85
Finance
currently dominate the financial system. NBFIs con-
sist of 8 leasing companies, 4 building societies, 1
development bank, 1 saving and credit bank, 1 De-
velopment Finance Institution, 57 currency exchang-
es, 1 credit reference bureau, and 35 micro-finance
institutions.
The Bank
of Zambia
Zambia’s banking and financial system has under-
gone a process of modernization and streamlining
of operations. The country’s central bank, the Bank
of Zambia, has improved both on its supervision and
regulation of the sector. This has included revoking
licenses of insolvent banks, denying bailouts, limit-
ing deposit protections, strengthening loan recovery
efforts, and upgrading the training and incentives of
bank supervisors. These measures have resulted in
a financial sector that is reasonably efficient, sound,
and profitable.
The Bank of Zambia recognizes that financial stability
is essential for strong macroeconomic performance
and the proper execution of monetary policies. This
entails ensuring that financial service providers are
adequately capitalized and have appropriate risk
management systems. In 2006, the Capital Adequa-
cy Regulations of 1995 was amended to provide for
a tiered capital structure to encourage entrants into
the financial sector. The review was aimed at ensur-
ing that banks are adequately capitalized when they
begin operations as well as when they operate.
Over the years, the bank has made progress in mod-
ernizing payment systems. The National Payment
Systems Act No.1 (NPSA), enacted in 2007, has
enabled the BoZ to develop and implement national
payment systems. It has also seen the introduction
of a tax payment stream on the Real Time Gross
Settlement (RTGS) system. These developments
have strengthened the capacity of BoZ to monitor
transactions and to ensure that only safe and ef-
ficient institutions are able to provide payment ser-
vices.
In order to improve the credit culture in the country,
the BoZ issued the Credit Data (Privacy) Code and
the Credit Reference Services (Licensing) Guide-
lines to facilitate the establishment of a credit and
reference bureau. Subsequently, the first credit
bureau, Credit Reference Bureau Africa Limited
(CRBAL), was formally launched in January 2007,
which allowed for the increase of credit extensions.
All commercial banks must sign the Service Level
Agreement (SLA) with CRBAL. The Banking and Fi-
nancial Services Act (Provision of Credit Data and
Utilization of Credit Reference Services) Directive
was issued on 10 December 2008, and since this
date, all banks and NBFIs have been required to
use the services of the credit reference agency be-
fore granting credit to a customer.
Commercial
Bank
s
Zambia’s commercial, investment, and merchant
banks offer a wide range of financial services. Al-
most all commercial banks now have Automated
Teller Machines (ATMs) and Point-of-Sale (POS)
terminals. The roll out of the Electronic Switch is
well underway.
In 1969, the Zambian government, to foster national
development, established the Zambia National
Commercial Bank, more commonly known as Za-
naco. It is the country’s largest bank in terms of out-
reach, and according to the latest research, it also
has the largest market share in terms of accounts
held.
Non-bank
financial
institutions
NBFIs present an opportunity to transform the finan-
cial sector in Zambia through their role in long-term
lending and financial services directed towards un-
derserved rural consumers and small businesses
often ignored by traditional banks.
DEVELOPMENT FINANCE INSTITUTIONS
These institutions were originally established and
funded by the government under separate statutes.
The only remaining DFI is the Development Bank of
Zambia (DBZ), which provides medium to long-term
development finance. DFIs were brought under the
supervision of the Bank of Zambia (BoZ) after the
amendment to the Banking and Financial Services
Act (BFSA) in 2000, with subsequent restructuring
of the DBZ in 2002. The DBZ is currently governed
by the Development Bank of Zambia (Amendment)
Act of 2005.
THE ENTERPRISE DEVELOPMENT PROJECT
S
MULTI-PURPOSE CREDIT FACILITY
This is an investment credit line dedicated to the
support of capital investments and offering short-
term credit lines for financing export pre-shipment
activities. The fund has grown to 52 million USD
from the original 40 million USD, and it is expected
to grow even more as more financial institutions are
becoming eager to participate in the initiative.
