MMD President Dr Nevers Mumba recently made a statement on the limited access to genuine credit for local businesses in Zambia, despite the commercial banks posting huge profit before tax figures. In his statement, Dr Mumba congratulated ABSA and Zanaco for their impressive financial performance, particularly highlighting the leadership of women in these organizations.
“I wish to congratulate ABSA for posting a huge Profit Before Tax figure of K1.95 Billion,” said Dr Mumba. “I also wish to recognise the historic performance of our ever Big, Strong and reliable Zanaco for posting astronomical figures in Revenues. This shows that our Financial Services Sector is growing.”
Dr Mumba expressed pride in the leadership of women in these organizations, saying, “I am particularly proud of the fact that this moment of success is a toast to women in leadership as the success has been presided over by my dear young sisters Madam MIZINGA MELU and Madam Mukwandi Chibesakunda of ABSA and also ZANACO, respectively. Well done ladies, Zambia is so proud of you and your organizations.”
However, Dr Mumba raised concerns about the impact of the high profit before tax figures on the Zambian economy as a whole. “I have a question,” he said. “I would like to know what this very high profit before Tax figure for the Commercial Banks represents to the Zambian Economy as a whole.”
Dr Mumba questioned whether the banks’ focus on low-risk lending is causing local businesses to resort to borrowing from the black market, leading to defaults and higher interest rates. “At the same time, being a politician, I know that most businesses in Zambia that have been able to borrow money have been unable to meet the repayments as and when they fell due and they end up paying more interest in penalties and or losing the assets they pledged as security,” he said.
He asked, “If these banks are so profitable, then who are the businesses borrowing and defaulting to? Could it be that businesses can only manage to borrow from the black market now? Could it also mean that these Banks have now almost completely made the shift into only lending money to Projects or sectors that have near Zero Risk?”
Dr Mumba also questioned whether the success of the banking sector has come at the cost of local entrepreneurs, saying, “Has this success come at a cost to Local Zambian Entrepreneurs?”
Dr Mumba called for the creation of real support for local businesses through affordable access to finance, saying, “Is it not time we as a nation created real support to Local Business through affordable access to finance?”
He asked for data on the yearly losses of small businesses due to high-interest rates and loss of assets pledged as collateral, saying, “Does anyone have accurate data on how much Small businesses in Zambia are losing every year in form of punitive interest to Shylocks popularly known as Kaloba Lenders, as well as loss of Assets pledged as Collateral to these lenders over very small amounts of money purely because the Bank’s refused to fund their Projects on more humane terms or because their business turn around time was longer than the unreasonable period that they get to pay off this ‘KALOBA’?”
Dr Mumba also asked what the Ministry of Finance, Ministry of SMEs, and Bank of Zambia are doing to improve access to credit for local SMEs. He raised the question of whether banks should adjust their credit policies and requirements or if local businesses need to improve, saying, “What is the Ministry of Finance, Ministry of SMEs, and Bank of Zambia doing to improve access to CREDIT for Local SMEs.