REDUCE LENDING RATES - PSDA

THE financial sector should further reduce lending rates to improve the performance of the Non-Performing Loans (NPLs) which are currently posing a threat to industry, says the Private Sector Development Association (PSDA). PSDA chairperson, Yusuf Dodia, explained that the currently high NPLs which posed a threat to the stability of the banking industry could be improved by reduced lending rates. Mr Dodia said in an interview with the Daily Nation in Lusaka that companies were failing to settle payment obligations due to high rates. “Lending rates have remained around 20 to 24 percent which still makes the cost of borrowing expensive. This might be okay for short term investors but a lot of private sector companies need long-term financing. “We are seeing that the number of NPLs are increasing which means a lot of companies are borrowing money and are failing to pay back,” he said. Meanwhile, Mr Dodia observed reduced Government borrowing from the domestic market was yet to be felt. “Inflation rate has been quite stable and the Kwacha has also been relatively stable, so from that perspective the private sector performance this year has so far been fair. “Off course the impact of Government borrowing from the domestic market is yet to be felt because it seems to be giving better yields on treasury bills and bonds such that banks are more likely to place money in there than to lend to the private sector.”