Maravi

Magande bemoans poor financial services in rural areas

Magande bemoans poor financial services in rural areas
By Nomusa Michelo
Tuesday October 16, 2007 [04:00]

FINANCE minister Ng’andu Magande has said little progress has been made to create a conducive environment for the operations of financial institutions. Launching the K53 billon Rural Finance Programme at Chrismar Hotel in Lusaka yesterday, Magande said while the demand for rural financial services in the country had grown, the formal banking sector had not been able to participate in capacitating people in rural areas.

“While the demand for rural financial services in Zambia is indisputable, little progress has been made in creating a conducive environment for the operations of financial institutions,” he said. “This is the reason for the failure of the formal banking sector to actively participate in capacitating many rural inhabitants.”

And Magande said the proliferation of credit institutions had created a lot of competition especially in urban areas.

“I understand that there is already a lot of competition among the microfinance institutions as they are jostling for clients,” he said.

And Magande expressed worry that many salaried workers and civil servants were failing to manage loans contracted from the many micro-credit financial institutions on the market.

“One of the insurance companies brought it to our attention at the ministry that because of this kind of business where you have this competition, it is becoming evident that many of our civil servants or salaried workers are running into problems of how to mange debt and that is causing a bit of disruption in the economy,” Magande said.

“We are concerned at the ministry and we intend to do something to try to bring some kind of proper arrangement so that people don’t go on to commit themselves to so much credit from everybody because it is available.”

He said availability of financial services was not prominent a few years ago.

Magande said the rural finance project would help rural populations to have access to financial institutions.

He thanked the International Fund for Agricultural Development (IFAD) for the interest they had continued to show in supporting the programme through loan scheme of US $13.8million.

Some of the objectives of the project include the development of community based financial institutions, promotion of rural banking services, establishment of credit facility for contracted small scale production, innovation and outreach facility and policy institutional and management support.

Labels: BANKING, MAGANDE, RURAL AREAS, RURAL FINANCE PROGRAMME

posted by MrK @ 5:17 AM