Lusaka, Zambia — The World Bank Group's Doing Business 2018 report was released this week and lists Zambia in second place in this year's Getting Credit category - just after New Zealand. To improve access to credit, Zambia partnered with the World Bank Group to modernize the country's financial infrastructure, including creating a modern secured transactions law and establishing an online collateral registry.
The secured transactions law and collateral registry make it easier for small businesses that do not have access to traditional collateral, like land or real estate, to take out a loan and grow their business using moveable collateral, such as equipment, machinery, inventory, and other types of moveable property to access finance.
The World Bank Group is also working with the Bank of Zambia to strengthen the credit reporting system. Zambia scored an eight - the maximum score - on the depth of credit information index in this year's report. Increasing the coverage of the adult population will allow for robust credit information tools to support lending decisions. Over time, better credit information sharing reduces defaults, lowers the cost of processing loan applications, and expands access to credit.
Alejandro Alvarez de la Campa, Practice Manager for the World Bank Group's Finance and Markets Global Practice, said: "Zambia performed especially well in this year's Doing Business report. By strengthening the country's financial system, the reforms implemented will continue to help promote investment, access to finance, and inclusive economic growth economic growth in Zambia."
Madalo Minofu, IFC Resident Representative in Zambia, said: "A strong secured lending framework and credit information system in Zambia will protect the rights of diverse regulated financial institutions and encourage them to provide financing to small businesses and entrepreneurs. We look forward to continuing to work with Zambia to ensure these reforms can achieve their full impact."
Zambia's online collateral registry will be officially launched in November 2017. By 2020, the project aims to generate $2 billion in financing to firms and benefit 6,500 SMEs, 1,200 micro enterprises, and 1,200 women entrepreneurs.
SOURCE International Finance Corporation (IFC)