Bank of Zambia says there is need for commercial banks to do more in providing funding to small And medium scale enterprises SME.
Governor Michael Gondwe says commercial bank lending is currently dominated by lending to the sub-sector at 31.9% compared to lending to the manufacturing sector which is 13.1% and agriculture at 16.1%.
He said world over SMEs play an important role in creating employment as well as accelerating production in the economy and thus the BOZ desires that banks channel more lending to the productive sector to achieve that cause.
Speaking at the launch of the Jacaranda Mall branch of Standard Chartered Bank in Ndola Wednesday, Dr. Gondwe said banks also need to address the high cost of funds to enable SMEs access low cost funding to grow their businesses and create employment.
He emphasized that the bank of Zambia will support any initiatives aimed at promoting SMEs as well as individuals that are engaged in productive ventures but urged SMEs to be responsible borrowers by paying back loans advanced to them as failure to do so destabilizes the banking sector leading to increased cost of borrowing.
And Dr Gondwe has maintained that the bank of Zambia will continue to monitor market conduct to ensure the market responds to both consumer needs and regulatory requirements.
Dr. Gondwe therefore urged financial service providers to improve on their operations by engaging in innovative activities that will reduce their cost of operations and pass on efficiencies to borrowers.
Speaking at the same event, Standard Chartered Head of Consumer Banking Sonny Zulu reemphasized the banks commitment to supporting individuals,SMEs and the local corporates.