Lower lending rates to allow borrowing – Canisius Banda
ZAMBIA must work towards lowering lending rates so that more citizens can become active in the economy through Small to Medium Enterprises (SMEs), Canisius Banda has said.
Dr Banda, who is a development activist and former UPND vice president for politics, yesterday told the Daily Nation that for any economy to be healthy, all people must access credit as it was a standard instrument of business.
He observed that in Zambia today, credit was hardly accessible because of its prohibitive cost, a reflective of an economy “which shoots itself in the foot.”
“This barrier to credit is inimical to economic growth and expansion as it does not encourage start-ups and, the nourishment and maintenance of entrepreneurship. The cost of credit must never be prohibitive on the money markets. Such a scenario leads to financial segregation or financial apartheid.
“Credit is synonymous with blood to the human body. It keeps economies alive and makes them thrive. It follows then that when lending rates are high, default rates will also be high. Zambia must therefore work towards lowering lending rates so that more citizens become active in the economy through SMEs,” Dr Banda said.
And Dr Banda says there was need for Zambia to look for equity partners for its parastatal companies if they were to start making profits as the current investment model was not good enough.
He said there was no need for the country on its own to borrow money, build an airport like the Kenneth Kaunda International Airport (KKIA) and then run it.
“This model of infrastructure development and management is not cost-effective. In the case of the Zesco KKIA, Ndola International Airport, Zambia Railways and other such parastatals, Zambia must now look for equity partners.
“These equity partners must come and buy off the outstanding debt. We should then allow these partners, through such authority purchase, to co-run these facilities with the Zambian Government as a mechanism for Zambia's repayment,” he said.
Dr Banda said such a model would not only clear the debt, but also ensure better performance and service delivery besides increased dividends to the state.
“This then is the reason why government should avoid subsidizing domestic consumption of things such as electricity but instead extend such subsidies to factories and industry for their production,” he said.