions
with the largest concentration
of highly trained manpower.
Dr. Fundanga said the Bank has
always engaged the union in
the implementation of
11
important policy matters that
affect staff welfare.
“I believe that in the Bank we
have developed a culture
where every month, every
department holds a meeting.
At these meetings,
departmental heads are
supposed to explain what is
discussed in senior
management meetings, debate
and have an input into what we
discuss in senior management
meetings. This is done in order
to make it possible that every
body can participate in one way
or another in the decision
making process,” he said.
The BoZ Governor said the
Bank runs an HIV/AIDS
voluntary scheme which is
currently supporting over 134
persons made up of members
of staff and their families.
“Most of you will recall that
when we started, there was
no provision for members of
the family and even their
spouses. This was debated
and found to be unrealistic.
How can you treat the
husband and the wife is not
treated? Or you treat the wife
and the husband is not
treated? I think we overcame
that and today we have a
scheme which is all
embracing including the
children,” he said.
Dr. Fundanga thanked all
members of staff for their
contribution towards the
achievement of Zambia's B+
rating.
ZAMBANKER JUNE 2011
PHOTO FOCUS
Director Financial Markets Mr Peter Banda giving an overview of the operationsof Financial Markets to the President when he visited the BoZ
pavilion at the Zambia International Trade Fair
BoZ Governor Dr Caleb Fundanga introducing senior management to President Rupiah Banda when he arrived at the BoZ stand
Part of the members of the Regional Office Managers' circle who travelled to Siavonga on retreat celebrate what seems to be a well deserved catch
ZACCI president Geoffrey Sakulanda and Vice president Dr Francis Ndilila with Governor Fundanga and ZITF chairman Phesto Musonda during a
Symposium at Mukuba Hotel in Ndola
Part of the interior design of the BoZ pavilion at the Zambia International Trade Fair
Governor Fundanga congratulates Jacob Lushinga, a Long Serving Award recipient at the Labour Day Awards Ceremony in Lusaka. Behind Mr
Lushinga is Dr Noah Mutoti, another of this year’s recipient
Director Financial Markets, Mr Peter Banda, Director PMS David Nkata and Director NBFIS Chisha Mwanakatwe captured in a relaxed mood
at the BoZ stand in Ndola
Governor Fundanga and DGO Mwape being briefed on progress by officials from the construction company responsible for building the
Ndola stadium
12
ZAMBANKER JUNE 2011
PHOTO FOCUS
Delegates who attended a tripartite meeting between BOZ, CRBAL and microfinance institutions in the BOZ auditorium
Reuters Correspondent Mr Chris Mfula giving a vote of thanks at the BoZ Media seminar
BoZ employees who took part in the 2011 labour day march past on May 1, 2011
BoZ members of staff caught in full swing during the World VCT day march past
BoZ employees at the Labour Day celebration at the BoZ Social Club in Lusaka listening to proceedings
Banking, Currency and Payment Systems department Section Officer verification Mrs Misozi Chileshe Mapala at Isoka market during the
currency sensitisation campaign
Regional Director Morris Mulomba talks to Permanent Secretary Davis Sampa while Governor Fundanga and DGO Mwape chat with Permanent
Secretary Chriticles Mwansa in the background at the trade fair
BoZ exhibitors pose for a group photo at the BoZ stand during the ZITF in Ndola
13
ZAMBANKER JUNE 2011
VESS/NEW FACES
Separation from the Bank
List of Banks and Other Financial
Service Providers
Licenced Under The Banking and Financial Services Act, Cap 387 of the Laws of Zambia
A.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Commercial Banks
Names of Banks
Access Bank Zambia Ltd
African Banking Corporation Zambia Ltd
Bank of China Zambia Ltd
Barclays Bank Zambia PLC
Cavmont Bank Zambia Ltd
Citibank Zambia Ltd
Ecobank Zambia Ltd
Finance Bank Zambia Ltd
First Alliance Bank Zambia Ltd
First National Bank Zambia Ltd
Indo-Zambia Bank Ltd
Intermarket Banking Corporation Zambia Ltd
International Commercial Bank of Malaysia
Investrust Bank Zambia Ltd
Stanbic Bank Zambia Ltd
Standard Chartered Bank Zambia PLC
United Bank for Africa Zambia Ltd
Zambia National Commercial Bank Ltd
Head Office Address
Tel No:
P O Box 35273
P O Box 39501, Lusaka
234541, 232991-3
235350
228858-66, 227659- 61
224280/6/7
P O BOX 30037, Lusaka
229025-8
Stand No. 22768 (Formerly FTJ Chiluba Institute) Corner Great East/Thabo Mbeki Roads
221808/ 229733 42
229303-6
P O Box 36187
224653/225080/ 228074/224652
227227-8
238733/5
229285-6
222046/229242-60
Stand No. 22768 (Formerly FTJ Chiluba Institute) Corner Great East/Thabo Mbeki Roads
221355
NON BANK FINANCIAL INSTITUTIONS LICENCED BY BANK OF ZAMBIA
Mr Mhango
Mr. Sikazwe
The Bank of Zambia has lost a total of
seven members of staff who separated
from the Bank in the second quarter of
2011, through retirement, resignation
and Voluntary Early Separation
Scheme (VESS).
Those who left the Bank through VESS
include Mr. Kambole Sikazwe, Mr
Chizaso Mhango, Mrs Getrude
Mulenga and Mr Zomba Ngona, while
Mr Gandson Moyo retired after
attaining the statutory age-limit of 55
years. Mrs. Mwila Mwanza and Mr.
Chalo Njovu separated from the Bank
through resignation.
Mr. Kambole J. Sikazwe, who at the
time of taking VESS was a Data Entry
Officer in the Bank Supervision
department separated from the Bank on
April 14, 2011 after working for slightly
over 22 years. He joined the Bank on
10th April 1989.
In his farewell message Mr. Sikazwe
said his era in the Bank had gone but it
had made him strong. He added that
the path was long but he had walked
with a song. He had fears, tears and
cheers in his era as he traversed the
long road, but one thing he knew was
that God did not require him to be the
best. He just wanted him to do his best
and He (God) would take care of the
rest.
Mr. Chizaso Patson Mhango also left
Mrs Mulenga
th
the Bank on April 14, 2011 after
working for 19.6 years. At the time of
taking VESS, Mr. Mhango was an
Accounts Assistant - Receipts &
Payments in Finance department. He
joined the Bank on 5th December 1991.
Mrs. Getrude Chansa Mulenga, whose
last position was that of Assistant
Librarian, opted to take early retirement
after having worked in the Bank for 16.9
years. She left the Bank on 14th April
2011, having joined on 4th August
1994.
In her farewell message, Mrs. Mulenga
urged staff to continue supporting the
development of the library section.
Mr. Gandson Moyo retired from the
Bank on 6th May 2011 after working for
12.4 years. At the time of his
separation, he was a Senior Economist
in Economics department. He joined
the Bank on 1st February 1999.
On his last working day, MrMoyo sent
an email to all members of staff stating
that it was sad for him to part from such
a great family as the BoZ staff. He said
he will always cherishthe time spent in
the Bank.
Mrs. Mwila Lwele Mwanza bade
farewell to the Bank on 23rd June 2011
after working for slightly over 5 years.
Her last appointment was that of
P ro c u re m e n t O f f i c e r i n t h e
Procurement and Maintenance
Services department. She joined the
Mr Moyo
Mr Ngona
Licenced Under The Banking and Financial Services Act of 1994 (and as amended in 2005)
Bank on 15 May 2006.
Mr. Zomba Ng'ona left the Bank on
VESS on June 24, 2011 after working
for 18.8 years. His last appointment
was that of Assistant Manager –
Training Administration in the Human
Resource department. He joined the
Bank on 21st September 1992.
Mr. Ng'ona also sent a farewell
message to staff on his last day in the
Bank, thanking them for the support
provided during his stay in the Bank. He
said BoZ employees were a source of
hope and that they made him look
forward to every new day. He further
urged them to continue working hard to
ensure that the Bank remained a better
place. Mr. Ng'ona further thanked
management for the exposure
accorded to him during his service in
the Bank and also for allowing him to
proceed on VESS. He also expressed
appreciation to his colleagues in the
Human Resource department for the
unconditional support provided to him
and his family even in the worst of
times.
Mr. Chalo Moses Njovu resigned from
the Bank on 30th June 2011 after
working for 5.3 years. At the time of his
resignation, he was a Systems Operator
in the Payment Systems Division –
Banking, Currency and Payment
Systems department. He joined the
Bank on 3rd April 2006.
Mrs. Mwanza
Mr. Njovu
New Faces
In its continued effort to steer the
Bank towards excellence, the Bank
has added five new employees to its
establishment since the publication
of the last Zambanker. The
beneficiary departments are Non
Bank Financial Institutions
Supervision (NBFIS) Information
Communication and Technology
(ICT) and Banking, Currency and
Payment Systems. The new recruits
Mr Zulu
joined the Bank on a three-year
renewable contract.
Mr Lackson Zulu joined the Non Bank
Financial Institutions Supervision
Department as an Inspector –
Regulatory Policy on April 1, 2011 after
working for the Copperbelt University
as a lecturer. He had also worked for
Lusaka Business and Technical College
(LBTC) as Manager - Finance and
Administration. He is an affiliate
member of the Association of
Mr Mwenya
Mr Siyengo
Chartered Certified Accountants
(ACCA). Mr Zulu also has a Bachelor
of Accountancy degree from the
Copperbelt University as well as a
Masters degree in International
Finance from Leeds University.
The ICT Department received three
new staff by the names of Mr Albert
Mwenya, Mr Alex Siyengo and Mr
Giver Paul Sikalinda.
Mr Mwenya joined the Bank on April
To Page 16
Mr Sikalinda
Mr Dumingu
14
A.
1
2
3
4
5
6
7
8
9
10
LEASING COMPANIES
ALS Capital Limited
Afgri Leasing Services Limited
Commercial Leasing (Z) Limited
Executive Financial Services Limited (ExeFin)
Industrial Credit Corporation Limited
IMS Financial Services Limited
Leasing Finance Company (Z) Limited
Alios Finance Zambia Limited
Stechas Financial Services Zambia Limited
Focus Financial Services Limited
POSTAL ADDRESS
P O Box 72543, Ndola
Tel No:
0211-244335
0211-240331
0211-229427
0211-230631/2/3
0211-227474
0211-286562
0212-618844
0211 256592
0211-222736
0211-227951
B.
1
2
3
BUILDING SOCIETIES
Finance Building Society
Pan African Building Society
Zambia National Building Society
0211-239755
0211-220688
0211-229191/4
C.
