9 November 2012

Zambia: Lending Portfolio Reaches K13 Trillion - BAZ

ZAMBIA's total lending portifolio increased from about K11 trillion in January 2012 to nearly K13 trillion as at August 31 the same year, the Bankers Association of Zambia (BAZ) has said.

Acting BAZ chairperson, Joyce-Ann Wainaina said the figure was expected to rise as banks disburse K2 trillion funding for the crop marketing exercise to the Food Reserve Agency (FRA) before the end of this month.

She said during a media briefing in Lusaka yesterday that Government had done a lot to stimulate the banks' capacity to lend, and that banks were now responding by increasing lending levels at lower rates.

"In fact the total banks' lending portfolio has increased from K10,760 billion at the beginning of January 2012 to K12,951 billion at the end of August this year," Ms Wainaina said.

She said lending to macro, small and medium entrepreneurs (MSMEs) had also increased from K434 billion in 2010 to about K1.2 trillion as at the end of June 2012, representing a growth rate of 168 per cent.

Ms Wainaina also said that banks had a pipeline of transactions exceeding K300 billion during the same period, adding that the average lending rate to MSMEs had reduced from 24.6 per cent to 17.83 per cent in June 2012.

She explained that the largest increase in lending was to personal loans which she said had increased by 672 per cent, from K45 billion to K354 billion, while lending to the manufacturing sector in the MSMEs had increased by 254 per cent from K60 billion to K211 billion.

"Overall growth of lending to the MSMEs sector in the past years has been significant at 168 per cent from K434 billion to K1,162 trillion," she said.

Ms Wainaina said banks were working closely with Government and the Bank of Zambia to realise the policy decision to rebase the Kwacha effective January 1, 2013.

She said the banking industry was in full support of the rebasing exercise in view of the benefits that would come with it, but the accumulated cost of the exercise would range between US$15 million and $18 million for the industry.

On the 2013 national Budget, Ms Wainaina said the estimated one million jobs to be created from the various measures over the next five-year period had a higher probability of being realised.

She urged the Government to quickly deploy $750 million whose estimated annual interest costs of the sovereign bond would average $40 million to ensure utilisation in areas of high economic return.

She welcomed the allocation of $20 million to Development Bank of Zambia's MSMEs but noted that more funds would be required and that banks with other financial institutions were expected to provide additional support.

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