(TIMES) ‘Explain high interest rates’

‘Explain high interest rates’
By Times Reporter

THE Governement has questioned the high interest rates being charged by micro-finance-lending institutions in Zambia resulting in some people shunning credits. Finance and National Planning Minister, Ng’andu Magande described the interest rates by financial institutions as exorbitant and a recipe to the culture of not settling debts.

Speaking during the launch of Finca-Zambia Matero Branch in Lusaka yesterday, Mr Magande said the Government, through the Central Bank, was taking keen interest in the operations of financial institutions and would ensure the interests of the public were protected.

He urged Zambians to improve the debt servicing record if they were to access more facilities from lending institutions instead of defaulting. He commended Finca-Zambia for being exceptional and offering relatively low interest rates that would serve the lower-income population of Zambia.

The minister commended Finca-Zambia for applying for a licence with the Central Bank despite it being a non-governmental organisation. He said the decision by Finca-Zambia to register with the Central Bank showed its commitment to work in partnership with the Government in creating wealth among the people.

Mr Magande said people should have access to financial support from banks and micro-financial institutions so that the pronouncement of Government’s economic reforms could be attained. The minister said the Government welcomed the development in the micro-finance industry and the growth of financial innovations although the challenge of conformity with the law still remained.

He urged the Central Bank to supervise micro-finance institutions in a manner that would encourage them to extend their services further into the rural areas and develop customised products for rural areas. Mr Magande said the enactment of the Banking and Financial Services Act of 2006 was a milestone in recognising the important role of micro finance in the economy of Zambia.

Through the supervision of micro-finance institutions, the Central Bank would accumulate valuable information that would be used to advise and strengthen the sector.

He said Finca-Zambia had grown steadily in Zambia and had about 12,202 clients by June this year with over 1,600 of them based in Matero. Finca-Zambia board chairperson, Anthony Singleton said the success of his institution in Zambia depended on the support it was getting from the community and Government.

Mr Singleton said Finca-Zambia was targeting the poor community of Zambia by providing minimal financial support. He said 90 per cent of their clients in more than 21 countries where the company existed were women.

He said Finca-Zambia was not aspiring to be a commercial bank and it would maintain its present status of being community based.