THE Bankers Association of Zambia (BAZ) says verification delays by the Central Bank for clients seeking to access the K10 billion facility is a recipe for mistrust and discontent about the intention of the fund.
In an interview, BAZ chief executive officer Leonard Mwanza said the Central Bank should also consider informing financial institutions of any bottlenecks so that the verification on the part of the Bank of Zambia was expedited.
“What is coming out is that the verification and disbursement process is what is slow. Remember previously, what was slow was the number of applications going to the Central Bank from commercial banks and financial service providers as we speak, the number of applications have outstripped what is available on the table and even the number of approvals are over 50 percent but when you look at the disbursements, they are just well above K1.1 billion. So whatever they are doing in terms of ensuring they verify and ensure that funds go to the intended recipients or they go to the intended beneficiaries, that’s the process that we need to see expedited so that we are also advised if there are any bottlenecks, things that financial providers need to do better, at least they do them better…,” Mwanza said.
“However, I think the issue is when it comes to disbursements and this is where the central Bank comes in because they have only released K1.1 billion out of the expected K5.3 billion. So reason given is that the Central Bank would like to ensure that money goes to the intended beneficiaries. Now, these are the beneficiaries the financial service providers have advised the Central Bank and they are within the values already approved, for instance, the K5.3 billion approved reflects the pipeline of application from financial service providers which are deemed to be in good standing with the Central Bank, there are no challenges, so we are thinking it’s just that reverification process to make sure that this money disbursed will go towards supporting the respective institutions, it won’t be money that will be used for other unintended purposes, I think that’s the process that is taking a little bit long and that’s the reason why disbursement have been slow.”
He added that the fact that the funds had all been applied for meant the need for liquidity among citizens was much bigger than was being seen.
“The public are in need of funds, they are actually busy requesting their financial service providers to give them some support and it reflects from the improved uptake in terms of applications. Right now, let’s assume whatever has been applied and approved, we could as well just say that financial service providers are ready to take the entire amount on the table because applications have reached the Central Bank for the full value of the amount of money that is available under this facility and if all that is approved, and disbursed, we would be saying whatever the Bank of Zambia put on the table has been taken…The fact that we have had applications from financial service providers, it shows that banks and other lenders have created long pipelines, it means people are applying and as they are applying and assessing, those that are deemed to be worthy to be supported are the ones they take to the Central Bank for liquidity solutions,” said Mwanza.
“So it just shows you that banks and other lenders are busy creating pipelines of applications. As we have always said, speaking from the commercial bank side, there are two options, there are those commercial banks with enough liquidity, they are already providing solutions to their customers and you will not see them on this pipeline, they’ve already been given solutions from their internal resources…”