1
2
3
4
5
6
7
8
9
10
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19
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21
22
23
24
25
26
MICRO FINANCE INSTITUTIONS
Bayport Financial Services Limited
Blue Financial Services Zambia Limited
Bomach Finance Limited
Izwe Loans Zambia Limited
Cetzam Financial Services Limited
Elpe Finance Limited
FINCA Zambia Limited
Letshego Financial Services Limited
Meanwood Finance Corporation Limited
Metropolitan Finance Corporation Limited
Microbankers Trust
Blue Cash Xpress Limited
Faroncredit Limited
Pulse Financial Services Limited
Royal Microfinance of Zambia Limited
Unity Finance Limited
Yakabutala Musa Limited
Genesis Finance Limited
Microcredit Foundation Limited
Prime Circle Microfinance Limited
Kungoma Financial Services Limited
Credit Finance Limited
Wide and Deep Services Limited
Sigma Financial Solutions Limited
Agora Microfinance Zambia Limited
Madison Finance Company Limited
Private Bag E760, Lusaka
P O Box 80836, Kabwe
P O Box RW 51269, Lusaka
P O Box 510637, Chipata
P O Box FW 260, Lusaka
0211-253922
0211-232082
0211-222802
0211-223350
0211-222991
0211-237505
0211-251828
0211-257747
0211-236165/7
0211-281943
0211-290852
0211-234306
0211-233137/8
0211-228455
0211-233084
0211-234368
0211-250372
0216-223833
0211-281694
0 211 235195
0211 233420
0211 252185
0211-257701
0211-231983/5
D.
1
DEVELOPMENT BANKS
Development Bank of Zambia
0211-222821
E.
1
SAVINGS AND CREDIT INSTITUTIONS
National Savings and Credit Bank
0211-226834
F.
1
OTHER FINANCIAL INSTITUTIONS
Credit Reference Bureau Africa Limited
0211-224257
H.
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33
34
35
36
37
38
39
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42
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44
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48
49
50
51
BUREAUX DE CHANGE
APT Bureau de Change Limited
Atics Bureau de Change Limited
A and I Bureau de Change Limited
Becky's Bureau de Change Limited
Bimm Bureau de Change Limited
Bullion Bureau de Change Limited
C & A Bureau de Change Limited
Casha Bureau de Change Limited
CFB Bureau de Change Limited
Challenge Bureau de Change Limited
Choice Bureau de Change Limited
Chuvic Bureau de Change Limited
Citizen Bureau de Change Limited
Dondou Bureau de Change Limited
EL Thomas Bureau de Change Limited
Elite Bureau de Change Limited
Flex Bureau de Change Limited
FS Bureau de Change Limited
Forex King Bureau de Change Limited
FX Africa Bureau de Change Limited
Golden Coin Bureau de Change Limited
Goldfield Bureau de Change Limited
M & T Bureau de Change Limited
Mill Bureau de Change Limited
NyamiNyami Bureau de Change Limited
Northmead Bureau de Change Limited
Roseco Bureau de Change Limited
Runnymede Bureau de Change Limited
Saints Bureau de Change Limited
Sterling Bureau de Change Limited
Stero Bureau de Change Limited
Struts Bureau de Change Limited
Swift Bureau de Change Limited
Unifinance Bureau de Change Limited
Variety Bureau de Change Limited
Walk Tall Bureau de Change Limited
Zampost Bureau de Change Limited
Zanwiche Bureau de Change Limited
Gobena Bureau de Change Limited
RADOX Bureau de Change Limited
Crusade Bureau de Change Limited
Dilt Bureau de Change Limited
Kayagold Bureau de Change Limited
Floodgates Forex Bureau de Change Limited
Presans Bureau de Change Limited
Supernova Bureau de Change Limited
JIT Bureau de Change Limited
A-Plus Bureau de Change Limited
Supreme Bureau de Change Limited
Afritex Bureau de Change Limited
Amachi Bureau de Change Limited
P O Box 60660, L/stone
P O Box 23110, Kitwe
P O Box 60987, Livingstone
P O Box 51086 RW, Lusaka
P O Box 60936, L/stone
Private Bag 383X, Lusaka
P O Box FW 467, Lusaka
P O Box 51260,Lusaka
0211-225637
0211-223443
0211-224350
0211-228217
0211-220647
0211-235196
0211-235543
0211-232922
0211-231107/8
0211-229359
0211-220262
0213-327011
0211-221394
0212-232017
0211-222879
0213-322660
0211-225316
0211-222064
0211-236730
0211-232363
0211-235850
0211-233847
0211-251438
0211-235974
0213-322489
0211-290426
0977-108060
0211-261978
0211-227939
0212-620825
0211-222736
0211-268320
0211-223012
0211-237575
0211-235445
0212-621929
0211-220563
0211-233282
0211-287262
0211-227864
0211 264601
0211-221178
0211-233898
0211-234658
0211-840573
0211-222195
0211-846417
260 966 404714
211- 235759
TBA
TBA
0211-221993
0211-223529
0211-224350
0211-228394
0211-229149
0211-235196
0211-235543
0211-223160
211-231787
0211-229358
0211-220262
0213-322524
0211-230411
0212-232017
0211-222879
0213-322660
0211-231344
0211-223879
0211-236730
0211-232276
0211-235851
0211-233847
0211-251438
0211-235974
0213-322489
0211-290426
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0211-222736
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0211-222788
0211-227342
0211-233481
0212-621929
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0211-227864
0211-264601
0211-221178
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0211-840573
0211-222889
0211-846418
211- 235759
TBA
TBA
ZAMBANKER JUNE 2011
FEATURE/CROSSWORD PUZZLE
Bachelor’s
Degree
Charles Mukuka
Public Administration – UNZA Awaiting Graduation
Luka Chiwowa
LLB – UNZA - Awaiting Graduation
Maxwell Mwape
Public Administration - UNZA
Awaiting Graduation
Mable Sikanyiti
Business Administration – CBU Awaiting Graduation
DOWN
1. River (7)
2. Volume (9)
3. Apprentice (6)
4. Transcend (6)
5. Uproar (3)
6. Charges (5)
10. Fable (4)
11. Sugar Estate (9)
12.
15.
17.
18.
19.
22.
Tidings (4)
Designation, Period (4, 3)
Fish, Insect (3, 3)
Gracious (6)
Ideas (5)
Knock (3)
Bank of Zambia may also give support
to outreach activities or projects based
on scientific knowledge and related to
Bank of Zambia activities, events or
projects that aim to generate citizen
accountability and action with respect
to protection of the environment and
sustainable development.
The Bank of Zambia will not consider
has resolved that requests from the
following categories shall not be
entertained: requests from individuals,
labour organisations or political
organisations or parties or lobby
groups, requests for endorsements,
seminars, or reunions, or any travel
costs associated with such, for any
group or individual, requests from
organisations of uncertain financial
soundness, requests from
organisations for projects that do not
meet the funding – area requirements
of this policy, requests from
Organisations that support a single
individual or a personal project,
requests from schools for capital
projects (e.g. Buildings), requests for
religious causes or religious causes
directed to one faith, requests to assist
traditional ceremonies, requests from
Members of parliament for political
purposes, requests with less than
proper notification, requests from
organisations that discriminate on the
basis of age, sex, race, religion or
disability with employment or
provision of services, requests that are
not consistent with applicable laws
regulations, local customs and Bank of
Zambia policies including this policy.
1
3
2
15
15. Name,
19. Plans
22.
5
4
6
7
8
9
10.
ACROSS
7. Computers (6)
8. Trustworthy (4, 4)
9. Repairs (6)
12. Penniless (5)
13. Adjust (5)
14. Present (5)
16. Consider (5)
19. Delight (6)
20. Connectable (8)
21. Continent (6)
23. Deadlock (9)
3. Novice
6. Costs
Name
Programme
Chola Milambo - PhD in Economics – Howard University
Charity Chikumbi - MBA - Nelson Mandela University
(awaiting graduation ceremony)
Fidelis Chamunda - MBA - Herriot-Watt
Florence Pandala - MBA - Herriot-Watt
Kakosa Matutu - MBA - Herriot-Watt
Kamyalile Chileshe – MA in Library and Information
Studies – UNZA - Awaiting graduation
Mirriam Lupindula - MBA - Herriot-Watt
Morton Miyanda - MBA - Herriot-Watt
Mpooma Hichilema - MBA - Herriot-Watt
Modesta Simutowe - MBA - Herriot-Watt
Zaliwe Nyoni - MBA - Herriot-Watt
campaign, the organisation's annual
budget, the ability to obtain financial
support in the local community and in
the organizations field of endeavour.
Regarding youth activities, the Bank
will support programmes and events
whose primary fund raising focus is
specifically related to improving
opportunities for healthier and better –
educated youth as well as
programmes that directly improve the
quality of life of children in Zambia. In
amateur sports, activities that promote
initiatives, projects and events that
encourage multisport activities,
support organisations and events that
give athletes the opportunity to
participate in qualifying competitions
for national and international
championships will be considered.
Other areas include activities that
promote the practice of sports among
people with physical or intellectual
disabilities in order to improve their
quality of life and sports activities of
business or social interest to the Bank.
Consideration may also be given to
national events such as Olympic
teams and national sporting teams or
national sporting commonwealth
bodies like FAZ, ZBA, ZAVA etc.
Further, recognising that climate
change and pollution are serious
global concerns, Bank of Zambia will
invest in community based
programmes that inspire and educate
citizens to minimise their impact on
the environment and those that protect
and restore critical natural assets
and habitat.
CROSSWORD PUZZLE 26
DOWN
1. Zambezi
2. Magnitude
4. Exceed
5. Din
Myth
11. Nakambala 12. News
Age
17. Eel, Ant 18. Genial
Rap
Programme
PhD
Masters
Degree
institutions locally and abroad,
as stipulated herebelow:
Concerning the Public High Schools
and Colleges, the policy says the Bank
will promote the development of
quality learning environments in the
areas of mathematics, commerce,
banking and literacy necessary for
future success in the work force and in
life. Bank of Zambia may contribute to
fund–raising campaigns, benefit
events or special funding projects for
public high schools or colleges. The
amount of the contribution shall be
based on the number of students
concerned, special services offered
by the institution and covering a large
geographic area, the institution's
importance and influence in its
region.Projectsthat will be given
preference are those designed to
promote business economics among
young people, develop skills in fields
of interest to Bank of Zambia, prevent
students from dropping out and allow
access to schools' sports facilities.
In the area of Community Service, the
Bank will invest in programmes that
increase public understanding of and
engagement in the processes and
issues that affect local
communities.The Bank will support
institutions or organizations which
offer emergency services and
assistance to people in distress,
support people who are ill, andfight
poverty by providing direct-assistance
services. The main criteria for
evaluating requests and determining
the level of Bank of Zambia's
contributions are as follows: holding
of a fund-raising and/or financing
23.
The following employees have
completed studies at various
Governor, Dr Caleb Fundanga handing over a donation to the Cheshire Divine Providence Home in Lusaka's Chawama township
specialty, the institution offers special
services in order to cover a large
geographical area, the institution is
important and influential in its region
or community.
T h e B a n k w i l l p ro m o t e t h e
development of social emotional and
cognitive skills in children that are
needed to succeed in life. The Bank
agrees to contribute to fund certain
aspects of university activities or
disciplines by way of supplementing
the remuneration of resource persons.
The term of the commitment shall
generally not exceed ten (10 years)
and may be reviewed. The Bank shall
sign a detailed agreement with the
institution setting out the terms and
conditions of each component of the
contribution awarded.
Amounts granted shall be determined
and allocated to research chairs in the
fields of interest and relevant to the
Bank and to scholarships for masters
or doctoral studies. Regarding
Research Chairs, any project
proposed by the institution must be
relevant to the Bank with a particular
interest in advancing knowledge and
practice in the field concerned. Once
the project is approved, Bank of
Zambia will sign a detailed agreement
with the institution and the holder of
the chair, allowing the Bank to
participate in the development of
research programmes and the transfer
of knowledge to the Bank.
