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Finance
Non-bank financial institutions
Non-bank financial institutions (NBFIs) include all
financial institutions that are not classified as com-
mercial banks, which includes: leasing and finance
companies, housing financial institutions (building
societies), savings and credit institutions, devel-
opment finance institutions, microfinance institu-
tions and currency exchange offices (bureaux de
change). NBFIs present an opportunity to transform
the financial sector in Zambia through their role in
long-term lending and provision of financial ser-
vices to under-served rural consumers and small
businesses often ignored by traditional banks.
Development finance institutions (DFIs) were origi-
nally established and funded by the government
under separate statutes. The only remaining DFI
is the Development Bank of Zambia (DBZ), which
provides medium to long-term development fi-
nance. DFIs were brought under the supervision of
the Bank of Zambia (BoZ) after the amendment to
the Banking and Financial Services Act (BFSA) in
2000, with subsequent restructuring of the DBZ in
2002. The DBZ is currently governed by the Devel-
opment Bank of Zambia (Amendment) Act of 2005.
The DBZ has recently re-launched its Enterprise
Development Project’s multi-purpose credit facil-
ity. Originally launched in 2003, it is an investment
credit line dedicated to the support of capital invest-
ments and a short-term credit line for financing ex-
port pre-shipment activities. The fund has grown to
US$ 52 million from the original US$ 40 million, and
is expected to grow even more as more financial
institutions are becoming eager to participate in the
initiative.
Under BoZ supervision since the early 1990s, leas-
ing companies are commercial ventures estab-
lished under the Companies Act, whose principle
activities are the provision of asset-based finance.
Industrial Credit Company (ICC) Zambia was estab-
lished 45 years ago and is the largest independent
leasing company in Zambia, with a trusted brand.
Being independent brings with it opportunities and
challenges. The two biggest challenges are ac-
cess to liquidity and the cost of funding. However,
the bank is discovering that being an indigenous
Zambian bank provides a significant competitive
advantage over the international banks, which tend
to centralize operations and take a ‘one-size-fits-all’
approach to their operations in emerging markets.
The business has just finalized a strategic part-
nership with an East African investor that brought
US$ 20 million into the operation in the first half
of 2010. ICC feels that indigenous banks will be
the way of the future and that international banks
will struggle to adapt to the culture and ethos that
more and more Africans are demanding. The bank
is very proud of its heritage, what it has achieved
and where it has come from.
Housing Finance Institutions (HFIs), which tradition-
ally provide banking services and mortgage lend-
ing, have tended to take two major forms – namely
that of building societies and employer-sponsored
housing loan schemes. Such building societies are
governed by the Building Societies (Amendment)
Act of 2005. The country’s three building socie-
ties are deposit-taking institutions operate as: the
Finance Building Society, the Pan African Building
Society and the Zambia National Building Society
(ZNBS).
Rural banking and microfinance institutions deal di-
rectly with the public, take deposits and make loans
to individuals. Established under various pieces
of legislation, such as the National Savings and
Credit Bank (NSCB) Act, the Cooperatives Act, the
Societies Act. The NSCB and microfinance institu-
tions were brought under BoZ supervision following
amendments to the BFSA in 2000. In 2005, amend-
ments and updates were made to the NSCB Act.
The BoZ has reviewed and submitted reports on
the review of the revised ZNBS Corporation Strat-
egy Plan (CSP) and the NSCB Institutional Devel-
opment Plan to the government. Based on these
reports, the government is expected to recapitalize
both such institutions accordingly.
Bureaux de change, or Foreign Currency Exchange
Offices, deal in foreign exchange, particularly of the
British Pound, US Dollar and South African Rand in
addition to the Zambian Kwacha. Although those
that are established by major banks are able to ex-
Minister of Finance, Hon. Situmbeko Musokotwane at
the launch of IZB Internet Banking product