The Bank of Zambia (BOZ), the country’s central bank, reportedly has mandated a 42-percent cap on the effective interest rates charged by non-bank lending institutions designated as microfinance service providers [1, 2]. The Bank of Zambia’s public relations department indicated the cap is designed to protect microborrowers served by these institutions from rates that have climbed as high as 200 percent [2]. The effective annual lending rates charged by non-bank financial institutions not designated as microfinance service providers are not to exceed 30 percent [1].
By Nicole Boyd, Research Associate
About Bank of Zambia
The Bank of Zambia is the central bank of Zambia. The principal responsibility of the bank is to create and implement monetary policy that will maintain the economic stability of the country. The bank is a member of the Thailand-based nonprofit Alliance for Financial Inclusion [3].
Sources and Additional Resources:
[1] Lusaka Times. Micro Finance Service Providers’s lending interest rate capped at 42% by Bank of Zambia. http://www.lusakatimes.com/2013/01/03/micro-finance-service-providerss-lending-interest-rate-capped-at-42-by-bank-of-zambia/
[2] Xinhua. Zambia’s Central Bank introduces cap on interest rates for non-bank financial institutions. http://news.xinhuanet.com/english/africa/2013-01/05/c_132080697.htm
[3] MicroCapital Universe Profile: Bank of Zambia https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+Zambia
MicroCapital Brief: October 19, 2012, “Bank of Zambia Urges Microlenders to Move Away From Consumption-Related Lending at Launch of Microfinance Zambia” https://www.microcapital.org/microcapital-brief-bank-of-zambia-urges-microlenders-to-move-away-from-consumption-related-lending-at-launch-of-microfinance-zambia/
MicroCapital Brief: August 27, 2010, “Zambian Minister of Finance and National Planning Reaffirms Commitment to Build Financial Infrastructure for Low-Income Groups and Microfinance Institutions (MFIs)” https://www.microcapital.org/microcapital-brief-zambian-minister-of-finance-and-national-planning-reaffirms-commitment-to-build-financial-infrastructure-for-low-income-groups-and-microfinance-institutions-mfis/
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