Agreements should generally be for a
five year term with the possibility of
renewal.
12.
Training Schedule Update
Donations Policy Changed
9. Amends
16.
decisions and, ultimately, its
contribution to a humanitarian or
charitable cause.
Bank of Zambia may support eligible
causes through three means of
contribution, i.e.; charitable
contribution of funds, sponsorships
and in – kind donations. For the
purposes of this Policy: “Charitable
contributions” are donations from
Bank of Zambia to eligible not for profit
organisations or causes,
“Sponsorships” are financial support
from Bank of Zambia for a specific
event, function or programme.
Generally sponsorships are funds paid
to any organisation for which Bank of
Zambia will receive community
relations value.
Sponsorship
opportunities which strengthen or
increase public awareness of Bank of
Zambia will be given priority. “In-kind
Donations” include non-monetary
contributions in the form of
equipment, facilities, technical
resources, employee time and other
resources. This is dependent on the
availability of material resources and
manpower.
Requests for contributions must be
aligned with one or more of the
mentioned focus areas and objectives
and should meet the following
eligibility criteria: the request
responds to or seeks to address issues
of hunger and poverty, priority will be
given to requests from organisations
whose activities foster growth and
development within the local
communities in Zambia, donations
will be made to organisations that are
not for profit, funding areas include:
health, education, community
service, youth activities and
environmental.Exceptions may be
made in case of a special need or
opportunity.
The Bank will promote the economic
well – being and health of the local
communities' most vulnerable
residents. Examples of these could
include the poor, children and youth,
the elderly, the displaced persons and
people with disabilities. Donations in
the field of health will be limited to:
collaborations that coordinate health
care services and economic selfsufficiency,
Community–based programmes that
address disparities in health care and
projects that improve the efficiency of
health and human services systems,
including food, housing and health
care. The Bank may consider
contributing to a fund – raising
campaign or activity if the funds
collected are used to develop the
institution's or organisations centres
of excellence or to support research or
the quality of patient care. The term of
commitment shall generally not
exceed three (3) years. Other factors
to be considered in determining the
Bank's involvement are that the
institution is an important medical
research centre, the institution is
recognised for a unique major
Accross
7. Counts
8. Bona fide
Needy
13. Inure 14. Token
Weigh
19. Please
20. Linkable
21. Africa
Stalement
Consistent with its vision of being a
modern, dynamic, credible and
effective Central Bank, the Bank of
Zambia (the “Bank”) believes that it
can and continues to lend support and
contribute towards the growth and
prosperity of its stakeholders, local
communities and the Zambian public.
This benefit to the Zambian public at
large fosters a sense of pride and
corporate responsibility for the
organisation and employees. The
Bank's community involvement goal is
to further develop and maintain
collaborative external relationships
with the stakeholders and the broader
community at large.
Formerly called the Donations Policy,
the Bank of Zambia has now changed
the name of, and revised the policy it
disburses aid through the Bank of
Zambia Charitable Contributions
Policy. This document provides the
basic guidelines that the Bank will
follow to decide which events,
organisations, programmes and/or
projects create the most successful
partnerships.
According to the Bank of Zambia
Charitable Contributions Policy, Bank
of Zambia understands its role as the
only central bank in Zambia and
believes in supporting and enriching
the environment, the Zambian people
and the communities in which it
operates. Bank of Zambia charitable
giving efforts are aimed at creating a
more humane Bank of Zambia that
cares about the aspirations and
expectations of its stakeholders at
large.
Therefore, Bank of Zambia believes
that the growth of the economy and
progress in economic, social and
environmental aspects of society is
critical to the overall growth and
stability of the Zambian society.
Accordingly, as a corporate citizen,
Bank of Zambia adopts this Charitable
Contributions Policy and commits
itself to contribute to the social and
collective well-being of the Zambian
people by supporting various
humanitarian, community,
educational, environmental, sporting
and health-related activities. Bank of
Zambia's primary focus is events,
organisations, programmes and or
projects related to the focus areas of
involvement.
The charitable efforts will enable the
Bank to demonstrate the Bank's good
corporate citizenship.
The objectives of the revised policy
are: to act as a guide to the Bank's
Community involvement activities, to
provide the Bank with a consistent
response to requests for donations
and to provide clear procedures for
management when responding to
requests for donations. This policy
provides guidance and criteria for
measuring the appropriateness of
solicited and unsolicited charitable
requests and to define the process by
which Bank of Zambia will make its
10
11
12
13
14
16
17
15
18
19
20
21
22
23
ZAMBANKER JUNE 2011
16
SPORTS NEWS
JUNE 2011
BoZ 'Shuts' Access Bank
The Bank of Zambia (BoZ)
Madala's football team came
from a goal behind to exert
authority as regulators of the
financial sector on the football
pitch, as they beat young and
over zealous Access Bank 3 - 1
in a social football match
played at BoZ recreation club.
The nail biting encounter
watched mainly by Access
Bank fans, started with both
teams looking relaxed until
after 20 minutes of play.
Access Bank capitalized on
the lapses of BoZ left back
o v e r l a p p i n g d e f e n d e r,
Wadson Moyo, with a counter
attack from the right wing and
Suipwa Mataa converted
Alex's superb cross into a
goal.
The regulators responded
with a change of system,
dropping Mickey Phiri and
Kedrick Zombe into the
midfield, leaving Jacob Lungu
The BOZ Madala’s football team
Economic Events Right On
From Page1
export market, accounting for
54 per cent of total exports.
Exports to the region rose by
73 per cent to US$3,853
million 2010 from US$2,227
million recorded the previous
year.
This increase was largely
driven by the surge in metal
exports to Switzerland, United
Kingdom, USA and Japan.
The country also recorded a
rise in export of food items to
the United Kingdom.
The increase in metal prices
on the international market as
a result of the recovery of the
world economy from the
impact of the global economic
and financial crisis, explained
this outturn.
Asia accounted for 24 per cent
of the country's exports and
was the second major export
destination, as exports rose by
141.1 per cent to US$1,709
million from US$707 million
recorded in 2009.
This outturn explained by
increased metal exports to
China and the United Arab
Emirate. An increase in export
of food items to China was also
recorded.
The SADC (exclusively)
ranked third, accounting for
10 per cent of Zambia's
exports due to a rise of 61.6
per cent to US$ 726 million
from US$449 Million in 2009.
Increased exports of copper and
articles thereof to South Africa
and food items to Namibia,
explained this outturn. The
SADC and COMESA (dual
members) was relegated from
the third to fourth position as
exports accounted for 8 per cent
to the region despite a growth
of 17. 5 per cent to US$580
million from 493 million in
2009.
Increased exports to Congo DR
(food items, lime and cement
and chemical products),
Zimbabwe (food items, iron and
steel) Malawi (food items) and
Burundi (food items,
manufactured goods and lime
and cement) explained this
outturn.
The EU ranked fifth as exports
to that region rose by 40 per
cent to US$173 million in 2010
from US$123 million 2009. The
increase was driven by a rise in
metal exports to Austria,
Belgium and Luxemburg.
In contrast, exports to COMESA
(exclusively) declined by 21.8
per cent and accounted for one
per cent of Zambia's total
exports following a reduction in
copper exports to Egypt and
manufactured goods to Kenya.
Concerning revenues and
grants, the annual report says
total revenues and grants were
K15,198.4 billion, 4.6 per cent
higher than the programmed
level of K14,533.7 billion. This
outturn was explained by the
higher than programmed
collections of domestic
revenues, especially tax
revenues as grants were below
projection.
As a proportion of GDP, total
revenues and grants at 19.6 per
cent were 0.6 percentage
points higher than the
programmed level of 19 per
cent.
The report further says the
performance of tax revenue
was buoyant in 2010 with total
tax revenue at K13,112.1
billion at 15.2 per cent above
the projected amount of
K11,385.2 billion.
Explaining this performance
was mainly higher than
programmed income taxes and
value added tax (VAT). Income
taxes were K7,326 billion, 27.9
per cent above the programmed
level of K5,730 billion, largely
driven by higher corporate
taxes, especially from mining
companies following the
recovery in the price of copper
on the international market
coupled with payment of tax
arrears by some mines.
At K3,159.5 billion, VAT was
7.5 per cent above the
programmed level of K2,939.7
billion.
This outturn was mainly driven
by higher import VAT following
increased imports as domestic
economic activity heightened.
Import VAT was 8.4 per cent
higher than the target of
K2,439.4 billion.
The developments in tax
revenue showed that income
taxes and taxes on domestic
goods and services continued to
rise in 2010.
Further, international trade tax
recovered in 2010 after falling
in the previous year. As a
proportion of GDP, tax revenues
were 2 percentage points at
16.9 per cent of GDP in 2010
compared to the target of 14.9
per cent.
Similarly, income taxes and
taxes on domestic goods and
services at 9.4 per cent and 2.8
of GDP were 1.9 and 0.3
percentage points higher than
programmed.
Although international trade
taxes and excise duty rose
above the 2009 levels, they
underperformed despite
improved conditions in the
global economic environment.
International trade taxes and
excise duty at K3,679 billion
and K1,376.7 billion were
below their target levels of
K3,717.1 billion and K1,437.9
billion respectively.
You may access the full report
from our website
:www.boz.zm
New Faces
From Page 15
21, 2011 as a Software Engineer.
Before joining the Bank, Mr Mwenya
worked for the University of Zambia
(UNZA) in the department of
Electronic Engineering as a lecturer.
He was also an Assistant Dean Academics in the School of
Engineering. Mr Mwenya has a
Bachelor of Science Degree in
Computer Science from the
Copperbelt University (CBU) as well
as a Master of Science degree in
Telecommunication Engineering from
Leeds University in the United
Kingdom.
Mr Siyengo also joined the ICT team as
a Software Engineer. He joined the
Bank on June 1, 2011 after working for
COMESA Secretariat as a Software
Engineer.
He has a Bachelor of Science Degree in
Engineering and Electronics and a
Master of Science degree in the same
field from St Petersburg Electrotechnical University in Russia.
Mr Sikalinda joined the Bank on July 6,
2011 as Manager - Business
Continuity Management after working
for Zamtel as IT manager – Business
Systems Support.
He had also worked for Zambia
Revenue Authority (ZRA)
as IT
Manager – Database Administration
and Business Continuity. Mr Sikalinda
has a Bachelor of Science degree in
C o m p u t e r S c i e n c e f ro m t h e
Copperbelt University (CBU) and a
Master of Science degree in the same
field from the University of Cape Town
in South Africa.
Banking, Currency and Payment
Systems Department saw the incoming of Mr Jack Dumingu who
joined the department on July 6, 2011
as a Systems Operator.
Mr Dumingu has a higher diploma in
Information systems from IMIS which
was done from National Institute for
Public Administration (NIPA). He also
has a Bachelor of Science degree in
Computing from the Greenwich
University done at ZCAS.
Zambanker wishes the five new
employees success in their new
appointments.
PRODUCED AND PUBLISHED BY THE BANK OF ZAMBIA, PUBLIC RELATIONS DIVISION, GRAPHICS: CHISAMBA EVANS,
and Willard Chulu as the only
attackers.
