Caleb M Fundanga: Broadening access to mortgage financing in Zambia
Opening speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the re-launch
of the Pan African Building Society (PABS), Lusaka, 24 July 2007.
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• The Shareholders of PABS;
• The Board of Directors of PABS;
• Senior Government Officials present;
• The Deputy Governor-Operations and Registrar of Banks and Financial Institutions;
• The General Manager of PABS;
• Distinguished Ladies and Gentlemen.
It gives me great pleasure and gratitude for having been invited to speak on this occasion of
the re-launch of the Pan African Building Society.
Ladies and Gentlemen: Today marks an important day in the calendar of Pan African
Building Society which brings on board new shareholders. The Bank of Zambia is happy to
note that this development has turned around the financial condition of Pan African Building
Society.
Ladies and Gentlemen, as you are aware, there is shortage of housing in Zambia and
therefore the demand for housing finance is increasing.
It follows therefore, that the primary challenge of housing finance institutions in Zambia is the
broadening of access to mortgage finance particularly to many people in urban areas.
Due to the prevailing macro-economic stability that the country is experiencing, we have
seen substantial growth in the housing finance industry in recent years. For instance, in the
last four (4) years to December 2006, the mortgage portfolio of the building society industry
has grown five fold.
Ladies and Gentlemen, in recognition of the need to provide a conducive regulatory
environment which promotes sustainability, accountability, transparency and growth of the
building society industry in Zambia, the Building Societies Act was amended in October 2005
to harmonise it with the Banking and Financial Services Act pending the modernization of the
Building Societies Act under the Financial Sector Development Plan law reform programme.
Ladies and Gentlemen, Bank of Zambia is concerned about the levels of lending interest
rates charged by most financial institutions in Zambia, building societies included. With the
achievement of relative macroeconomic stability in the recent years as evidenced by a
significant reduction in the inflation rate to 11.1 percent as at June 2007, it is the expectation
of the Bank of Zambia that all prudent lending institutions would make downward
adjustments to their lending interest rates to make financial services accessible and
affordable. It is also important to note that high lending interest rates can lead to high levels
of delinquency.
Ladies and Gentlemen, it is in this light that we anticipate that credit referencing services will
help in reducing credit risk through the provision of widely accessible information on the loan
repayment profile of borrowers. This should also provide another incentive for lowering of
interest rates.
Ladies and Gentlemen, in conclusion I wish to state that the Bank of Zambia is committed to
broadening and deepening the financial sector through effective implementation of the
Financial Sector Development Plan. Bank of Zambia will endeavour to contribute towards the
creation a stable macro-economic environment.
I would therefore like in this particular instance, to call upon the housing finance industry to
play its role effectively so that Zambian people can have access to affordable housing
finance.
Thank you and God bless you.