ZAMBIA Industrial Commercial Bank (ZICB) says it is currently trying to collaborate with other financial institutions as a means of making access to cheaper credit possible in view of the high lending rates obtaining on the local market.

In an interview, ZICB public relations manager Luke Njovu said the bank was exploring avenues to collaborate with other financial institutions to make access to cheaper credit possible for the SME sector in view of the high lending rates prevailing on the local market, which had remained at an average 30 per cent in recent years.

“The issue of interest rates is obviously concerning to everybody in the sector in the sense that if interest rates are high, then, obviously, as you have indicated, the productive sector suffers because at the end of the day, the rate of return might not be sufficient to sustain the business. So, even as we price out facilities, we take cognisance of the fact that we have to be mindful of customers’ ability to pay. So, to assist our SME clients, we are in the market talking to various partners on how we can provide products and services that will be suitable in terms of pricing to the SME sector. So, we are still in discussions with a number of financing partners to see how we can access cheaper funding or cheaper deposits for onward lending to the SME sector,” Njovu said in an interview.

“So, that’s the discussion that really hinges on development financing and those are areas that we are very proactively looking at because we realise that, yes, if the cost of credit is too high, then definitely you are just choking the SME and that is one area because of our strategic mandate; that’s one area where we need to find solutions because at the end of the day, if that sector is not supported, then the challenge that we are facing today, as a Zambian economy, might persist for decades to come. So, the SME sector is critical, it has to grow and it has to grow to a level where it becomes a meaningful contributor to the GDP of this country.”

And Njobvu urged financial institutions in the country to play their role of absorbing the economic shocks being experienced to avoid breakdown of the economy.

He observed that there was need to find middle-ground between financial services and the productive sectors.

“The challenge, really, is to find middle-ground between the financial services sector and the productive sector and this is where, really, banks should come to the table and be seen to be providing that cushion that is required to absorb the shocks that the economy is experiencing. And I think that’s what the Bank of Zambia has been trying to do (with) the provision of the Medium-Term Refinancing Facility to provide that shock absorbing facility to ensure that even as much as things are bad, they do not completely break the backbone of the economy, and that’s what banks really should be able to do because at the end of the day, we are intermediaries; we have to be able to provide products and services that can help our customers to navigate,” Njovu said.

“So, from our perspective, as ZICB, we have been talking to our customers, some of them we have gone through the process of helping them to access the COVID-19 Fund from the Bank of Zambia, and that process is ongoing. But for those customers that just require, for instance, to restructure their facilities, we are talking to them and we are finding solutions of how we can help them mitigate the challenges they are facing. There are some customers that have come and applied to restructure their facilities, we have been able to do that. Some have come to ask for top-ups on the facilities that they have, again, we have been able to do that.”

Meanwhile, Njovu announced that ZICB was ready to break-even despite being on the market for only two years.

“We are very ready to break-even. We are a very ambitious bank, we have a team at ZICB that has been in the banking sector for many years. It’s not easy starting a bank from scratch, but I think we are up to the task and we are more or less looking to the next couple of few years and we will be feeling a very good story to the market,” said Njovu.