BoZ stepped up their game
and became more industrious
and well-organized, with
Jacob Lungu and Willard
Chulu presenting a
formidable striking force.
Lungu was on target with 2
minutes to go before the
break when he rounded off a
fine move involving Joseph
Tembo, Ander and Kedrick to
level the score line to 1 all at
halftime.
Early in the second half,
Access Bank displayed some
flare in their style of play
combining impressively with
accurate passes, but could not
find the back of the net owing
to the outstanding and
disciplined BoZ defence
anchored by Lazarous
Siluonde and Willie Phiri.
Kedrick Zombe increased his
goal tally to five in the season,
when he headed a Willard
Chulu free kick to give BoZ a
deserved 2-1 lead.
At the other end, Access Bank
top man Vincent hit the wood
work twice and had a goal
disallowed after the second
assistant referee ruled him to
have been offside.
The visitors had
disappointing moments when
the referee waved play on
after Steve Mwale was alleged
to have handled the ball in the
box in a rather desperate
attempt to clear the ball.
BoZ coach Malunga Siwela
introduced Evaristo
Chinyanta for Zombe as the
latter limped off with a
suspected knee injury 10
minutes to before the end of
regulation time.
Mwale
At this point, victory was
evident for the host team
when they dominated play
freely expressing their power
on the pitch as they showed
the new comes in the financial
sector how 'banking football' is
played.
It was Mickey Phiri who was a
darling to the ever-cheering
BoZ fans when he put the icing
on the cake, driving in the last
nail to 'shut' Access Bank's
efforts to settle for a draw,
with a cracker that sent
Access Bank goal Keeper in
the wrong direction, to give
the hosts a well deserved 3-1
victory.
The satisfaction at their day's
work was evident as BoZ
coach Malunga Siwale
sprinted onto the pitch to
celebrate with his players at
the final whistle.
Sovereign Credit Rating
From Page 1
currency because they retain
the right to print their own
money. The main concern in
this regard is that a nation may
service debt at the expense of
inflation,” he said.
Mr Kalamatila also mentioned
that where a nation borrows in
foreign currency, however,
there is a risk of outright
default since the printing right
cannot be exercised.
He said another principle
objective of a credit rating is to
gauge the sovereign state's
ability and willingness to
generate foreign exchange to
meet external obligations.
He also said the rating is based
on information supplied to the
rating agency by the
authorities and also relies on
other independent sources of
information deemed relevant
and credible by the rating
agency.
Mr Kalamatila said the rating
that has been assigned to
Zambia reflects strong
economic performance as
shown by the GDP growth rate
which average 6 percent from
2004 to 2010.
“This has also been supported
by low rate of inflation and
fiscal deficits, external sector
performance spearheaded by
the mining sector, and
activities in key economic
sectors, including agriculture
and tourism, as well as strong
external balance position after
huge debt relief from
international creditors
obtained in 2005, ” he said.
He went on to say that the
rating puts the Zambian
business community and
Government in a strong
position to access finance
globally at risk-adjusted
interest rates for investment
that is essential for sustained
economic growth and
improved living conditions of
the citizens.
He further said the rating
entails transparency in the
economic management of the
countr y's resources and
provides an opportunity for the
countr y to work on the
weaknesses identified by the
rating agencies.
“For instance, from the rating
report it was noted that Zambia
still faces challenges in the
energy sector and
infrastructure development. It
therefore, follows that once the
country addresses the
identified weaknesses that can
lead to an improved rating” he
said.
Mr Kalamatila, however, said
the rating assigned to Zambia
shows stability and
predictability of Government
policies, and signals
improvements in the business
environment.
He also said with increased
globalization of the world
economy, there is no doubt that
Zambia stands to benefit from
the rating assigned on
condition that the country
adopts appropriate policies
that are supportive to
sustainable economic growth
environment.
Our Vision
To be a modern, dynamic, credible and effective central bank
Bank of Zambia
ZAMBANKER
A Bank of Zambia Journal
JULY 2011
Prevention is
Better than CURE
Agricultural and Commercial Show Society of Zambia: “Shaping tomorrow's World”
Competition Essential
says Fundanga
Bank of Zambia Governor Dr Caleb
Fundanga has said successful financial
innovation must reduce costs and result
in the provision of improved services
and affordable financial resources to
users, particularly in the productive
sector.
Speaking at the Zambia International
Trade Fair symposium entitled
'Innovative financial products on the
Zambian market in relation to credit
interest rates and the private sector
development,' at Mukuba Hotel in
Ndola, the Governor said a low level of
innovation and development in the
financial sector produces a weak impact
of financial intermediation on economic
growth.
The BoZ chief further highlighted that
the right kind of innovation obviously
would help the financial sector fulfill its
core functions and if the financial sector
fulfilled its functions better and at lower
cost, it would almost surely contribute
to growth and societal wellbeing. It is
essential to realise that for the most part,
the financial system is not an end in
itself but a means to an end and the
measure of the success of the financial
system must relate to its success in
accomplishing broader societal
functions.
Dr Fundanga said innovations in the
financial system that help it perform
these tasks better and at lower costs
lead to increased societal well being
and to the extent that the GDP measures
capture these benefits in higher
measured growth.
'Notwithstanding the benefits of
innovation, it is important to note that
the opening up to new activities and
products, particularly the expansion of
the credit portfolio brings in a myriad of
new risks associated with the new
activities,' he added.
Studies have shown that increasing
financial innovation and deepening of
financial markets brings with it
challenges and risks which, if not well
addressed, can threaten the health of the
financial system and may cause havoc
to the stability of a financial system.
On competition in the Zambian financial
sector, the Governor said BoZ
recognises that competition is an
essential element in the effective and
efficient operation of a market economy.
In this regard, the licensing regime
encourages the entry of players that will
foster integrity, innovation and
competition while deepening and
widening the financial sector.
The presence of reputable financial
intermediaries is further expected to
increase competition which, in turn,
would lead to an improvement in the
quality of domestic financial services
and improved efficiency reflected by
lower operating costs and narrower
margins.
The increased efficiency of financial
intermediation would eventually be
translated into higher returns for
domestic savings and greater efficiency
in the pricing of credit and other risks
and in the allocation of credit.
The Governor added that despite the
growth in the number of financial
institutions in Zambia, this development
has not had a very significant impact on
promoting competition as most of the
banks are small in terms of size. A few
banks continue to enjoy an oligopolistic
position and this in a way explains why
some inefficiency remains in the
provision of services.
The banking sector has remained
fragmented with insufficient and
distorted competition, thereby
rendering it rigid in its activities.
Competition is not strong enough to
lead to a convergence of prices which
would ensure that banks have more or
less the same prices for their services
and products, and importantly,
affordable to most people.
The Governor said this could partially
explain why finance service providers
are not revising their interest rates and
charges in tandem with the movements
in key macroeconomic indicators such
as inflation.
While the Bank of Zambia is conscious
to the fact that financial institutions are
in business and are therefore expected
to make profits, there is need to make
financial services affordable in order to
provide an impetus to promote
economic growth and reduce poverty
levels in the country. Low interest rates
reduce the cost of doing business and
encourage investment in key sectors of
the economy.
Dr Fundanga added that while BoZ
acknowledges that there has been
remarkable development in the financial
sector over the past years as evidenced
by the various new products and
innovations, customers are still faced
with serious challenges when it comes
to the high costs of borrowing. The
challenge for the financial sector is,
therefore, to improve on their operations
by engaging in innovative activities that
will reduce their costs of operations and
pass the efficiencies on to borrowers.
'From the foregoing, it is clear that the
challenges of reduction of interest rates
to levels that would facilitate economic
development through an efficient
savings mobilisation and credit
allocation system are numerous.
However, they are not insurmountable.
The solutions are in the hands of all
stakeholders in the financial sector,' he
concluded.
Government and the Bank of Zambia
have implemented initiatives aimed at
lowering the cost of borrowing,
specifically, inflation which has been
reduced, yield rates on Government
securities which are sufficiently low due
to the reduced rate of Government
borrowing and falling inflation rates,
statutory reserve ratios which have been
reduced to low levels and a Credit
Reference Bureau firmly in place to deal
with perceived high default risks. It is
also worth noting that with international
access to funding having improved
tremendously, it only follows that the
sector will respond accordingly.
Governor's Message to Show Goers
Director - Economics Dr Emmanuel Pamu explaining recent economic developments to H.E President Rupiah Banda when he visited the BoZ pavilion at the Zambia
International Trade fair. Looking on is BoZ Governor Dr Caleb Fundanga and Deputy Governor – Operations Dr Austin Mwape
Zimba Counts Victories
D i re c t o r - B a n k S u p e r v i s i o n
Department, Mr. Lameck Zimba has
announced that Zambia has had a sound
financial system with both commercial
banks and Non-Bank Financial
Institutions recording steady growth and
successes between 2001 and 2011.
In a presentation to His Excellence, the
President of the Republic of Zambia, Mr.
Rupiah Bwezani Banda and his
entourage at the Bank of Zambia stand
during the Zambia International Trade
Fair in Ndola, Mr Zimba said that the
banking industry capitalisation had
grown phenomenally by 572 per cent
from K356 billion in 2001 to K2,391
billion at the end of March, 2011. This
translates into an annual average growth
ZAMBANKER JULY 2011
rate of 64 per cent. “Total assets for the
Banking Industry have also grown
significantly by 586- per cent from
K3,460 billion in 2001 to K23,729 billion
as 31 March , 2011recording an annual
average growth rate of 65 per cent.
Additionally, commercial bank total
deposits registered a huge growth of 606
per cent from K2,405 billion in 2001 to
K16,988 billion in March 2011 thereby
resulting in an annual average growth rate
of 67 per cent,” he said.
The phenomenal growth in the banking
industry was attributed to five (5) banks
which entered the industry during the
period under review. The growth was
also as result of the increase in the banks'
operations which was driven by the sound
growth in the economy.
quarrying (3.7per cent); Restaurants and
hotels (1.6per cent); Electricity, gas,
water and energy (1.2 per cent); and
Others (10 per cent).
Commenting on the sectoral distribution
of loans and advances, Mr. Zimba said the
personal loans sector, followed by the
agriculture, forestry, fishing and hunting
sector received the largest share of
industry credit. These were followed by
electricity, gas, water and energy sector,
construction sector, transport, storage
and communication sector, financial
services sector, community, social and
personal services sector and the real
estate sector restaurants and hotels
sector, the manufacturing sector,
wholesale and retail trade sector and the
mining sector.
The total industry loans and advances
portfolio had also grown phenomenally
by 805 per cent from K1,079 billion in
2001 to K9,766 billion at 31st March,
2011 translating into an annual average
growth of 89 per cent .The industry loans
and advances portfolio were evenly
distributed among the following sectors
as follows:
Personal loans (17.6 per cent);
Agriculture, forestry, fishing and hunting
(16.1 per cent); Manufacturing (12.8 per
cent); Wholesale and retail trade (10 per
c e n t ) ; Tr a n s p o r t , s t o r a g e a n d
communication (6.6 per cent);
Community, social and personal services
(6.3 per cent) Construction (5.8 per cent)
Financial services (3.8 per cent); Real
estate (3.8per cent); Mining and
i
Introduction
Zambia has continued to record
remarkable macroeconomic
achievements over the past 10 years.
