DEVELOPMENT Bank of Zambia board chairperson Noel Nkoma says the Bank has in the last few months recovered K300 million out of a loan book of about K1.4 billion.

And Nkoma says there was political interference in the operations of the Bank, which made it difficult to operate effectively.

Speaking when he featured on ZNBC’s Sunday Interview, Nkoma said no one would be spared from the recovery process, whether politically inclined or not.

“In the last few months, we have recovered about K300 million out of a loan book of K1.4 billion, which was not possible before. We are now taking a different approach, we have given the people out there who have borrowed with no intent to repay that ‘we are giving you a chance, can you be able to do the rightful thing, re-engage with us as a Bank, because in the next few weeks we are coming for you’. There are those that we know borrowed with no intention of paying [back], but I can tell you that we shall recover the money. No person will be spared whether politically inclined or not, as long as you are sitting as a defaulter, we are getting the money. That is why we are talking about 98 percent NPL (Non- Performing Loans) because they have been classified, but we are going to recover. We can not convince the shareholders to recapitalize the bank in the absence of us doing our part. There are people who have gotten money without any movement on the project that they had presented, they are many, we know them. There are people also who got money with a clear intention of cashing out on their weak assets,” he said.

“The receivers who have misbehaved, who were appointed rightly or wrongly, created worse problems for the Bank, run-down businesses, failing to render an account of the money that they realised from the sale of those assets, which borders to some extent on fraud. We are going to explore all possible avenues to bring them to account. As a receiver, you have a duty to your principal to be able to perform as expected from them. But we realise that others have greatly disappointed us in terms of how they handled these receiverships.”

Nkoma said the Bank previously departed from its mandate which had led to its current status.

“Without casting any aspersions on the people before me, the management before me, I would like probably to acknowledge that they would have done their part within their abilities and capabilities to be able to deliver, but I think by and large we departed from our mandate that was the genesis of the problem. This Bank has not been short of government support, I can tell you that in 2012 the Ministry of Finance released $20 million to recapitalize the Bank, under the Eurobond. If you ask me today, 98 percent of the assets that were created with this Eurobond are the toxic assets that we are talking about now. It is a toxic asset!” he said.

And Nkoma said there was political interference in the operations of the Bank, adding that a number of people who had defaulted on the loans belonged to a certain political persuasion.

“I should not be ashamed to say it, I think to a larger extent political overbearing. I think I should make it very clear, I don’t have a problem with a politician borrowing to engage in business activities, what you will call as a politically exposed person. We have got politicians who are successful business persons, many even here in Zambia but I think to be able not to tick all the boxes in the loan appraisal stage, in the final assessment and recommendation to the board, that to me should not be allowed to happen,” he said.

“It could be pressure if you are being directed by the powers that be to disburse even without satisfying the minimum requirements. Then you have a choice, do you resign, jobs are hard to come by, somebody has got a family; three, four children to look after, his or her conscious tells them that this is not the right way to go, that is how we find ourselves in that situation. So there was to a larger degree political patronage and interference. One thing that I know that there was political interference was the fact that if you look at the pattern of the people who have defaulted, because of the Bank customer confidentiality I can’t mention names here, it tells you that the majority belonged to a certain political persuasion.”

When asked how much political influence was there now, Nkoma said he was confident they would manage the situation.

“We should just have to manage it, I have every confidence in my board that we are people who first of all have got principles to guide us in what we do, and most importantly, we have got a reputation to protect. We will not want to be part of the statistics that were there to be able to create bigger problems for DBZ. We think that we have been given a very clear mandate to get DBZ back on track. DBZ should start lending again, DBZ should be relevant to the people of Zambia and begin to benefit them in a manner that speaks to its mandate. If you have strong internal governance at management level, strong governance at board level, these are things that you cannot fail to manage. We just have to say to ourselves we have a job to do and to clean up. If Grevazio deserves a loan, he or she has met all the requirements and it is a sustainable and bankable proposal, we should be able to support you regardless of whether you are PEP or not, or whether you belong to the ruling party or you belong to the opposition party. The first requirement is one you are a businessman, you are a Zambian, you qualify,” he said.

Meanwhile, Nkoma said 40 percent of the debt portfolio which had gone bad was on partially funded projects.

“40 percent of that portfolio which has gone bad is partially funded projects. The Bank has committed to finance a project to set up let’s say a milling plant, the figures have been hammered down to $5 million, the Bank only disburses K2 million and they say we don’t have money. What do you expect from the promoter? First of all, you have not discharged your obligations, if you have not discharged your obligations, what moral right do you have to go and tell a defaulter that ‘yes you wanted $5 million, we gave you $2 million, but still you have defaulted’. We are now taking a different approach, we are reappraising and reassessing those loans. Never again should we partially fund projects,” he said.

Nkoma said people would be seeing a different Development Bank of Zambia by the end of this year.

“In 2020, the government gave a grant of K20 million. The goodwill is there but I think it has been extremely weak and compromised credit underwriting. It is basically how the Bank has been managed, the child has done its part. We have to work with the Bank of Zambia, we have to work with the shareholders to be able now to turn around this Bank. There are actions that I have discussed and I have written to the shareholders which we need to do for us to be able to, first of all, bring DBZ back on track, reposition and begin to discharge its responsibilities. The first action is that we have to visit the regulatory framework which is eroding the paid-up capital and to revisit its mandate to stick to DFI mandate. The last one we should say to the shareholders ‘we have to recapitalize the Bank’, because without capital you cannot run a bank on negative equity, because negative equity you cannot be able to engage with international capital markets,” said Nkoma.

“One of the things we are also exploring, which discussions at board level we have started, is to look at issuing probably a K1.5 billion bond to be underwritten by one of the financial players in the market. We have commenced those negotiations and we think with our actions at this stage, we can be good in the next three months or so to come to the market to issue a K1.5 billion bond. I can promise the Zambian people that by the end of this year, you will be seeing a different Development Bank of Zambia. At the moment it is in a recovery mode because we have to recover, again for us to resume lending there are structural issues that we need to deal with. Upon appointment of this board our defaulters are now reaching to us ‘yes we defaulted, we want to re-engage with the Bank’. What we want is to recover.”