The Zambian economy has recorded an uptick of 1.6% in private sector credit, the biggest signal that the economy is finally turning a positive corner and returning to full recovery. The total domestic credit balance hit ZMW55.6 billion (About US$6 billion) at end of second quarter.
Bank of Zambia (BOZ) governor Dr. Denny Kalyalya stated in his Monetary Policy Committee statement issued on 10 August 2017 that domestic credit (loans) in Zambian financial sector increased by 6.5% in the second quarter (April to June 2017), the same quantum as in first quarter (January to March 2017).
The most notable difference though was that government credit declined with the private sector credit recording a marginal but notable increase of 1.6%. This was the first time in about a year, stated Dr. Kalyalya.
Increased private sector credit signals the return of confidence in the private sectors by the banking sector. This is driven by improved prospects of businesses to return to viable profitability after about two years of constrained economic activity in Zambia.
The BOZ Governor also stated that the lowest interest rates for mostly secured business credit facilities further reduced from 10% to 8% while the highest interest rates mostly for unsecured loan facilities like salary backed loans reduced from 38% t0 37.5%.
More on Monetary Policy to follow from ZBT