This is reflected in positive real GDP
growth since the early 2000s, low and
falling inflation, a downward trend in
lending interest rates, favourable
external sector performance as well as
relative stability in the exchange rate of
the Kwacha.These developments can be
attributed to improved monetary and
fiscal policy management and improved
economic management, which in turn
has enhanced investor confidence.
Looking ahead, the prospects of the
economy are very bright, and to this
effect, we should, in line with this year's
Agriculture and Commercial Show
theme 'Shaping tomorrow's future
World,' strive to press higher for greater
heights. Below is an outline of the
macroeconomic gains recorded and a
picture of Zambia's economic
prospects.
Real Gross Domestic Product (GDP)
Following the economic reforms the
Zambian Government has been
implementingsince 1991, robust
economic growth has been recorded
especially over the last ten years. Over
the last five years, real GDP growth
averaged 6.4 percent. In 2010, real GDP
growth rose to 7.6 percent, up from 6.4
percent in 2009, reflecting a robust and
growing economyand it is projected to
grow by 6.8 percent in 2011. This
expansion has been driven by growth in
the mining, agricultural, and
construction sectors.
Performance of the mining sector
increased following higher output
arising from increased capacity
Dr Fundanga
utilisation at various mines and
investments into operations at various
mines. Metal mining was the main driver
of this growth, with copper and cobalt
output growing by 17.4% and 49.4% to
819,159.19 mt and 8,781 mt in 2010,
respectively.
In the agricultural sector, the historic
bumper harvests recorded in the last two
farming seasons contributed highly to
the favourable performance in the
agricultural sector. The agricultural
sector recorded a historical bumper
maize harvest of over 2.8 million metric
tonnes during the 2009/10 season
followed by another 3.0 million metric
tonnes output during the 2010/11
harvest season. This was supported by
favourable weather conditions and the
Farmer Input Support Programme.
Growth in the construction sector was
driven by increased public and
To Page iii
AGRICULTURAL AND COMMERCIAL SHOW SOCIETY OF ZAMBIA
ZCCM-IH to Diversify Portfolio
The agriculture sector presents
enormous opportunities
for diversification
The ZCCM-IH Plc has announced that
it has intentions to seize investment
opportunities in other sectors of the
Zambian economy through
partnership with other investors as a
way of diversifying its portfolio. These
sectors will include, agriculture,
tourism, energy, real estate
development and manufacturing
which are showing signs of significant
growth. The goal of the Zambian
Government for the agricultural sector
in the Sixth National Development
Plan (SNDP) is to increase and
diversify agriculture production and
productivity so as to raise the share of
its contribution to 20 percent of GDP.
Under tourism, the plan is to increase
direct earnings from USD 200 million
in 2009 to USD449 million by 2015.
ZCCM-IH Investments Manager Mr
Mwiza Mbewe told the Zambanker that
in terms of dealing with the legacy
liabilities going forward, there are a
number of outstanding ZCCM-IH
obligations that still need to be
attended to in the coming years after
the closure of the CEP on 31st March
2011 including the implementation of
twelve environmental projects over the
next 5 years. He said ZCCM-IH will
also need to continue funding the
ZCCM Trust fund until between 2030
to 2034, when the last payouts are
expected to be made, as well as deal
with the litigation cases that are yet to
be closed.
He said by exploiting the above
mentioned and many other available
investment opportunities, dealing
with legacy liabilities in a timely
manner and ensuring that maximum
value is extracted from the already
existing investments, ZCCM-IH Plc
could emerge as a major investment
player in Zambia, initially and
subsequently within the region.
And giving an update on ZCCM-IH
PLC'S recent investment activities and
plans going forward, Mr Mbewe said
ZCCM-IH is an investments holdings
company in which the Government of
the Republic of Zambia (GRZ) holds
87.6 per cent of the shares, while the
remaining 12.4 per cent holding is
held by private investors. The
company previously used to operate
mines until privatisation in 2000
following which it changed its name
from Zambia Consolidated Copper
Mines Limited (ZCCM) to ZCCM
Investments Holdings Plc to reflect the
change in the nature of business it
conducted. ZCCM-IH has a primary
listing on the Lusaka Stock Exchange,
and secondary listings on Paris
Euronext and London Stock Exchanges
under ISIN number ZM0000000034.
As a
transformed investments
holding company, the main objectives
of the Company are mainly to increase
shareholder value in the Company and
resolve the legacy liabilities. ZCCMIH Plc's investment portfolio after
privatization included 20.6 per cent
shareholding in Konkola Copper
Mines Plc, 20 per cent shareholding in
Kansanshi Mines Plc, 20 per cent
shareholding in Copperbelt Energy
Corporation Plc, 15 per cent
shareholding in NFC Africa Mining Plc
and Chibuluma Mines Plc and a 100
per cent shareholding in Ndola Lime
Company Limited among others.
The privatisation of ZCCM also
resulted in ZCCM-IH Plc having to
deal with legacy liabilities which
Welcome Message by the Minister of Agriculture Welcome Message by the Minister of Livestock &
and Co-operatives Fisheries Development
Dr. Kazonga
On behalf of the Ministry of
Agriculture and Cooperatives and indeed the
entire agricultural sector, I
warmly welcome you all the
show exhibitors and show
goers to this 85th Zambia
Agricultural and Commercial
Show. I join you all and wish to
encourage you to continue
partnering with Government
in the development of the
agricultural sector for the
betterment of the Zambian
economy as a whole.
As we implement the Sixth
National Development Plan
(SNDP), our focus in the
Agricultural sector will be to
promote economic growth by
directing investments in key
priority areas that will
stimulate growth in the
agricultural sector. The
growth of the sector is
important for the attainment
of the long term vision for
Zambia of becoming a
prosperous middle income
nation by 2030. Therefore,
the theme for this year's show,
“Shaping Tomorrow's World”
is appropriate as it is in line
with our long term vision.
Zambia has this year, 18th
January 2011, signed the
Comprehensive Africa
Agriculture Development
Programme Compact
(CAADP) whose objective is to
accelerate agricultural
growth through country-led
programmes. It is through
investing in priority areas
such as irrigation, agriculture
infrastr ucture and land
development, sustainable
agricultural practices,
improved resea rch a nd
technology and improved
input supply and market
access for our farmers that we
can develop our agriculture.
As government, development
partners, the private sector,
civil society and the farming
community as a whole, our
priority this year should be to
develop investment plans for
the priority programmes
under CAADP so that we
stimulate growth in the sector
in order to shape tomorrow's
future.
Therefore, as we seek to shape
tomorrow's world, my
Ministry's focus will be to
develop irrigation, agriculture
infrastr ucture and land
development, enhance
research and technology,
enhance extension services
and improve agricultural
marketing, trade and
agribusiness. It is my belief
that improving on these
programmes will lead to
improved standards of living
for our people.
To all the stakeholders in the
agricultural sector, exhibitors
and show goers, I would like to
reiterate that agriculture
remains one of the priority
sectors to achieving economic
growth and reducing poverty
in Zambia. Our country is
endowed with rich natural
resources and should be
harnessed to the fullest. I
implore the private sector to
explore existing opportunities
in the sector and continue
investing in agriculture for
the future in line with this
year's show theme, “Shaping
Tomorrow's World.”
Have a great 2011 Zambia
Agricultural and Commercial
Show.
Hon. Dr. Eustarckio Kazonga,
M.P.
Minister of Agriculture and
Co-operatives
Country men and women
The theme “shaping tomorrow's world”
sets a tone of challenge and hope for
the livestock and fisheries subsectors.
Zambia has a huge potential for both
livestock and fisheries development.
This is with regard to the fact that
grazing land is four times more than
arable land and that Zambia accounts
for about 40% of the water resource in
the SADC Region. I have no doubt that
the development of the livestock and
fisheries subsectors, among others,
can be used as avenues for “shaping
tomorrow's world”.
The livestock industry is increasingly
becoming an important part of
Zambia's economy. The subsector's
contribution to agricultural production
is about 40 percent. The livestock
subsector can therefore be an integral
part of “shaping tomorrow's world”.
Over the years, there has been a steady
increase of women involvement in
livestock production. In this regard,
the livestock sector is one of the key
areas for women empowerment.
Livestock production has gradually
been growing over the years,
particularly during the years 2009 to
1010. Cattle population increased by
12, percent while goat population
increased by 4.1 percent. During the
same period, poultry production grew
by 16.3 percent. Equally, exports of
livestock products have continued to
grow over the years. Cattle exports
form the major livestock product with
good export prospects. Beef accounts
for 40% of the total meat market and
with surplus capacity, potential for
export expansion into Europe, Middle
East and neighboring countries exist. It
should be noted that the extent of
entering into these markets depends
largely on the livestock disease status
in the country.
in order to address some of these
challenges, government is
implementing programmes such as
disease control, creation of disease
free zones, establishment of livestock
breeding and service centres,
strengthening of research and livestock
extension services. The role of the
private sector is vital in all these
initiatives.
On the other hand, the fisheries
industry offers the best opportunity to
both small scale and commercial
involved historical environmental
liabilities, ex-employee obligations
under the ZCCM Trust Fund and
historical litigation cases.
In an effor t to manage the
accumulated environmental liabilities
that resulted from mining operations
over the past 100 years which caused
a major disturbance to the natural
environment and also as a result of the
mining sector's poor economic
performance throughout the 1980s
and 1990s which resulted in
environmental issues not being
adequately addressed and becoming
more acute, the Government of the
Republic of Zambia (GRZ) obtained
the support of the World Bank and the
Nordic Development Fund (NDF) and
established the Copperbelt
Environment Project (CEP) to address
the environmental liabilities and
obligations that remained with ZCCMIH and GRZ following the privatization
of the assets of Zambia Consolidated
Copper Mines Limited (ZCCM).
ZCCM-IH Plc also had to deal with the
Trust fund obligations resulting from
employees that were not retrenched
but had been taken over by the new
mine owners and the historical
litigation cases.
Hitherto, ZCCM-IH Plc has made
investments that include a USD30
million in Equinox Minerals Limited
(the owners of Lumwana Copper
Mine) in June 2006 which represented
a 5.75 per cent shareholding at the
time (these shares were subsequently
sold in June 2011 to earn the
Company a return of over 400% in five
years), an acquisition of the entire
shareholding of GRZ in Maamba
Collieries Limited in November 2007
(ZCCM-IH Plc subsequently sold 65
per cent of its shares in Maamba
Collieries Limited to Nava Bharat
Singapore in May 2010 and thus
re m a i n e d w i t h 3 5 p e r c e n t
shareholding), a USD10 million
investment in Albidon Limited (the
Mr Mbewe
owners of Munali Nickel Project) in
January 2008 and is currently
finalizing negotiations to take up a 20
per cent stake in Konkola North Copper
Project which is a USD400 million
start up joint venture between African
Rainbow Minerals, Vale and ZCCM-IH
Plc.
