grow at an annual rate of 15 %. the increased trade between the sub - saharan region and islamic nations in the middle east only reinforces our view that partnerships among the corporate players between the two regions will foster more development. the government of the republic of zambia ( grz ) recognizes that the limited access to financial services and low number of products available to the different sectors of the economy has hindered the development potential of zambia ’ s economy. there is need therefore, to revitalize the financial sector so that it meets the challenges of accelerated and sustained investments in key sectors of the economy. recent developments in the financial sector world - wide offer some encouragement that working together could extend the range and reach of financial services that are available to our people. still a lot remains to be done to extend financial services to the majority of our people and foster ongoing sustainability of our financial institutions. it is against this background that bank of zambia found it necessary to hold this conference to deliberate on the topical concept of islamic banking under the theme “ building partnerships for development ”. the main objectives of this conference are to get a general understanding of the operations of islamic banking and to share views on promoting partnership for development through islamic banking, draw lessons, and recommend strategies for implementing islamic banking in zambia in order to improve access to financial services. the rapid growth of islamic banking raises a series of important questions, such as whether islamic banking should be regulated differently from conventional banking. because modern islamic banking is relatively new to most countries rules for financial accounting, bank governance, and lending standards are continually evolving as business practices are refined. however, a basic understanding of the concept of islamic banking should provide a basis for determining an appropriate regulatory framework for islamic banking. of particular importance to zambia is an arrangement where borrowers can borrow without paying interest. lending rates are very high in this country, thus making borrowing for capital investments prohibitive. this is one issue we have been grappling with for a long time. therefore, an arrangement where borrowers can access funds for investments without paying interest, offered by islamic banking is worth exploring. mr. chairman, over the past two years, we have noted with delight that financial institutions in zambia are beginning to rise to the challenge by broadening the scope of their financial services beyond the traditional customers to include previously unbanked segments of society. ladies and gentlemen, the need to foster an enabling environment cannot be overemphasized. in this regard, the bank of zambia will continue to ensure

country to create wealth and contribute to the country ’ s development. we view increased private investment such as fcb as a stimulus for job creation, technological and skills transfer, as well as wealth creation. this investment by fcb is important given the fact that deposit - taking corporations ( banks ) have recently become among the top three sectors in the country with respect to fdi. fdi inflows to banks were us $ 184. 4 million, third to manufacturing and mining at us $ 469. 6 million and us $ 933. 7 million in 2012, respectively. consistently, in terms of fdi stocks, banks were in third place with us $ 601. 2 million while manufacturing and mining were second and first at us $ 1. 3 billion and us $ 9. 0 billion in 2012, respectively. distinguished clients and invited guests private investment is a critical source of long - term capital for spurring sustained economic growth and diversification while promoting innovation by supporting the micro, small and medium sized enterprises ( msmes ). chairperson in order for the financial sector to fully satisfy the credit demands of the productive sector in zambia, commercial banks must not be overly conservative in terms of their risk appetite for bis central bankers ’ speeches msmes. rather, banks should seek to better understand the risks associated with lending to these enterprises. further, it is important that banks better understand the risk associated with lending to specialized and growth sectors such as agriculture, tourism, manufacturing and mining by deliberately developing relevant human resource skills in these sectors. ladies and gentlemen in its quest to see the financial sector take up an active role in financing the productive sector and facilitating the flow of investment into the economy, the bank of zambia continues to undertake a number of policy and structural reforms. among these reforms is the new increase in the minimum capital requirement for banks to k520 million and k104 million for foreign and local banks respectively. these capital levels are expected among other things to : i. make the banking system strong enough to withstand shocks and instability in the economy should they occur ; ii. enable banks to underwrite big ticket transactions ; iii. make banks contribute more to the growth of the economy ; and iv. improve access to loanable funds among local entrepreneurs and thereby enable them to partner with foreign investors. this should enhance their economic inclusiveness or participation in the development of the country. ladies and gentlemen as i conclude, allow me to remind you of the plight of so many of our people living in rural districts