Maravi

Lack of financial services hindering rural development – Musokotwane

Lack of financial services hindering rural development – Musokotwane
Written by Florence Bupe in Lukulu
Friday, May 29, 2009 4:40:17 PM

FINANCE minister Dr Situmbeko Musokotwane has observed that the lack of financial services has continued to be a major hindrance to rural development. And Bank of Zambia (BOZ) governor Dr Caleb Fundanga has urged commercial banks to price their services in accordance with their respective customers’ economic status.

During the official opening of the National Savings and Credit Bank (Natsave) branch in Lukulu district on Wednesday, Dr Musokotwane (left) said the absence of banking services in rural areas was a challenge to business communities and government departments. He specifically noted that the absence of banks in Lukulu since independence had greatly slowed down development in the area.

“The absence of a bank in Lukulu has been a very big challenge not only to the private sector but also the various government departments,” Dr Musokotwane said. “This has been slowing down economic activity and the implementation of developmental projects in the area.”

Natsave is the first and only bank in Lukulu district. Dr Musokotwane expressed optimism that the establishment of a bank in the area would increase investment opportunities.

He observed that although Lukulu had the potential for investment, investors were unwilling to take business to the area due to inadequate infrastructure, including banks.

Dr Musokotwane disclosed that the government had since 2004 pumped over K19 billion into Natsave Bank as capital and pledged continued investment to improve banking services in rural areas and enhance development.

“Very elaborate government policy is already in place under the Rural Finance Programme. Since 2004, the government has injected K19.3 billion as capital, bringing the total equity investment by government to K21 billion,” he said.

Dr Musokotwane hoped that local businesses in Lukulu would now have access to loans in order to grow their businesses.

And in a speech read for him by Bank of Zambia director for non banking services supervision Chisha Mwanakatwe, Dr Fundanga said it was important that financial service providers complemented branch expansion with increased product innovation.

He said the key element to poverty reduction was financial service inclusion.

“A key element in the strategy of poverty reduction is the provision of financial services to the majority of our people, including micro-enterprises, who have traditionally been neglected by the formal banking sector,” said Dr Fundanga.

Meanwhile, Natsave board director Godfridah Sumaili said the newly opened Lukulu branch was expected to break-even within 12 months and become profitable in 18 months.

Labels: BANKING, CALEB FUNDANGA, INTEREST RATES, RURAL AREAS, SITUMBEKO MUSOKOTWANE

posted by MrK @ 3:43 PM