Zambia’s Minister of Finance and National Planning Exchanges with President Kaberuka
In his welcoming remarks the Zambian Minister of Finance and National Planning Alexander Chikwanda commended African Development Bank President Donald Kaberuka for the support the Bank has provided since 1971 amounting to US $1.4 billion. The Minister also commended the Bank’s initiative and support on the Kazungula Bridge project, which links Botswana and Zambia over the Zambezi River.
The Minister expressed appreciation for the Bank’s efforts in leveraging additional resources from other partners for national and regional projects, including the Kazungula Bridge, the Nacala Corridor and Itezhi-tezhi Power Project, among others.
Zambia has power supply deficits and needs huge resources for power generation so that it can export to other countries since it has potential for environmentally friendly hydropower. Zambia could take advantage of existing inter-regional power and transmission lines.
Chikwanda applauded the Bank for the massive growth it has achieved as an institution and its support to its regional member countries (RMCs). The RMCs have a challenge because of their young populations – hence the need for education, health and job creation.
The Minister mentioned that the Bank has grown under the leadership of President Kaberuka and this achievement should be sustained even after Kaberuka leaves the Bank. He informed the President that his visionary leadership and commitment have put the Bank in good standing on the continent and abroad. The Minister informed the President that he works very well with the Bank’s Resident Representative Freddie Kwesiga.
President Kaberuka indicated that the Bank’s work depends largely on the partner member countries. The President raised the following three issues on which he wanted the Minister’s view: (i) Zambia displays features of both a low-income country (LIC) and a middle-income country (MIC), with a high growth rate and high levels of poverty at 60 per cent; (ii) How the low hanging fruits in agriculture could be taken advantage of to create jobs and income; (iii) How financial services could be used to grow the economy.
In his response, the Minister informed the President that the Government is dealing with the difficult issue of inclusive growth and how poverty can be meaningfully reduced. Key issues are youth unemployment, infrastructure and agriculture diversification to increase employment and reduce poverty. He also mentioned that commercial banks were small, so the country raised the minimum capital to US $20 million for local banks and US $100 million for foreign banks. The persisting problem is high lending rates. The Bank of Zambia has introduced the policy rate at 9.5 per cent currently; however, this has not helped lower the lending rates. In trying to encourage lenders to reduce rates, Government has provided about US $20 million to the Development Bank of Zambia at six per cent and agreed with the DBZ to lend at 7.5 per cent to customers.
On the topic of agriculture, Minister Chikwanda indicated that the Government is working on reforming the maize subsidy program and diversify agriculture to include other cash crops such as wheat, cotton, beans and rice. He said they needed bankable ideas. Forestry is another area being supported by the Government, together with tourism, which is affected by lack of infrastructure.
Agro-processing is also important for the development of agriculture because it can provide jobs and food, he said.
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