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LOW interest paid by banks are discouraging Small and Medium Enterprises (SMEs) from banking, Economics Association of Zambia (EAZ), has said.

EAZ in its report launched last week on resolutions made at the Economic Summit which took place in Livingstone in July this year observed that SMEs were made to bank their money and yet the cost of borrowing was high.

The association said this discouraged financial inclusion.The summit observed the need to explore the other financial financing mechanisms such as pension funds and capital markets as a way of deepening financial inclusion especially for SMEs.

“Banks and other non-financial institutions such as mobile company providers and pension funds needed to complement their efforts and leverage on each other’s efforts for them to fully benefit from the digital revolution thus contributing to deepening of financial inclusion,” the report said

According to the report, the National Switch would bring all the Banks together in Zambia, break barriers and lower transaction cost, thus expected to make banking cheaper.

The stakeholders also urged Government to consider the International Monetary Fund financing option as this was expected to contribute to lowering the cost of accessing funds in the Zambian financial market.

The summit observed that despite the significant contribution of the SMEs to the economy, their access to finance was ridiculously low in SSA despite employment potential.

“The traditional approach to financing of SMEs which focuses on adherence to strict corporate governance standards such as submitting of audited financial reports,” said the report.

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