Commercial Banks Admit Cost Of Borrowing Is High

COMMERCIAL banks in the country have admitted that the cost of borrowing money is high and against the spirit of empowering citizens.

Last week, Finance and National Planning Minister, Alexander Chikwanda raised concerns about the high cost of borrowing money soon after he was sworn in.

Mr Chikwanda said the Government would press for pro-growth interest rates by dialoguing with the banking sector in understanding the factors that had led to the current prohibitive interest rates in order to streamline them and empower more Zambians.

He said that would grow the capacity of small-scale entrepreneurs, create more money and contribute to the sustainable development of the country.

In response, Bankers Association of Zambia (BAZ) chairperson, Mizinga Melu said in Lusaka yesterday that the minister was right and that the situation should be addressed urgently.

Ms Melu said the cost of borrowing money did not inspire citizens to participate in the economy.

She also said she was happy that the new Government had started dealing with critical issues such as the high cost of fuel.

Ms Melu said the commercial banks, through her association, were available to ensure that the thorny issue was addressed.

She said as soon as the minister settled in his office, the members of BAZ would hold a meeting with him and ensure that the interests of the Zambian people were addressed.

“We are in total agreement with the minister and this issue has been raised before but fundamentals need to be addressed.

“There is the issue of the high cost of doing business in the country which is also affecting commercial banks. We will support the new Government in ensuring that we address this matter,” Ms Melu said.

Mr Chikwanda said there was need to ensure that commercial interest rates in the Zambian banking and financial services sector responded to the movement of other macroeconomic variables like the current single-digit inflation.