is concerned about the levels of lending interest rates charged by most financial institutions in zambia, microfinance institutions included. with the achievement of relative macroeconomic stability in the recent years as evidenced by a significant reduction in the inflation rate to 8. 5 percent as at june 2006, it is the expectation of the bank of zambia that all prudent lending institutions would make downward adjustments to their lending interest rates. some commercial banks have taken the lead by reducing their base lending rates and we expect microfinance institutions will follow suit so that many more people can have access to affordable financial services. mr chairperson, distinguished guests, let me take this opportunity to inform you that following the coming into force of the credit reference services ( licensing ) guidelines and the credit data ( privacy ) code on 30 january 2006, a credit reference bureau has since been issued with an operating licence to provide services to the zambian market. although the bureau will initially provide services to the banking sector, it will subsequently extend its services to other credit providers, such as, microfinance institutions. this will help in reducing credit risk through the availability of a widely accessible database on the loan repayment profile of borrowers. this should also provide another incentive for lowering of interest rates. ladies and gentlemen, one way of addressing concerns of limited capital and dependence on donor support to the industry is by promoting linkage banking where microfinance institutions not only maintain accounts with commercial banks but also access funds from their respective commercial banks for on lending. before i conclude, allow me to mention one area of concern not only to the microfinance sector, but the entire financial sector in general, and that is money laundering. in the absence of effective cooperation among the various players in the financial sector, there will be no realistic change of defeating or significantly curbing money laundering. it is therefore imperative that the microfinance sector becomes more alert and report suspected cases of money laundering to the anti - money laundering investigations unit for corrective action. money laundering, if left unchecked can erode the integrity of our financial system. ladies and gentlemen, in conclusion i wish to state that the bank of zambia is committed to the development of a robust financial sector in zambia, and i would therefore like in this particular instance, to call upon the microfinance industry to play its role effectively by expanding its outreach so that more poor people can have access to financial services. i implore you to discuss issues openly and now declare this 8th annual general meeting of ami

significant strides have been made to improve financial access and introduce more convenient services, more work needs to be done. ladies and gentlemen, this state of affairs hinders people ’ s ability to establish financial transactions. effectively, lack of financial access stifles entrepreneurship and holds back the country ’ s economic growth. for instance, as at june 2010, there were only 258 bank branches and agencies in the whole country. in most cases, these branches or outlets are located in urban centres, with rural areas having few if any branches. conversely as at june 2010 the three mobile phone operating networks in zambia had a total of about 4. 6 million subscribers. distinguished participants, this situation grants us an opportunity to develop innovative approaches of extending financial services. it will no doubt involve remodelling of traditional products, service delivery channels and regulatory frameworks. it is important that all possible alternatives are critically examined for viability, safety and efficiency. some of the alternatives that need urgent examination include bank partnerships with non - bank agents to provide wider distribution outlets for payments and other financial services, and leveraging new technologies such as a common national switch to extend financial services. mr chairman, the mobile money transfer has the potential to act as the fulcrum of branchless banking, which allows provision of transactional banking services without the need of a “ brick - and - mortar ” branch. individuals are allowed to remotely access cash using different technologies, which may include automated teller machines, point of sale devices, mobile phones, payment cards or other smart technologies. to ensure that payment service providers take full advantage of the benefits that come with implementation of a mobile money transfer, they must develop and embrace new business models. these models may be built around the existing large financial flows such as remittances, salary and wage benefits, pensions and other government social benefits transfer system. ladies and gentlemen, although mobile money transfer provides a solid platform upon which to anchor expansion in the coverage of financial services, this goal will not be realised unless all stakeholders participate and play their respective roles effectively. accordingly, banks and other payment system businesses need to utilise this infrastructure to the fullest extent possible by ensuring that various products are developed to extend financial services coverage. at the same time, households and businesses need to change their attitude towards non - cash payment methods. it therefore goes without saying that financial education will be critical in shifting public attitudes and ensuring that the non - cash payment methods are widely utilised by the target market. in this