ECONOMIST Dr Grieve Chelwa says he has no doubt that newly-appointed Bank of Zambia Governor Dr Denny Kalyalya will be able to sail the ship properly, noting that he had previously worked under a very difficult environment.

Speaking when he featured on Hot FM, Tuesday, Dr Chelwa said Dr Kalyalya needed to restore credibility and respectability to the Central Bank.

“I have no doubt that he will be able to sail the ship properly. But one of the most important things that need to happen is to restore credibility to the Bank of Zambia. I mean in the last year, quite unprecedented in recent memory, the Central Bank is being mentioned in all sorts of scandals. We have seen the Central Bank being mentioned in the K65 million scandals. We have seen the Central Bank being accused of printing money and we have seen the Central Bank being involved through that famous recording that was released involving the former Central Bank Governor Mr Christopher Mvunga. So I think one of the things that need to happen is to restore respectability of that office. That is a very sacred institution and one of the most sacred institutions in our country. I think the most important thing is he needs to protect the sacredness again and to tell us that we are at the Central Bank and it is sacred despite what has happened in the last year,” Dr Chelwa said.

He stated that the last five years were difficult for transformative change, but that things would now change owing to the new administration.

“I think things will change now. By the way, first of all you need to know that he is not the only person at the Central Bank, he works with the team and so forth. The last five years were difficult for transformative change. The last five years were for fighting. I like to believe that his bandwidth was stretched towards fire fighting. It was a very difficult environment not just for him in the Central Bank but for many people in this country,” Dr Chelwa said.

“So I think his attention was that ‘can I fight the fire before the Kwacha depreciates to a level where it becomes almost unbearable or can I fight the fire so that inflation is maintained at reasonable levels or can I fight the fire so that the banking system does not collapse’. So I imagine those were his focuses and he did well. Now going forward there will be less fires and there is a general expectation like we have a very credible guy in the state house who is very predictable. So we expect that the next five years will be smooth sailing then he can focus on some of these fundamental issues.”

Dr Chelwa said Zambia needed a banking system which could extend credit to small and medium enterprises.

“I think the issue of reform in the banking system is an ongoing process. So for me, the one thing that I see is that banking does two things. So it offers savings for people to put away their money and also the extension loans to SMEs and other businesses. On the savings side, you can already see that the banking system was a bit slow because mobile money seems to have overtaken the banking system on that side. But what we certainly do need is a banking system that extends credit, especially now that the President has put small to medium enterprises as the core aspect of his economic development programme plan. So we need a banking system that can extend credit to men and women who are running businesses. Right now it is very difficult to do that because interest rates are very high,” said Dr Chelwa.

“There are macroeconomic reasons for that, but also structural reasons that the banking system actually works and how it is regulated it tends to increase the cost of borrowing. So I think Dr Kalyalya needs to push through some reforms. I suspect it might be easier in the next five years to do that because I think at the Ministry of Finance we are going to have some sanity. We have got somebody very credible as Minister of Finance. So I think the job of putting out fires might be an issue of the past and now it is an opportunity for him to focus on some of these fundamental things on how do we get a banking system that works and plays a vital role in economic development? One that extends loans to SMEs, affordable loans and those kinds of things.”