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Stakeholders bemoan high interest rates

MORE stakeholders have bemoaned the continued upward adjustment of interest rates on the market with Private Sector Development Association (PSDA) saying the new position will slow down business activity.
PSDA chairman Yusuf Dodia said the interest rates that have sky-rocketed to between 35 and 42 percent on the back of  high inflation of close to 23 percent, tight liquidity and cost of deposits to about 28 percent, will make it difficult for the private sector to borrow for various projects.
“The cost of money is becoming very expensive and businesses are likely to slow down. Some businesses will further be threatened by imports, which are cheaper because the cost of money and production in the countries of origin is lower,” he said in an interview on Tuesday.
Early this week, the Bankers Association of Zambia (BAZ) said the high interest rates on the market will not only affect the cost of borrowing and implementation of projects by the private sector, but is also likely to increase the defaulting rate by customers, which will negatively affect the operations of commercial banks.
Mr Dodia said ensuring low inflation levels through sound policies will go a long way in the reduction of interest rates in the country.
He said ensuring that all export earnings are reinvested in the economy will bolster economic activity thus ensure stability.
“Inflation has continued to increase, we [country] closed the year at 21 percent, opened this year at about 22 percent and inflation is now almost 23 percent. Commercial banks have no choice but increase in line with the inflation rate so pro-inflation reduction policies will help lower interest rates,” he said.