Rupiah bemoans harsh conditions for loans

Rupiah bemoans harsh conditions for loans
By Chiwoyu Sinyangwe
Wed 28 Oct. 2009, 04:01 CAT

HARSH terms and conditions of borrowing have penalised many ordinary people who have ended up facing legal action, President Rupiah Banda complained yesterday. And First National Bank (FNB), South Africa’s giant financial institution, has officially launched its operations in Zambia, bringing the total number of commercial banks in the country to 16.

During the launch, President Banda said access to funds for both private individuals and the private sector should be made conveniently available in affordable terms.

“The most affected clients are the micro, small and medium-sized enterprises. These businesses are important in growing our economy as well as providing employment to our people,” President Banda said.

“Therefore, access to funds for small investments should not be at a very high cost. The role of banks in an economy such as ours should, ultimately, be to support the small businesses and not only to finance big corporate business which already have access to other sources of financing.”

President Banda said although personal loans had been made accessible to ordinary people, in most cases, the terms were too harsh.

“People do need the money to advance family interests, but banks should make genuine attempts to meet them half-way and provide them with user-friendly packages so that the future repayment is not only detrimental to their being,” said President Banda.

“If we must put in simple terms, harsh terms and conditions of borrowing have penalised many ordinary people who have ended up facing legal action.”

Earlier, FNB chief executive officer Dr Michael Jordan said the bank which ranks among the four top banks in South Africa was aiming to have a branch in every provincial headquarters in the country as part of its immediate growth strategy.

Dr Jordan said the high economic growth in Zambia coupled with low political risk attracted FNB to invest in the country.

“We are very confident that FNB will be a huge success,” Dr Jordan said adding that the bank would transact its business in Zambian kwacha, South African rand, United States dollar, Euro, and British Pound.

South African High Commissioner to Zambia Moses Chikane said there was need to develop financial intermediaries that would help to reduce the high poverty levels in the region.

High Commissioner Chikane regretted that a lot of people in the region continued to live in abject poverty despite the huge economic potential.

High Commissioner Chikane also urged FNB to adhere to Zambian laws and provide good representation of South Africa’s corporate citizenship in the country.

Among the prominent people who attended the launch included Bank of Zambia (BoZ) governor Dr Caleb Fundanga, finance deputy minister Chileshe Kapwepwe, Barclays Bank Southern Africa managing director Zafar Masud, Stanbic Zambia board chairman Larry Kalala.

FNB launched its operations in the country last April with an initial required capital of K12 billion approximately US .43 million.

The bank has so far opened three branches in Lusaka and one in Ndola, employing over 96 Zambians.