a non - interest earning asset. the opportunity cost of these funds is therefore included in the cost of conducting banking business. on 1st october 2007, bank of zambia reduced the statutory reserve ratios on both kwacha and foreign currency deposits from 14. 0 % to 8. 0 %. this followed the earlier reduction in october 2003 from 17. 5 %. the reduction in statutory reserve ratios entails a release of more liquidity into the financial system which is expected to provide more loanable funds to banks and contribute to lowering interest rates. ( iv ) establishment of credit reference bureau : the first and only credit reference bureau ( crb ) in zambia, credit reference bureau africa limited ( crbal ) was licensed in 2006 and commenced operations in 2008. the crb is expected to enhance positive credit behaviour by providing lenders with information on borrowers ’ payment histories. the crb provides an essential service that aids lenders to be able to evaluate and price loans better. good borrowers with a perceived low risk premium should have access relatively cheaper credit while bad borrowers can be denied credit thus reducing default rates and ultimately the price of credit. ( v ) sovereign credit rating : fitch rating and standard and poors both assigned the country with a b + sovereign credit rating. the rating is expected to provide an opportunity for both the government and the private sector to access cheaper funds on the international financial markets. bis central bankers ’ speeches 8. 0 conclusion the bank of zambia acknowledges that there has been remarkable development in the financial sector over the past years, as evidenced by the various new products and innovations. however, despite the growth in products and services being offered, customers are still faced with high costs of borrowing. the challenge for the financial sector therefore is to improve on their operations by engaging in innovative activities that will reduce their cost of operations and pass on the efficiencies to borrowers. from the foregoing, it is clear that the challenges of reduction of interest rates to levels that would facilitate economic development through an efficient savings mobilisation and credit allocation system are numerous. however, they are not insurmountable. the solutions are in the hands of all stakeholders in the financial sector. the government and the bank of zambia have implemented initiatives aimed at lowering the cost of borrowing, specifically, inflation has been reduced, yield rates on government securities are low due to reduced rate of government borrowing and falling inflation rates, statutory reserve ratios have been reduced to low levels and a credit reference bureau is in place to

encouraged the southern connections. the government of zambia has embarked on the process of rehabilitating the road network, which covers 35, 168 km. therefore investment opportunities are available in the areas of road rehabilitation, routine maintenance and consultancy. although the country has international highway links with tanzania, democratic republic of congo, botswana, zimbabwe, namibia, malawi, mozambique and south africa, the roads can not accommodate the growing traffic due to increased trade with other countries. there is a large investment potential for multiple lane highways to cater for the smooth running of traffic for increased efficiency in trade. further, the railway system remains the dominant mode of transport for heavy goods to local and international routes. it also links zambia to six african seaports such as dar es salaam, beira, east london, port elizabeth, durban and cape town. the railway system however, requires substantial investment to upgrade it into an ultra modern facility that would allow speedy transportation of goods and products to the ports for delivery to other markets. in air transport, zambia has 4 international airports at lusaka, livingstone, mfuwe and ndola. in order to support the increased transportation demand for goods and services, there is need to increase the capacity of the existing airports to provide direct links with most countries in the sub - region and other places. connections to all countries in the subregion will also encourage large commercial airlines to set up in the country and take advantage of zambia ’ s central location. over 97 percent of the telephone exchanges are automatic, and the country enjoys direct dialling facilities, fax, e - mail and television links with the rest of the world. in the main urban centres, public telephones and independently operated cellular telephone networks are in place. zambia also hosts zamnet and other internet service providers. in order to continue diversifying our export base and further increase our export earnings, it is imperative that we intensify use of marketing strategies that take advantage of the fact that globalisation requires each country to develop more efficient modes of communication. therefore, inadequate infrastructure, institutional capacity and investment in skilled human resources should continue to be aggressively addressed by targeting identified weak areas, and implement policies to tackle the weaknesses speedily so as to enhance economic growth and developments prospects. in addressing these issues, it is crucial to build strong partnerships, particularly with the private sector, for effective information and communication technology ( ict ) development in zambia. the agriculture sector however, remains one of the key areas where advancements in icts