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BoZ signs MoUs with Malawi, Mozambique on use of local currencies across borders

BANK of Zambia governor Dr Denny Kalyalya says the Central Bank has signed a Memorandum of Understanding with the central banks of Malawi
and Mozambique to try and use the local currency across the borders.

And Eastern Province minister Makebi Zulu says there is need for banks to devise systems on how they are going to give loans to local farmers.

Meanwhile, Eastern Province Chamber of Commerce and Industry chairperson Thomas Mtonga expressed concern with the high lending rates.

Speaking when a delegation from Bank of Zambia which was in Chipata for a board meeting met EPCCI at Protea Hotel on Wednesday, Dr Kalyalya said the Central Bank was also in the process of signing the same MoU with Angola.
“…There is a lot of activity going on between Zambia and Mozambique, Zambia and Malawi. In fact, we have signed a Memorandum of
Understanding between our two central banks, [Zambia and] Malawi to try and use the local currency across the border as well as Mozambique, we are in the process of doing the same with Angola but overall as SADC region, we have a platform now which we have established as central banks to use our national currencies to reduce the amount of pressure that we see of using the dollar, Euro and Pound,” Dr Kalyalya said.

He also said overall, the current size of the Zambian economy was about 24 billion dollars with 4.1 per cent.

“Now look at the economies of countries like the US, it’s 15 trillion dollars…the Chinese economy which is the second largest is about 9 trillion dollars. But we are concerned about our own,” said Dr Kalyalya.

Speaking earlier, Mtonga said the BoZ should look at ways of reducing lending rates.

Mtonga also said the foreign exchange rate which was around K10 per dollar was worrying, adding that “it will be better if it gets below K10”.

And speaking when the BoZ delegation paid a courtesy call on him at his office on Wednesday, Zulu said the banks could not conduct business the same way they were doing it in places like Lusaka.

“With your coming, we hope that the bank will come up with very good incentives to local banks that are operating in places that are considered rural because they cannot be doing business the same way they are doing business in Lusaka. This is a peak season for the banks here in the province because farmers are harvesting, so there will be
something to put in their accounts,” Zulu said.
“Our land here is largely customary and our farmers don’t have title to their pieces of land. We need to devise other mechanisms as to how we are going give loans to the farmers to be able to do business. We have the e-voucher system which sometimes delays but eventually comes but if the local banks can be incentivised to be able to give loans to farmers, knowing that government will soon put the monies in their accounts and they will be able to recover their monies, farmers may start getting the loans as early as August and we wouldn’t be having problems like delays in planting which affects the harvests.”
And Bank of Zambia deputy governor operations Dr Bwalya Ng’andu said it was important to go to various provinces to get a sense of the impacts of the various policy decisions they make.

He said Bank of Zambia had been working on expanding the space in the financial sector so that more people could participate in various financial services.

“One of the things that we think is key is the digital platform, the use of a mobile phone as a way of getting various actors to participate in form of financial system especially in the area of transmission of money from one person to the other, that’s one important things that we can push and we hope it can grow as it has been growing,” said Dr Ng’andu.

BOZ vice board chairperson Gilbert Temba said they were in Chipata for the bank’s board meeting.

Temba said the central bank realised that it needed to know the country from economic and social points of view so that as it sits to restructure the monetary policy that responds to the needs of the nation, they would have a grasp of things at various local levels.

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