RE­DUCE LEND­ING RATES - PSDA

Daily Nation Newspaper - - BUSINESS AND CORPORATE WORLD - By BUSI­NESS RE­PORTER

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.”

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