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Zambia: More Banks Lower Base Lending Rates
It seems like good news are coming from Zambian microfinance and even more importantly banking sectors. What do you say?
More commercial banks have reduced their base lending rates following the measures introduced by the Bank of Zambia (BoZ), bringing the total number to eight institutions that have cut down on rates since last week.
The International Commercial Bank (ICB) and Barclays Bank Zambia are the latest institutions to reduce their lending rates. ICB which operates in Lusaka reduced its base lending rate to 16 per cent effective November 1, this year while Barclays Bank reduced the rate to 16.5 per cent.
"We are pleased to advise our esteemed customers of the reduction of our Zambian Kwacha base rate to 16.5 per cent per annum effective December 1 2011," reads a Barclays advertisement to clients. Other banks which reduced their base lending interest rates last week are Finance Bank Zambia (FBZ), Investrust Bank Zambia, Indo Zambia Bank, Standard Chartered Bank and Cavmont Bank.
For Zanaco the Kwacha interest rate has been brought down to 16 per cent from 19 but the change is with effect from December 1 2011. This follows the positive measures taken by the central bank to reduce the cost of funds for commercial banks. Last week the Bankers Association of Zambia said the base lending rates will continue reducing.
Some industry players have said the reduction in lending rates will promote growth of Micro, Small and Medium Enterprises (MSMEs) in the country. Zambia Development Agency (ZDA) Director for Micro and small enterprises division Windu Matoka said lowering of lending rates would strengthen domestic industries due to increased access to finance. He commended the financial institutions for responding positively to Government's and other stakeholders' appeal for lower rates.
Mr Matoka said in an interview that the move meant that more MSMEs would be able to access loans from commercial banks thereby increasing their productivity. "This means that MSMEs will be able to get loans and we expect them to improve their production and procure state art equipment," Mr Matoka said.
The Zambia Federation of Associations for Women in Business (ZAFAWEB) has welcomed the reduction in lending rates. ZAFAWEB board treasurer Nancy Kawandami said the reduction would help members to access funds at reasonable cost. Ms Kawandami said previously entrepreneurs especially women were finding it hard to get loans because of the high interest rates when repaying.
Original article posted here.
Tags: Africa, SMEs, Zambia, banking, banks, finance, loans, microenterprise, microfinance
Replies to This Discussion
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Permalink Reply by Sarah Grant on -
This is great news. I remember reading about the lowering of interset rates in the 90's (I believe the cap was at 20% but will look it up) and though it made credit more affordable for some, it also spurred the closing of quite a few rural bank branches because they could not keep up with the admin costs of servicing such rural clients. So double edged sword.
Hopefully with our program here we can help serve as a link to those aspiring rural groups helping them to get to a place where eventually they have the capacity, confidence and business skills to take advantage of more formalized credit in the country.
Thanks for the article Liza!
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Permalink Reply by Mike Buffo on -
The great thing about this is that is shows the BoZ is responding to lower inflation rates. It's great that Zambia has been about to maintain an inflation rate below 10% in the last few years. Hope they keep that up.
In related news, I just read that they are going to rebase the kwacha. That is, they are going to get rid of three zeros. No more 1000 kwacha notes, they will just be 1 kwacha notes. Even so, it could cause some short term economic disruption. It won't change the purchasing power of the money, just numbers, though it acknowledges that the 100 kwacha notes are essentially useless.
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