Commenting on Zambia’s ranking to be among global leaders in improving business regulation that has seen the country move up eight places in the global doing business rankings from 84 to 76 out of 183 economies, CUTS Zambia board chairman Love Mtesa said there was no doubt that the government had made great efforts in improving the business and investment environment in the country.
“However, for these efforts to be sustained there is need to pay closer attention to the very high lending rates which commercial banks are charging and we appeal to the financial sector including micro-finance institutions to review their charges and lending rates downwards,” Mtesa stated. “Unless the credit facilities are provided for at manageable rates, the business or investment environment being created by the government will not significantly contribute to the growth of the economy. The Small and Medium Entrepreneurs (SMEs), in particular, will not thrive.”
He challenged commercial banks to heed the calls and advice that both the Minister of Finance and the Bank of Zambia (BoZ) had consistently made regarding the need to lower lending rates.
“We are aware that the requirements for setting up such institutions in the sector have deliberately been made less stringent in order to encourage competition in the market, which is expected to ultimately translate into reduced charges,” stated Mtesa. “CUTS acknowledge the importance of competition and how it benefits the consumer welfare. The financial sector has embraced competition and there are a number of players in the sector. Therefore, where a number of players exist, we expect the theories of competition to apply. If the commercial banks continue to resist the calls by both the government and BoZ, we shall assume that they have formed a cartel.”
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