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BoZ calls on microfinance companies to expand lending

BoZ calls on microfinance companies to expand lending
By Henry Sinyangwe
Tue 02 Oct. 2012, 14:00 CAT

MICROFINANCE institutions should begin to explore their critical role as providers of credit to the small, medium and emerging enterprises to support the growth potential of the Zambian economy, says Bank of Zambia deputy governor for operations Dr Bwalya Ng'andu.

Launching Microfinance Zambia Limited, a subsidiary of the Mahtani Group of Companies, in Lusaka yesterday, Dr Ng'andu said the central bank would like to see microfinance institutions make a deliberate effort to expand their lending to the productive sector of the economy and alter concentration of their loan books away from personal consumer loans to business loans.

"This launch brings to six the number of deposit-taking microfinance institutions to be licensed by the BoZ and to 32, the total number of MFIs, which includes both deposits and non-deposit taking institutions," Dr Ng'andu said.

He said he expected Microfinance Zambia to lead the way by becoming a significant provider of credit to SMEs to support their expansion and ultimately economic growth.

"We have seen that despite the Zambian economy recording significant and consistent growth over the last ten years, lending by the micro finance institutions sector has lagged behind. For instance, at the end of June 2012, total credit by microfinance institutions stood at approximately K1.5 trillion.

This is only 11.8 per cent of the total loans of the central bank," he said.
Dr Ng'andu said the central bank had also engaged lending institutions on the need to bring lending rates to reasonable levels.

The Bank of Zambia recently introduced a benchmark lending rate for the banking sector at nine per cent, to compel lending institutions to lend at reasonable rates in line with country's low inflation rate.

And Mahtani Group of Companies chairman Rajan Mahtani said the organisation's ultimate goal was to ensure that it provided products and services that are structured around the key elements that promote economic growth and improvement of the welfare of its customers.

Mahtani said Microfinance Zambia Limited was committed to working with all stakeholders in promoting financial inclusion.

Labels: BOZ, MICROFINANCE

posted by MrK @ 4:23 PM