MICROCAPITAL BRIEF: Journalist Lewis Mwanangombe Argues Microfinance Institutions, Banks Fail to Provide Adequate Financial Services in Zambia

A recent article published by Inter Press Service (IPS), an Italy-based global news agency, written by Lewis Mwanangombe, a Zambian journalist who writes for the Associated Press and the Pan-African News Agency, highlights the limited availability of financial services in Zambia. Referencing a World Bank report, Mr Mwanangombe points out, “less than eight percent of Zambian adults have bank accounts. For the millions who make their living in the informal economy, this prevents them from earning interest on any savings they have or securing credit needed to expand small businesses beyond mere survival” [1].

Mr Mwanangombe highlights the limited access at both sides of the marketplace as follows, “Commercial banks have little interest in lending – or even banking – small entrepreneurs’ money” and many microfinance institutions (MFIs) decline to lend small-business entrepreneurs “anything more than a million Zambian kwacha – the equivalent of 75 dollars” [1]. “At the other end of MFIs’ potential market, the half of the population living on less than a dollar a day, who will have neither a formal income nor furniture against which to secure a microloan, have little option but to turn to loan sharks, commonly known as ‘kaloba’” [1].

The eight MFIs in Zambia that report to the US-based nonprofit Microfinance Information Exchange (MIX), as of 2009 serve 31,340 active borrowers and 27,369 depositors.

Sources and Resources:

[1] Inter Press Service (IPS), “Zambia: Microfinance Beyond the Reach of the Poor”, http://www.ips.org/institutional/

MicroCapital.org Article, 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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