Caleb M Fundanga: Zambia's Financial Sector Development Plan
Welcome remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the
Financial Sector Development Plan (FSDP) Phase II Consultative Meeting, Lusaka,
20 October 2009.
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•
The Honourable Minister of Finance and National Planning;
•
The FSDP Steering Committee Chairman & Secretary to the Treasury;
• Co-operating partners;
•
Chief Executive Officers and Representatives from Banks and Non Bank Financial
Institutions;
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Distinguished Invited Guests;
•
Ladies and Gentlemen.
It gives me great pleasure, on behalf of the Bank of Zambia, to welcome you all to the
Financial Sector Development Plan (FSDP) Phase II Stakeholders' Consultative Meeting.
Honourable Minister, this very important forum is a demonstration of the recognition, by
Government and various stakeholders, of the strategic importance of the financial sector to
the country's development and poverty reduction efforts.
Distinguished invited guests, there are a number of strategies currently being implemented
by both the private and public sectors to make the financial sector more inclusive, thereby
increasing the benefits for the average citizen to participate in the formal economy.
The Financial Sector Development Plan is one such Government initiative. The FSDP was
aimed at realising the vision of a financial system that is sound, stable and market-based and
one that supports efficient resource mobilisation necessary for economic diversification and
sustainable growth.
Ladies and Gentlemen, various countries have established specific programmes to
strengthen their financial sectors. In the United Kingdom for instance, there is a Financial
Inclusion Taskforce which is an independent body appointed to advise Her Majesty's
Treasury and to monitor and evaluate progress on its financial inclusion as well as oversee a
120 Million Pounds Financial inclusion Fund.
A platform for collaboration between local governments and the financial institutions in the
UK has been established in order to ensure that everyone has access to financial services
and that such inclusion corresponds with the needs of local economic development.
In other parts of Europe, the offer of basic banking accounts typically lies at the heart of
many countries' efforts to increase financial inclusion and they are a common feature of
economic policy in Europe.
In Asia, this matter has also been dealt with in various ways. In India, the Reserve Bank of
India issued guidelines (in 2006) by which banks are encouraged to enhance the level of
financial inclusion in their areas of operation in a time-bound manner. In Malaysia, a
Financial Sector Blueprint (2001-2010) has been used to guide interventions in the financial
sector.
However, financial inclusion is not an end in itself. Having a bank account, or an insurance
coverage, does not mean an enhancement in the economic position or well being of a
person. But it acts as a facilitator.
In Zambia, following the launch in 2004 of the Financial Sector Development Plan (FSDP), a
lot of work has been undertaken in addressing the weaknesses in the Zambian financial
sector, including the level of financial access.
Some ground-breaking market studies that have helped characterise both the demand and
supply side issues peculiar to the Zambian financial sector have been undertaken.
Most of you will be aware of the 2005 FinScope study findings which showed that only 33%
of Zambia's adult population had access to any formal or informal financial service or
product.
Arising from this, Government in collaboration with cooperating partners developed a
performance assessment framework, under which a target of at least 50% by end-2009 has
been set for the level of financial access. The findings of the on-going follow up Survey,
whose results are due to be finalized by the end of this year, will give us an indication of the
direction and level of access today.
Honourable Minister, Distinguished Ladies and Gentlemen, before the end of FSDP Phase I,
which ran from July 2004 to June 2009, it became quite apparent that a number of
challenges and recommendations would arise which would not be possible to implement
within the initial five year period approved by Cabinet in 2004.
In addition, there were new developments, coupled with key recommendations from the
second Financial Sector Assessment Programme (FSAP) of 2008, which required to be
incorporated into the FSDP.
Therefore, the second phase is envisaged to deal with longer-term issues pertaining to the
overall strengthening of the legal framework for the financial system. It is for this reason that
we are gathered here today as stakeholders to share information on the progress to date and
to adopt a strategic implementation framework for the work that remains to be done.
Distinguished Guests, the tremendous support of the various stakeholders to the agenda of
the FSDP cannot go unnoticed. The technical and financial support provided by a number of
our development partners, including the Swedish Government, the World Bank, IMF, DFID,
the United States Treasury and FIRST Initiative have gone a long way in slowly but surely
making this vision a reality. The Bank of Zambia and the Government are, therefore, most
indebted to our cooperating partners for helping us build capacity in our financial sector.
Honourable Minister, the support of stakeholders from financial and other institutions on the
various working groups has also been instrumental in facilitating the implementation of
various FSDP activities. Further, the coordinating role of the FSDP Secretariat, anchored by
the Bank of Zambia, has been key to the implementation of the FSDP.
For this reason, we at the Bank of Zambia hope that the same level of technical, financial,
material and morale support will be accorded to Phase II of the programme by all
stakeholders.
Ladies and Gentlemen, in recognising the critical role played by various stakeholders
represented here, the work of the FSDP has, by design, taken a consultative approach in the
identification of priority areas, formulation of strategies and the design of implementation
frameworks. It is for this reason that the Bank of Zambia has all the confidence that today's
consultative meeting will help advance the agenda for the second phase of the FSDP.
This forum therefore, brings together the FSDP secretariat, development partners and key
stakeholders to discuss the Phase II document and render support, financial and otherwise,
to the process as well as facilitate consensus building for the extension of the FSDP to
December 2012.
During this meeting, the FSDP Secretariat will update stakeholders on the progress to-date
as well as outstanding issues and new developments since 2004. The FSDP Secretariat is
further expected to highlight some of the key recommendations that were made in the recent
Financial Sector Assessment Programme (FSAP) and highlight proposals made by the
working groups.
Furthermore, representatives of Government and cooperating partners will also be at liberty
to provide their comments on the programme's achievements and the policy direction going
forward.
Finally, it is our view at the Bank of Zambia that the FSDP provides a unique opportunity to
enhance contribution of our financial sector to economic growth & poverty reduction as well
as deepening and modernising our financial system. However, the ability to move forward will
depend on our collective support to achieve the Vision of the FSDP.
It is therefore our expectation that this meeting will facilitate consensus among stakeholders
on the way forward and update cooperating partners on the need for their continued support
of the programme through direct financial support or technical assistance.
Chairperson, it is now my pleasure to invite the Secretary to the Treasury who is also the
Chairman of the FSDP Steering Committee to give us a few remarks before we call upon the
Guest of Honour, to give us his keynote address and to officially open this forum.