Ladies and Gentlemen, it is encouraging to note that, in the recent past, banks and non-bank financial institutions have expanded their provision of finance to SMEs, although there is still a lot of room for further improvement. We have recognised that a long-term strategy for SMEs calls for action across a wide range of policy domains, including education, research and development, financial sector regulations, competitive policies and a sound banking sector. These actions should address the need to create a healthier overall economic environment in which the business sector, SMEs in particular, operate. All key stakeholders should therefore strive to put in place SMEspecific policies and programmes that provide the sector with the support it needs to prosper. The banks are not an exception in this regard. The most recent statement of policies for SMEs are outlined in the Fifth National Development Plan, and they are in line with the country‘s long-term economic programme as enunciate in the Vision 2030. The primary stated objective of this policy is to create conditions conducive to sustainable growth in a structural context of private sector participation, openness and enhancing efficiency within a competitive environment. In order to enhance their contribution to economic growth, the Government during the Fifth National Development Plan (FNDP) period is focusing on addressing constraints that have negatively impacted on the performance of the manufacturing sector. One of the specific interventions in assisting enterprises, particularly the SMEs, is to access affordable finance.

Therefore, in order to ensure that the MFI sector grows in a sustainable manner and to protect public deposits, the BoZ developed the Banking and Financial Services “Microfinance Regulations” which came into effect on 31 January 2006. The Regulations were aimed at strengthening the sector and ensuring accountability and transparency in operations and providing effective smooth integration of the sector into the mainstream financial sector. Honourable Minister, distinguished ladies and gentlemen, at the time of the coming into effect of the Microfinance Regulations, there were only three microfinance institutions licensed by the Bank of Zambia. Today, the number of licensed microfinance institutions has increased to thirteen. This number is expected to increase further in light of the additional applications that are currently being considered. Ladies and Gentlemen, it is pleasing to see the extent to which commercial banks are working at providing financial services to the medium and small scale entrepreneurs. This is so because such financial inclusion is bound to lead to wealth creation. It is imperative that commercial banks, in providing financial services, ensure that the projects they are supporting are financially viable. The role of the commercial bank, in this regard, goes beyond sifting out unviable projects and providing finance for the best projects. As Bank of Zambia, we are pleased to see that the private sector, especially banks, are now taking steps to partner with Government in working towards reduction of poverty through increased provision of financial services to a wider clientele.