Long-term financing option can be commercialised – BoZ


COMMERCIAL banks should consider incorporating long-term finance in their services to help stimulate the low gross domestic product (GDP) growth in the country, the Bank of Zambia (BoZ) says.
BoZ governor Denny Kalyalya said despite commercial banks not being development institutions, they could play a critical role in the provision of long-term finance through collaborations with each other or with development institutions.
Dr Kalyalya said as agents of development, commercial banks should curb low GDP levels, which if unaddressed will impact negatively on the economy.
“You are not development institutions but somehow by virtue of you operating in this kind of environment you are in a sense development agents,” he said on Friday when he officiated at the PwC Zambia meeting on the 2016 Zambia Banking Industry Survey.
He said a number of development institutions are willing to partner with commercial banks, thus the need for commercial banks to express interest in initiatives that will support growth and economic sustainability.
Dr Kalyalya, however, noted that commercial banks have in the past collaborated in a number of projects citing the financing of Maamba Collieries renovations.
Earlier, PwC partner Andrew Chibuye said tight liquidity, higher interest rates and delayed contractor payments by Government led to an increase in non-performing loans.
Giving a highlight of the 2016 Zambia Banking Industry Survey, Mr Chibuye said the challenges resulted in a shift away from lending activity to investment in lower risk assets such as government securities.
The 2016 Zambia Banking Industry Survey was aimed at reviewing the various issues banks have had to contend with during the turbulent period.
“The industry witnessed an increase in non-performing loans with loan impairment charges and ratio increasing to K433 billion in 2016 from K295 billion in 2015,” he said.
Operating costs for the industry also continued on an upward trend, increasing by 11 percent to K4.67 billion from K4.2 billion.

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