The full list of the ZCCM-IH Plc's
current investment portfolio is
presented below:
Company
Shareholding (%)
Ndola Lime Company
100.0%
Ltd
Maamba Collieries Ltd
35.0%
Konkola Copper Mines
20.6%
Plc
Kansanshi Copper
20.0%
Mines Plc
Copperbelt Energy
20.0%
Corporation Plc
Luanshya Copper Mines
20.0%
Plc
Konnoco Zambia 20.0%
Opted to take up:
NFC Africa Mining Plc
15.0%
Chibuluma Mines Plc
15.0%
Chambishi Metals Plc
10.0%
Mopani Copper Mines
10.0%
Plc
Albidon Limited
0.9%
(Munali Nickel Project)
Ndola girls aspire to join BoZ
Mr Machila
farmers to increase their incomes and
ultimately increase the subsector's
contribution to GDP. The importance of
fish in strengthening food and nutrition
security among Zambians cannot be
over emphasized.
Currently, the
fisheries subsector contributes about
3.2 percent to the GDP.
The potential for increased fish
production in Zambia is very high given
the number of lakes, rivers, and other
water sources which we have. If these
are properly managed, this could lead
to sustainable increase in fish
production. In partnership with the
private sector, government will
continue promoting community
participation in the management of
capture fisheries and aquaculture
expansion.
Government has put in place the
national aquaculture development
strategy and the national aquaculture
plan. Currently the national aquaculture
development plan is being piloted in
three high potential zones namely: Lake
Kariba in Siavonga for cage culture,
farmer led demonstrations for
profitable aquaculture using ponds in
Copperbelt and Central Provinces.
Over 13, 000 small scale fish farmers
with more than 20,000 fish ponds are
benefiting from such initiatives.
In conclusion, one way of “shaping
tomorrow's world” is through the
development of the livestock and
fisheries subsectors.
Thank you.
Hon. Bradford Machila,
MP, Minister of Livestock and
Fisheries Development
ii
Two Grade 12 Ndola Girls Technical
High School students who visited the
Bank of Zambia stand at the just-ended
Zambia International Trade Fair said
they now have a much deeper
understanding of the role of the central
bank in the economy.
Ms Chibuye Mumba and Ms Tamara
Ngoma, whose aspirations are to join
the Bank of Zambia as economists said
until now, they were not very clear on
the role of the Bank but one thing they
were sure of was that their desire was
to eventually join the BoZ team as
economists.
The desire to join the Bank prompted
them to visit the stand and learn more
about the operations of the central
bank. In an interview with the
Zambanker at the end of their tour of
the stand, Ms Mumba and Ms Ngoma
said that some of the lessons learnt
were that the Bank played a critical role
in the economic development of the
nation by ensuring that
macroeconomic conditions for
stimulating investment expansion
remain favourable so as to achieve
economic growth and sustainable
development.
'We also learnt that the Bank facilitates
the mobilisation of domestic savings
to finance investment,' they added.
Ms Mumba and Ms Ngoma said their
visit to the BoZ stand was very fruitful
as they proved for themselves how
some of the things learnt in class were
put into practice.
The duo further said they learnt about
the importance of credit rating and
that when a country is credit rated, that
country's borrowing cost on funds
needed for developed became
cheaper.
Ms Mumba said that after touring the
BoZ stand, it had become clearer what
she would want to aspire to do in the
Bank. She said she would like to join
the Economics or the Financial
Markets departments while Ms
Ngoma said that she would want to
join the Banking, Currency and
Payment Systems team at the Bank.
The two girls also took part in the quiz
which was one of the main attractions
to the stand. The quiz ran from Friday
July 1 to Monday July 4, 2011.
The desire of two Ndola students to meet the Bank of Zambia Governor was met
when they took a photo with him at the Zambia International Trade Fair. (l-r)
Ms Chibuye Mumba, Dr Caleb Fundanga and Ms Tamara Ngoma in the BoZ pavilion
ZAMBANKER JULY 2011
Welcome Message by the Society President
It is with great pleasure that l welcome
you all to the 85th Agricultural and
Commercial show which runs from 28th
July to 1st August 2011. The premier
National show's theme this year is
'Shaping Tomorrow's World'.
This year's theme 'Shaping Tomorrow's
World' is in line with the current economic
growth in Zambia. Many development
projects have been undertaken that
clearly fit in with this theme. These
projects include construction of roads,
schools and hospitals. The Agricultural
and Commercial Society of Zambia
therefore, anticipates that the Zambian
businessman and farmer will take
advantage of this upturn to expand their
businesses and in the process provide
employment for better livelihood.
This is my second year as President of the
Agricultural and Commercial Society of
Zambia and the Committee of
Management, Staff and I are delighted
once again for to provide you with a great
show that I am certain you will enjoy.
Organising and holding of this annual
event would not be possible without
encouragement and support of
Government. In particular l would like to
single out our line Ministry Agriculture
and Co operatives, Ministry of Commerce
Trade and Industry and Ministry
Livestock, Fisheries and development.
This premier national Show is indeed,
Zambia's ultimate in the show casing of
businesses, trade, farming and
entertainment in the country! It is an event
of choice at this time of the year. It gives
an opportunity to the business
community and farmers to market their
goods and services to potential buyers
and in terms of entertainment there is a
great deal for all age groups.
The demand for commercial exhibition
space by local and foreign exhibitors has
been excellent. We expect exhibits from
the entire sub Sahara region namely,
South Africa, Namibia, Zimbabwe,
Malawi, Botswana, Egypt, Tanzania,
Kenya and of course Zambia. We are so
pleased to host all companies from these
countries and to all of you we say
welcome.
Cattle have not been shown in the past
few shows due to quarantine reasons.
However, through the Ministry of
Livestock and Fisheries Development, the
Society has this year, enticed a
substantial number of farmers across the
country to come to the show. The
Ministry is committed to eradicating
CBPP disease from Zambia in order to
protect the cattle rearing industry and
increase productivity. The Society has
embarked on improving the livestock
infrastructure in order to accommodate as
many cattle as possible. Bio-security
measures have been put in place. I
From Page I
Dr Nkumbula
therefore, invite you to visit the Livestock
Section to see the cattle breeds on show.
On the entertainment side, we are proud
that the callisthenics display is back to
our main arena. This indeed is one of our
crowd puller and this time it will be
performed by its originators in Zambia,
the Zambia National Service. It has
always been a captivating event. The
exhibitors and show goers are
challenged to come and see and feel the
great entertainment of this event.
I would like to encourage you this time to
visit those sections where you have not
ventured before as every section is full of
infectious enthusiasm. In the main arena
and other parts of the show grounds,
there will be lots of musical
entertainment that will keep you on your
toes, i.e. majorettes mass movement,
cultural panorama, International Rumba
artist, Ferra Golla, Boxing, Sky divers etc.
So come one, come all and enjoy a good
fun day out at an affordable price for the
entire family. The Society looks forward
to welcoming you all to a great show.
I would like to profoundly thank all our
local and foreign exhibitors who have
made great effort in coming to show their
products at this year's show. Without
your support this show would not have
the flare of achievements that we always
tag it with. The Society appreciates the
sponsorship given by many companies.
The sponsorship supplements the
entrance charges collected and enables
the Society to offer the public a first class
show.
I would also like to thank most sincerely
the Committee of Management and
members of staff for your support and
wish the 85 t h Agricultural and
Commercial show the greatest of
success. Please accept my gratitude for
your tireless and selfless contribution to
the success of this show.
ZAMBANKER JULY 2011
commercial infrastructure projects
around the country, as well as continued
high demand for housing. This was
supported by expansion in domestic
production of cement.
As a result of the sustained robust real
GDP growth, per capita GDP has more
than tripledover the last decade to US
$1,232.4 in 2010 from US $332.2
recorded in 2000.
Arising from the sustained robust growth
and the remarkable increase in real GDP
per capita, Zambia has risen to become a
middle income country this year. To this
effect, the World Bank in July
2011reclassified Zambia asa middle
income country along with Ghana in the
lower middle-income category. Lower
middle-income countries are those with
per capita Gross National Income of
between US$1,006 per year and
US$3,976, which Zambia has attained.
Inflation Developments
The robust GDP growth has been
supported by appropriate monetary
policy, complemented by prudent fiscal
policy. This is reflected in the decline in
inflation from the double digits of the
early 2000s to single digit levels
recorded in recent years. The annual rate
of inflation declined from 35.6 percent in
December 2000 to 7.9 percent in
December 2010. The annual inflation
rate has remained in single digits despite
rising to 9.0% in June 2011. The Bank of
Zambia,remainscommitted to reducing
inflation to the 7 percent end-year target
for 2011.
Interest rates
Following the decline in inflation, interest
rates have generally declined. The
commercial banks' average lending
interest rate declined to 26.0percent in
June 2011 from 54.5 percent in
December 2001. However, the rate at
which commercial bank lending rates
have come down has not been as
significant as the fall in inflation and yield
rates on Government securities. With
sustained lower inflation and a generally
stable macroeconomic environment, it's
expected that commercial banks will do
more to lower the lending interest rates. In
addition, increased competition in the
banking sector, following the coming on
board of new banks and the enhanced
coverage of the credit reference bureau,
will contribute to the further reduction in
interest rates.
External sector Performance
In the external sector, Zambia has
continued to register significant
improvements. This performance has
contributed to relative stability in the
exchange rate and macroeconomic
stability in general. Overall balance of
payment surpluses have been recorded
since 2006 from deficits recorded in
preceding years. During the second
quarter of 2011, Zambia's overall balance
of payments surplus amounted to US
$445.8 million, supported by higher
investment inflows and favourable export
performance. Export earnings surged to
US $7.3 billion in 2010 from about US
$0.8 billion in the year 2000, driven by
buoyant metal prices on the international
market, increased production and growth
in non-traditional exports. In 2010 Zambia
earned more than US$ 1 billion from NonTraditional Exports for the first time.
Increased production of metal and nonmental export products in the last couple
of years has largely been driven by a surge
in foreign investment inflows in form of
foreign direct investment. The stock of
foreign direct investment inflows
amounted to about US $8.5 billion in
2010 from less than US $1.0 billion in the
year 2000.
Consistent with this, the country
experienced an increase in gross
international reserves to US $2.5 billion,
equivalent to about 4.0 months of imports,
by end June 2011 from about US $0.1
billion (0.9 months) at end-2001.
Following the favourable external sector
performance, the Kwacha has relatively
been stable in recent years after
appreciating sharply following the
attainment of the HIPC Initiative
completion point in 2005. The Kwacha has
weathered the pressure arising for the
effects of the global crisis and,more
recently, the Euro area sovereign debt
crisis. The Kwacha is expected to remain
stable premised on the favourable external
sector prospects.
Fiscal Sector Developments
Fiscal prudence has improved over the
past few years, with domestic revenues
performing well following higher
collections of value added taxes, as well as
taxes from mining companies.
This has also been seen in increased
government expenditure on growthsupporting activities such as infrastructure
and social sector spending. Over the last
few years, Government has also reduced
its borrowing from the banking sector,
thereby avoiding the crowding out of the
private sector and contributing to
downward movement in interest rates.
Financial Sector Developments
The overall financial condition and
performance of the financial sector has
been satisfactory in the past few years,
with the last bank closure having been
carried out in 2001. In 2010, satisfactory
financial condition and performance was
maintained, as reflected in adequate
capitalisation and financial institutions
meeting their minimum regulatory
requirements.
The banking sector was adequately
capitalised and asset quality, liquidity and
earnings performance remained
satisfactory. In 2009, the Bank of Zambia
granted a licence to International
Commercial Bank (Z) Limited. The bank
started its operations in 2010bringing the
number of commercial banks operating in
the country to 18.
