BOZ stimulus package can cushion against economic slump – Stanbic

THE Bank of Zambia’s monetary K10 billion stimulus package has potential to curb negative economic growth if properly implemented, experts at Stanbic Bank have said.

Earlier in the year, the central bank announced the stimulus package to mitigate COVID-19 related financial and economic shocks on businesses and the nation’s gross domestic product.

Stanbic Bank has integrated its internal support strategy with BOZ to tailor support that will assist local businesses to remain viable amidst the pandemic.

Mutisunge Zulu, Stanbic’s head of risk, noted that while the virus’ impact on the economy would be significant, there remained a likelihood that the adversity may be cushioned as many stakeholders have projected.

“COVID-19 has had a telling effect on global trade with widespread supply disruptions across several markets which as a result, the 2020 global GDP growth rate is expected to recede to -3 (minus three) per cent as per World Bank and the International Monetary Fund projections,” he said during a Stanbic Anakazi Banking Webinar.

“In Zambia, we expect our GDP to grow at a rate of -3.5 per cent should the current trend continue. However, with effective implementation of measures prescribed by the stimulus package, Zambia may record positive yet weak growth in 2020.”

Zulu, who is also national secretary of the Economics Association of Zambia, explained that interventions by financial institutions and the central bank were offering critical buffers and support to the local economy during the current tough times.

“As digitalisation becomes increasingly critical to everyday transactability aligning to the prescribed health protocols being implemented by the Ministry of Health, the Bank of Zambia has increased limits for usage of electronic money for both retail and corporate clients to allow for efficacy in transactions for client classes from individual, to SME and corporate level.

“Further, the bank has issued strict guidelines on the K10 billion stimulus package to ensure key sectors of the economy receive adequate investment allocations. The Bank of Zambia directed that 60 per cent of the fund be channelled into priority sectors such as agriculture, tourism, manufacturing and energy -aligning to the government’s 7th National Development Plan while the remaining 40 per cent will be injected to SME’s and micro-enterprises,” he said. “This is all designed to complement interventions from other stakeholders aimed at helping cushion the economy from the COVID-19 storm. If implemented properly, we could see our GDP growth creep above the zero-per cent mark – which would undoubtedly be better than the projected -3.5 per cent recession.”

And Stanbic Zambia’s head of regional executive investment banking said financial institutions have a social obligation to aid local businesses and support key sectors of the economy in difficult times as the current one.

“Stanbic’s commitment to businesses of all sizes is real,” Chungu Kaunda said. “We have been offering COVID-19 relief packages to businesses even without external intervention for some time now. Our approach has been to provide relief in terms of capital financing, loan repayment and support for importers and cross border traders.”

Kaunda said the bank’s goal is to see businesses survive in this period and minimise the disease’s impact on the local economy.

“While the initial intervention period was expected to last about three months, the recently availed stimulus package from the Bank of Zambia will go a long way in helping us be there for our clients in the long term,” he said.

Kaunda added that Stanbic Zambia would leverage its position as the country’s largest bank and use the BoZ’s support through the K10 billion stimulus package to navigate a sustainable way forward for clients and help propel the economy thus ensuring its economic growth rate is as high as it can be.

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