Finance Minister Margaret Mwanakatwe says Small and Medium Enterprises (SMEs) are struggling to grow due to lack of access to affordable long-term credit, inadequate and poor record-keeping, and corporate governance.
Speaking during the official opening of the Zambia Industrial Commercial Bank (ZCIB) in Lusaka, Tuesday, Mwanakatwe urged SMEs and local firms to take advantage of the Zambia credit guarantee scheme, which offers guarantees to commercial banks, to access the finances and stimulate growth.
“It gives me great pleasure to be here today to launch a bank that holds a lot of promise for Zambian entrepreneurs and the local business community, the Zambia Industrial Commercial Bank Limited. This is because, as government, we are aware of the challenges that local entrepreneurs face in accessing financing that is structured for the primary purpose of stimulating growth of our SMEs and local businesses. This is something that has received international recognition. As the World Bank’s 2013 enterprise survey indicates, the number one barrier to growth for firms in Zambia is access to affordable long-term credit, followed by practices, such as inadequate and poor record-keeping, and poor corporate governance of the informal sector,” Mwanakatwe said.
“Access to finance for SMEs is limited due to the presence of constraints, including firm informality, high collateral requirements, and poor bank lending tools. These challenges of lack of affordable and long-term access to financing, among others, have been cited by our SMEs as the major reason for their low participation in the major economic activities of our country. As government, we want to see enhanced growth of local businesses, and hence local productivity, because it is only this that will lead to sustainable wealth creation and hence poverty alleviation among our people. It is for this reason that government enacted the movable property security interest act to make the business environment attractive for lenders to accept movable property as collateral. Furthermore, government recently operationalised the Zambia credit guarantee scheme that offers guarantees to commercial banks for credit extended to the local SME-sector.”
She also urged the new bank to help commercialise and industrialise SMEs and local businesses to help boost the economy.
“And now we are here today to launch a bank that will be primarily focused on the commercialisation and industrialisation of Zambian SMEs and local businesses. The launch of Zambia Industrial Commercial Bank Limited is this government’s commitment to partner with the private sector in finding solutions to the challenges being faced by Zambians, particularly those in the SME sector. It is our expectation, as government, that the launch of Zambia Industrial Commercial Bank Limited heralds a new chapter in the banking sector in Zambia, and that our local businesses will seize this great opportunity to grow their businesses and increase their contribution to the GDP of our country,” said Mwanakatwe.
“I, therefore, wish to commend the central bank, shareholders and the board of Zambia Industrial Commercial Bank Limited for successfully restructuring the Intermarket Banking Corporation in liquidation, against all odds and scepticism. The Bank of Zambia, shareholders and depositors were united in their resolve to bring new life to Intermarket. They were resolved to safeguard the interests of the former depositors of Intermarket Banking Corporation Limited. We now look to the future with great expectation that Zambian business houses and entrepreneurs will now have a bank they can call their home for banking and financial services.”
ZICB is a product of the restructuring of the former Intermarket Banking Corporation Zambia Limited (in liquidation), which the Bank of Zambia took possession of on November 29 2016 after the bank fell into insolvency and was unable to meet its obligations as they fell due.