Similarly, the overall financial
performance and condition of the NonBank Financial Institutions (NBFIs) in
2010 was fair. On average, the leasing
finance institutions and bureaux de
change sub-sectors reported adequate
capital, fair asset quality, liquidity
position and earnings performance.
Prospects for 2011 and beyond
In the medium to long-term, Zambia's
economics prospects are bright. The
robust GDP Growth momentum is
expected to be maintained premised on
favourable growth performance in
mining, agriculture, construction,
tourism, manufacturing among other
sectors. This will be supported by
favourable commodity prices on the
international market, Government's
investment in infrastructure and
expected increases in foreign direct
investment.
Inflation isexpected to remain in single
digits owing to prudent macroeconomic
policies and the bumper harvest
recorded during the 2010/11 harvest
season is expected to dampen any
negative effects on overall inflation
through the food component.
Accordingly, interest rates are expected
to decline further. Further, the
macroeconomic environment is
expected to remain favourable due to a
projected strong external sector
performance.
The positive developments recorded in
the Zambian economy thus far will go a
long way in shaping tomorrow's world.
This should trickle down to all sectors of
the economy and raise employment and
income opportunities for Zambians, and
therefore contribute to lifting of the
majority of people out of poverty. To
sustain these economic achievements
and the favourable economic prospects,
there is need for concerted effort from all
Zambians to work extra hard to reach
higher levels of economic achievement
to benefit the current and future
generations. A sound, stable and strong
macroeconomic foundation will be our
main contribution in shaping tomorrow's
world.
Dr. Caleb M. Fundanga
Governor
Dr.Elizabeth C Lungu- Nkumbula
SOCIETY PRESIDENT
Welcome Message by the Local Government Administrator
I have the pleasure to welcome all
participants, both local and foreign
exhibitors to the 85th Agricultural and
Commercial show. You are indeed our
partner in enhancing our city's
development. I am grateful to you our
stakeholders for positioning the city of
Lusaka as a preferred economic and
commercial center for investment.
The city of Lusaka has had an influx of
modern buildings due to good investment
policies and fast growing economy that
the current Zambian Government has put
in place.
The new structures are going up
everywhere in all parts of the city. We have
also seen many new shopping malls
springing up. These include the Levy Park
Mall which is currently under
construction and recently completed are
Manda Hill, Arcades and Crossroads
shopping Malls.
The city is a sprawling metropolis, with
many multi-storey buildings, two
footbridges that have been built along
Kafue road and has also seen a fast
g ro w i n g n u m b e r o f i n d u s t r i a l
d e v e l o p m e n t l i k e t h e Pe p s i
manufacturing plant, Hitachi machinery
plant, steel plant and many more. All in all
these positive economic developments
have increased employment and added
value to the greater city of Lusaka.
This year's theme 'Shaping Tomorrow's
World' comes at the right time when the
council is trying to improve the standard
of living of residents, stakeholders and
visitors by improving on service delivery
and facilitating structural development.
The Lusaka city council has a number of
programs going on in different parts of the
city such as street lighting and garbage
Governor's Message to Show Goers
BoZ Spokesman Mr Kanguya Mayondi presenting gifts, which included BoZ publications, to
President Rupiah Banda when he visited the BoZ Stand. Looking on is Governor Dr Caleb
Fundanga (l) ZITF Chairperson Mr Phesto Musonda ( r) and Minister of Commerce, Trade and
Industry Mr Felix Mutati
Manager Banking Mrs Edith Kabalika giving tips to a show goer on what to look out for on a
genuine note
Welcome Message by the Minister of Commerce, Trade and Industry
Mr Sakala
c o l l e c t i o n b u t n o t f o rg e t t i n g
maintenance of traffic signals, road
signs and drainages.
We are working hard in order to change
the face of the city to tis original status of
a green city by planting as many trees as
possible.
For those of you who are visiting Lusaka
for the first time, I invite you to utilize
your free time to tour the city and see for
yourself some of the memorial social
facilities that the city hosts.
Lastly, let me thank the residents of
Lusaka for their hospitality towards all
visitors. To all show goers, I humbly
plead for orderliness during the show
period.
As you participate in this year's show,
please remember to keep Lusaka clean
by throwing litter in designated places.
Enjoy your stay in Lusaka.
Solomon Faindani Sakala
I am delighted that yet again, it is that
time of the year when the Agricultural and
Commercial Society of Zambia is hosting
the 85th Agricultural and Commercial
Show. The theme for this year's show is
“shaping tomorrow's world”. In the
quest to diversify our economy the
Government has embarked on
development that will meet the needs of
the present without compromising the
ability of future generations by shaping
the future. The Government is therefore,
encouraging investment aimed at
promoting value addition to locally
produced resources.
Agriculture remains a priority sector in
diversifying the Zambian economy,
achieving sustainable economic growth
and reducing poverty in Zambia. In this
regard, the sector will continue to be a
strategic area of focus in promoting
economic growth, reducing poverty and
creating employment particularly due to
its linkages to the rural population.
In light of the above, Government is
encouraging the investment of
sustainable agricultural production and
productivity of crops, livestock and
fisheries. With a view to shaping
tomorrow's world, the Government will
emphasize on value addition of
agricultural products. Thus, focus will be
on the promoting of post-harvest
technologies, agro-processing and
access to domestic, regional and
international markets for agro-products.
This will also include the promotion of
iii
investment into the sector.
The Government has been implementing
reforms in the last decade that are aimed at
shaping tomorrow's future by promoting
economic diversification and generating
export-led growth. This is seen by the
Government's will to continue in pursuing
the implementation of the Private Sector
Development Reform Programme
(PSDRP) that is aimed at creating a
conducive environment for the growth of
the private sector. In addition, the
Commercial, Trade and Industrial Policy
and the Micro, Small and Medium
Enterprise Development Policy will
provide the framework for the development
of the sector. The Government has further
developed the National Quality Policy that
is aimed at ensuring that goods and
services emanating from or traded in
Zambia are designed , manufactured,
produced and supplied in a manner that
meets the needs, expectations and quality
requirements of the purchaser and
consumers as well as those of the
regulatory authorities in the local and
export markets.
I also wish to inform the business
community that, the Government, has
acknowledged a number of difficulties
traders and transporters face at border
points, and in order to facilitate the quick
movement of goods across borders,
Government is in the process of opening
One-Stop-Border Posts at Kasumbalesa,
Nakonde, Jimbe and Chanida in addition to
the already launched Chirundu One Stop
Border Post. This will greatly facilitate
trade by reducing clearance time at the
border.
With a view to shaping tomorrow's future,
the Government has introduced an
intellectual Property Policy that is aimed at
encouraging the use of appropriate
intellectual property protection systems.
The policy will encourage research and
development and collaboration between
institutions and industry specific to
agriculture. The policy also provides a
framework for the protection of plant
breeders' rights, including through the
creation of breeders reward systems,
protection of farmers rights, promotion of
collaboration between farmers and
research and development institutions and
industry. Literally, the policy will protect
innovations and therefore encourage future
generation to come up with innovative
ideas meant for development.
I further wish to inform show goers that, in
the hope of shaping tomorrow's world, the
Government has introduced the
Competition and Consumer Protection
Policy whose aim is to ensure that trade is
done in an environment where business
terms and conditions are the fairest and
transparent, devoid of underhand methods
and other secret deals that are likely to
disadvantage those that are not privy to
such secret dealings.
All of these policy and reform initiatives
have been designed to contribute to
efficient and effective production and trade
including that of agriculture products. I
Mr Mutati
therefore wish to encourage all exhibitors
and show goers to be mindful of the
critical role that commerce, trade and
industry will play in shaping Zambia's
future. Agriculture will continue to be an
important sector in the diversification of
Zambia's economy to shape tomorrow's
future.
Finally, I urge all companies and
individuals to take advantage of trade
shows and other trade related forums to
exhibit their products and seek business
ventures. Further, I wish to urge you to
enjoy yourselves and take advantage of
the business opportunities that will be
available to you.
Felix Mutati, MP
Minister of Commerce, Trade and
Industry
Fish farming checks fish ban
By Nicholas Mwale
The depletion of fish in most of
Zambia's natural water bodies is a
matter of great concern and is currently
threatening the future of the fish
industry in the country.
Overfishing is cited as the major
contributing factor to the depopulation
of fish in the country's natural water
bodies. Presently, Zambia is
experiencing a fish deficit, resulting in
about 60 per cent of fish consumed in
the country being said to be imported.
In order to improve the situation,
Government enforces an annual fish
ban aimed at allowing the fish to breed
in rivers and lakes. However, some
fishermen have perceived the measure
as punishment, especially given that
their livelihood is wholly dependent on
fishing, and this has, invariably led to
them defying the fish ban.
The defiance of fishing ban, coupled
with bad fishing methods, has had
adverse effects on the fish population,
causing a deficit of fish while its
demand keeps on increasing.
Arising from this scenario, one may
ask if there is an alternative to the fish
ban and a solution to the fish deficit
currently being experienced.
A look at Kafue Fisheries Limited
makes one believe that perhaps the
answer to these problems lies in
aquaculture, the growing of fish on a
farm, which allows for continued
fishing activities all year round.
Zambia has more than abundant water,
with about 60 per cent of the resource
in Southern Africa said to be in the
country, placing her in a highly
advantageous position to exploit the
resource and produce enough fish to
not only satisfy the local market, but
also export the surplus.
There are a few aquaculture activities
currently taking place in Zambia,
mostly by some individual fish
farmers, cooperatives and some
private organisations like Kafue
Fisheries Limited in Kafue District
which has invested massively in
integrated fish farming.
Located about 10 Kilometres South of
Kafue town, in the flood plains of the
Kafue River, Kafue Fisheries has more
than one hundred fish ponds
integrated with piggery.
“This farm was started in 1981 and is
currently the biggest integrated fish
farm in Africa,” Farm Manager, Fergus
Flynn revealed. “It is one of the biggest
fish farms in Africa and is the biggest
integrated fish farm in Africa.”
Mr Flynn disclosed that the farm has
over one hundred fish ponds and
produces 15 metric tonnes of fish per
week and 750 metric tonnes per year.
The farm has several fish breeding
houses called hot houses because
they hold a high temperature inside
which enables improved fish breeding
– simply put - the higher the
temperature, the faster the fish
production.
According to Mr Flynn, the farm mainly
breeds Tilapia breams and Bubble fish
species. He said the Tilapia bream
varieties bred on the farm included
Niloticus, an imported variety which
he said is the most successful tilapia
variety in the world, and Undersonii
which is an indigenous one.
Mr Flynn explained that market for fish
is currently good in Zambia because
there is an increasing demand for the
commodity.
“All the fish that we produce here is
sold locally. We do not export fish
because we need to satisfy the local
market, in which demand is currently
high,” he explained.
Integrating fish farming with piggery is
the best balance which Kafue Fisheries
opted to use because it is cost effective
and produces a large amount of
manure for feeding fish.
“Chicken manure is the best feed for
fish but that would have meant keeping
thousands of chickens to produce
enough feed for fish which is costly
because chicken feed is equally
expensive as compared to that of
pigs,” Mr Flynn explained. “Pigs also
multiply very fast and are very
profitable.”
