K10BN: USE GOVT INSTITUTIONS

GOVERNMENT should consider using established and reliable state institutions to disburse the K10 billion credit facility to SMEs because they understand the challenges and needs of local businesses, says Forum for democracy and Development (FDD).

FDD spokesperson Yotam Mtayachalo said Government should use state institutions such as the Citizen's Economic Empowerment Commission (CEEC), Development Bank of Zambia (DBZ), the National Savings and Credit Bank (NATSAVE) and other financial institutions where the state has high stakes.

He cited also Indo-Zambia Bank (IZB) and Zambia National Commercial Bank (ZANACO) as some of the entities that could be utilised, saying relying on privately owned commercial banks to execute this project may not produce desirable results.

Meanwhile, former Minister of Finance Katele Kalumba has said there was need for the parties to agree on the interest rate for the facility because it was not a normal financial facility but an intermediation facility meant to easy accessibility of loans. The former minister indicated that the interest must be reasonable in order for the beneficiaries not to default. If they use the same commercial rates for banks, Dr Kalumba said, it would be impossible for the SMEs to access the loans.

“There must an extraordinary state and consider it as a special facility. The World Bank and IMF does that. So the commercial banks must be engaged by the Ministry of Finance and central bank in an elaborate definition of the facility, who is eligible, what level of collateral needed and what interest. I think the banks cannot consider to be a political facility because they really understand the economy right now because it requires an inclusion of new capital.,” Dr Kalumba said.

And Mr Mtayachalo said FDD shares the president's concern over the snail’s pace at which the covid-19 K10bn stimulus package was being implemented.

"We also share the President's concern regarding the snail’s pace at which the K10 billion Covid-19 stimulus package which was announced by the Central Bank is being implemented because so far no clear cut modalities or guidelines have been put in place for Small and Medium enterprises (SMES) which have negatively been affected by the covid19 pandemic to access this credit facility," Mr Mtayachalo said.

Mr Mtayachalo said has called on Minister of Finance and the Central Bank Governor to design an effective monitoring mechanism to ensure that the K10bn credit facility for vulnerable businesses was accessed from commercial banks and other financial institutions at reduced interest rates with flexible collateral terms without further delay.