Caleb M Fundanga: Improving the savings culture of Zambians Remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official launch of CETZAM’s “Tusunge” Savings Product, Lusaka, 8 July 2011. *  *  *  The Board Chairperson of CETZAM Financial Services Limited, Mr Frederick Nduna; Members of the Board of CETZAM Financial Services Limited; The Chief Executive Officer of CETZAM Financial Services, Mr Dyson Mandivenga; Chief Executive Officers and Representatives of various organisations present; Distinguished Invited Guests; Members of the Press; Ladies and Gentlemen. Let me begin by thanking the Board of Directors and Management of CETZAM Financial Services Limited (CETZAM) for inviting me to this occasion, which marks the official launch of the “Tusunge” Savings Product. May I commend the Management of CETZAM for their foresight in developing this new savings product, which will go a long way towards inculcating a savings culture and enhancing financial inclusion within our financial sector. As a financial sector regulator, the Bank of Zambia is pleased to be associated with the achievements of the institutions we regulate, particularly where these developments lead to increased access to financial services for the Zambian public. This is what CETZAM is doing this morning. CETZAM’s focus to introduce innovative products is adequate testimony of its commitment to serve the financial needs of the Zambian people. I am informed that one of the key objectives of CETZAM Financial Services Limited is to provide sustainable microfinance services to the economically disadvantaged citizens of Zambia.

People in the informal sector and SMEs who hitherto were unable to open savings accounts with banks due to high minimum deposits and service charges should find the “Tusunge” Savings Product attractive. Ladies and Gentlemen, in the face of an ever growing fear of donor fatigue, public deposits and private capital are likely to be the main source of funding for the microfinance industry to achieve the growth required for it to have significant impact on financial inclusion and poverty reduction across the region. Notwithstanding this, allow me now to reflect on some of the key challenges in the financial sector that all of us must strive to address: (i)  Increasing access to financial services by the SME’s who form the backbone of the economy. This sector provides employment for many people who cannot be absorbed into formal employment. However, increased access to financial services remains a key challenge to this segment. (ii)  Although the Bank of Zambia has licensed 25 Microfinance Institutions, most of them operate along the line of rail providing mainly salary-backed loans. There is need for microfinance institutions to support production by providing finance to agriculture and manufacturing instead of merely providing consumption related salary backed loans. (iii)  There is need for all microfinance institutions to utilise the credit reference bureau at all times. A robust credit reporting apparatus will enable the financial sector to share critical customer information that will lead to lowering the credit risk and ultimately lending rates in the financial sector.