Landrace is the type of pigs Kafue
Fisheries is using in integrating its fish
farming. Mr Flynn explained that all
pigs at the farm originate from Europe.
“We have Landrace. These are large
and white in colour. And then we have
the black ones, which are old pigs
developed in England,” he explained.
Mr Flynn added; “These black pigs are
good even for small-scale farmers
because they are strong, meaning that
they are not easily attacked by
diseases and also the have good pork.”
Integrating fish farming helps pig
houses to be kept clean as all the pig
manure is pushed into the fish ponds
all the time, as feed for fish.
“In England, how to get rid of manure is
a big problem but here, it can easily be
through integrated farming,” observed
Mr Flynn. “The system is applicable to
small-scale farmers.”
Each farming system is a challenge
and the reason people fail is because
of certain inabilities. Mr Flynn
observed that the biggest challenge in
farming is to follow the channels
created. He explained that: “Even in
Integrated fish farming, if you do the
basics properly you succeed,” he said.
Seeing the massiveness of the
integrated fish farm at Kafue Fisheries,
Bank of Zambia Governor, Dr Caleb
Fundanga had no doubt that the
potential for fish farming was very high
in the country.
“This provides a clear picture of the
potential of fish farming, which is very
high in Zambia yet most of the fish we
eat is imported,” observed Dr
Fundanga.
“We have abundant water in this
country and there is need for a lot more
people to be offered an opportunity to
see what we can do with the water and
land that we have.”
He explained that having more of these
investments can satisfy the local need,
while the excess could be exported.
Livestock and Fisheries Minister,
Bradford Machila observed that
aquaculture, specifically integrated
fish farming, is the way forward for the
country to be able to address the
deficit in terms of meeting fish
requirements for the country.
“We have a deficit in terms of volumes
that we produce. As opposed to local
production, as things stand right now
we are importing most of the fish
consumed in the country,” Mr Machila
explained.
“Right now we are in the fish ban
period and this offers an opportunity to
reflect on what we can do for those that
are dependent on fishing”.
“ We n e e d t o h e l p o rg a n i s e
programmes whether through
cooperatives of other alternatives
where they can have small-scale
aquaculture so that when the fish ban
comes, there is no disruption on their
livelihoods and also diet and
nutrition,” Mr Machila said.
BoZ quiz attracts 121 entries
Head – Public Relations Mr Kanguya Mayondi congratulating one of the winners of the BoZ quiz. With him are Manager - communications and Protocol Ms Besnat
Mwanza, Stand Director Dr Anthony Simpasa (behind him) and Mr Steven Musuku (far l)
The Bank of Zambia quiz, which
remains one of the main attractions at
the Zambia International Trade Fair
(ZITF) this year, attracted a total of
121 entries.
In his report made available to the
Zambanker, ZITF BoZ Stand Director
for 2011 Dr Anthony Simpasa said for
this year's quiz, 10 questions were
prepared covering a wide spectrum
of the Bank's operations, its role in
the economy, as well as different
market indicators.
Traditionally, the Bank conducts a
quiz with questions drawn from the
material exhibited within the stand.
This invariably means that
participants in the quiz do not have to
leave the stand to find the answers,
but simply need to ensure that they
are attentive and concentrate as the
answers are well within their reach.
Dr Simpasa said a total of 121 entries
were received, out of which 20
carried complete and correct answers
while 2 were deemed to have been
spoiled entries. The remainder of the
entries were incorrect, but depicted a
broad understanding of the Bank's
operations and mandate.
From the 20 correct entries, 13 were
drawn out for the prize money. There
were 10 consolation prizes amounting
to K200, 000 each, and three major
prizes.
The winner of the third prize received
K1,000,000, winner of the second
prize got K1,500,000 and the winner of
the Grand Prize walked away with a
K2,500,000.
The Stand Director revealed that the
three major prizes were scooped by
students, which shows a keen interest
and knowledge among college and
university students in the affairs of the
Bank.
The questions, together with the
answers that were carried in the quiz
were as follows:
Question
Answer
Which province had the lowest number of
financial institutions as at 31 March 2011?
Luapula Province
What is the number of licensed commercial
banks in Zambia?
Eighteen (18)
What is the minimum capital amount for
setting up a commercial bank?
K12.0 billion
State any two benefits of the Credit
Reference Bureau.
?
Provide lenders within formation on borrowers’ payment histories.
?
Lenders are able to rapidly and correctly make decisions to grant loans.
?
Provide an essential service that aids lenders to evaluate and price loans
better.
?
Assist the lender to determine what interest rate to apply to a particular
borrower more objectively.
?
A borrower is assured of getting a loan that has been priced taking into
account his unique characteristics.
?
Allows borrowers with good repayment history to obtain a loan with an interest
rate that builds a low risk premium.
ZMK/Euro
Which exchange rate graph is given by the
colour orange?
List any four payment instruments.
Cash, Cheque, DDACC, RTGS, etc.
Give the four types of Treasury Bill yield
rates.
91 days, 182 days, 273 days, 364 days.
List two functions of Banking, Currency and
Payment Systems Department.
?
Maintain GRZ accounts
?
Facilitate the transfer of funds from central Government to line ministries
?
Collateral accounts maintained as required by ZECHL
What is the role of BoZ in the economy?
To implement monetary and supervisory polices that ensure price and financial systems
stability.
When was the highest level of GDP growth
attained and what was it?
2010 at 7.7%
iv
The Minister said the Government
together with its partners should be
able to see how to make appropriate
interventions to further enhance the
fisheries sector which has a very big
potential to grow adding that: “this will
help address the issue of natural water
bodies that are being overfished.”
He revealed that the Government is
considering introducing drastic
measures to address the depopulation
of fish in the natural water bodies.
“There will come a time when we will
need to take quiet drastic measures if
we are going to address the
depopulation of what has been going
on in the natural water bodies,”
disclosed Mr Machila.
“It may include extending the fishing
ban beyond the annual three months in
certain periods. We may also have
intensive fish restocking so that we can
have natural water bodies regenerate
the volumes of fish that they are
currently holding.”
The availability of water and land
resources clearly provides Zambia
great potential for fish farming as
observed by commentators.
It is certainly important for concerned
stakeholders to help grow the industry
by putting up a vigorous promotion and
by co-opting small-scale farmers into
integrated fish farming.
The system calls for serious extension
provision by experts for farmers that
would be introduced to integrated fish
in order that they may see its benefits.
There is no doubt that if more people
can venture into fish farming, the deficit
of fish currently being experienced in
the country would be addressed and
will also help to increase fish volumes
in lakes and rivers, in addition to
increasing incomes and bettering
nutritional value, which the sector has
the potential to provide.
Article Courtesy of the National
Agriculture Information Services
(NAIS)
Agric Lime cures fertilizers effects
By Martha Chanda
From a scientific perspective, extensive
use of inorganic fertilizers over a long
period of time depreciates the soils.
A great number of small-scale farmers
in the country risk experiencing low
productivity even when the right
management practices for various
crops are being followed, due to the
fact that most of them do not practice
organic farming.
It is for this reason that calls for the
Government to include agricultural
lime as part of the Farmer Input Support
Programme (FISP) have been made so
that soil fertility is maintained for
longer productivity.
Soil experts have, of late, been
championing the use of agriculture
lime acidic area as a means of
neutralizing the acidity levels.
During this year's Copperbelt Mining,
Agriculture and Commercial Show
themed'Prosperity on the
Copperbelt'and held in Kitwe recently,
Ndola Lime Company Sectional
Chemist, Mr Weston Mwape called on
Government to include agricultural
lime in the FISP.
Mr Mwape added that although
inorganic or chemical fertilizers were
seemingly fast-acting as compared to
organic varieties, their disadvantages
manifest themselves over time.
He stressed that as long as Zambia
continued using inorganic fertilizers,
there was an urgent need for the
Government to incorporate agricultural
lime into the package so that the fertility
of the soil is continually restored.
“Government should consider making
agricultural lime as part of the input
package under FISP because the
repeated use of synthetic fertilizers
tends to deteriorate the soil
conditioning as far as pH is concerned.
In so doing, the Government will ensure
that the Zambian farmers get the most
desirable results out of their fields,” Mr
Mwape said.
He said since most small scale farmers
in Zambia depend on the rains for their
agricultural activities, the rain absorbs
carbon dioxide to form a weakly
associated carbonic acid.
Mr Mwape explained that as the acid
water infiltrates the soil, it leaches vital
elements except for aluminum and that
in places where fertilizers have been
extensively used, aluminum bonds
itself to the phosphate thereby 'locking
up' a fundamental nutrient.
“Simultaneously, many beneficial
microbes may be killed off by these
chemical fertilizers resulting in poor
soil formation, lack of decomposition
and nutrients, and inadequate
protection from various diseases and
fungal growth,” he said
“The more inorganic fertilizers are
used, the more acidic the soils become
and the less available the plant
nutrients resulting in reduced crop
yield.”
With such a challenge, agricultural
lime has been proved to cushion effects
of chemical fertilizers that could
otherwise frustrate the efforts of the
small-scale farmers in the country.
Mr Mwape said that the primary reason
for applying agricultural lime was to
correct the high levels of acidity in the
soil so that the plant nutrients were
easily absorbed by the crops in the
field.
“Agricultural lime enhances the
'unlocking' of important nutrients held
up by fertilizers through the raising of
the soil pH to desirable levels,” he said.
Mr Mwape added that application of
Agricultural Lime in the field increases
the pH value, thereby considerably
reducing leaching of nutrients in the
soil.
And Zambia Agricultural Research
Institute (ZARI) Research Officer,Ms
Belinda Kapembwa also explained that
agricultural lime could contribute to the
fertility of the soils that are acidic.
Ms Kapembwa, however, said if applied
to alkaline soils, the lime could actually
destroy the soil.
She said it was therefore important for
farmers to have their soils tested first
before applying agricultural lime to the
soil.
“Agricultural lime actually improves the
nutrient intake by the plant. However,
before farmers apply agricultural lime
to the soil, they should ensure that the
soils are tested by any research
institution,” Ms Kapembwa said.
The availability of plant nutrients is
affected by the pH. Agricultural lime is
alkaline in nature and when applied to
acidic soil, it neutralizes it.
Agricultural lime, also called
agricultural limestone orgarden lime, is
a soil additive made from pulverized
limestone or chalk.
Ms Kapembwa explained that other
forms of lime had common
applications in agriculture and
gardening, including dolomitic lime
and hydrated lime.
She said dolomitic lime may be used
as a soil input to provide similar effects
as agricultural lime, while supplying
magnesium in addition to calcium.
In livestock farming, Ms Kapembwa
said hydrated lime could be used as a
disinfectant measure, producing a dry
and alkaline environment in which
bacteria do not readily multiply while in
horticultural farming, it could be used
as an insect repellant, without causing
harm to the pest or plant.
Experts say the best way to determine if
the soil is acidic or deficient in calcium
or magnesium is with a soil test.
Farmers typically become interested in
soil testing when they notice a decrease
in crop response to applied fertilizer.
Farmers should, therefore, be advised
that the ideal way of introducing
agricultural lime in their fields is to first
have the soil tested for acidity and get
advice from research institutions such
as ZARI, the University of Zambia or the
nearest research station.
ZAMBANKER JULY 2011

June 2011 - Bank of Zambia

Transcription

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