quality of service delivery of financial services, increase access to financial services by developing a rural finance policy and strategy and lastly delivering effective financial education. notwithstanding the work done through the fsdp, the financial sector in zambia still faces a number of major challenges. access to financial services among the adult population is at 37. 3 %, the cost of accessing financial services is still high, the quality of financial service bis central bankers ’ speeches delivery can do with some improvement and financial literacy remains low and presents an important factor in explaining the low level of financial inclusion that we see in the country today. the fsdp, honourable ministers, therefore, remains work in progress. i would like, however, to mention some milestones which have been achieved under this programme in order to underscore its potential as a tool for transforming for the better, zambia ’ s financial sector landscape. under the fsdp, we have witnessed the establishment of the credit reference bureau which is beginning to play an increasingly important role in helping financial institutions better manage credit risk, which in turn, should feed into less expensive credit. a draft rural finance policy and strategy aimed at improving finance to rural areas has also been completed and awaits implementation. another important exercise accomplished has been the law review exercise which has reviewed all existing legislation in the financial sector with the view to modernise, harmonise them and ensure that the different legislations speak to each other rather conflict each other. consequently, we will be submitting to government amendments to various laws, including those in banking, insurance and the capital market. another significant accomplishment under the fsdp has been work done so far in formulating a national strategy for financial education. this initiative grew out of the recognition of the fact that financial institutions and certain ngos that were engaged in promoting various financial education activities and programme were operating in isolation. what was clearly missing was a coherent and well - co - ordinated strategy among these organisations for delivering an effective education to enhance financial literacy and inclusion. consequently the fsdp identified the need to develop a coordinated approach to financial education as a meaningful way of bringing progress to this process. it therefore, started its intervention by commissioning a stock taking study of financial education efforts taking place in zambia in order to establish its true status. dfid provided financial support in the form of technical assistance which enabled the fsdp to recruit finmark trust to carry out the study. subsequently, a report was produced and presented to various stakeholders in november last

to keep their customers satisfied by offering superior but affordable products and delivering excellent service. the ability to offer diverse products appealing to a wider range of clients leads to enhanced access to financial services. the bank of zambia is determined to facilitate the introduction of new and innovative financial products, to tap savings and facilitate the interface between savings and investment. the bank of zambia will, therefore, continue to work in close collaboration with the financial sector to cultivate partnerships in order to establish the framework necessary for building strong institutions that will mitigate risks and build confidence in the sector. mr. chairman, as you are aware, zambia ’ s economy has continued to grow underpinned by growth in various sectors including agriculture which has recorded significant increase in output of maize in 2009 and 2010. it is also worth noting that a large portion of the zambian population depends on agriculture for its livelihood, yet lending to agriculture has been limited. the challenge, therefore, is to devise financial products that meet the requirements bis central bankers ’ speeches of the rural and pre - dominantly agricultural areas while at the same time devising means of “ ring fencing ” the financial institutions from risks associated with agricultural lending. however, i am pleased that the improved performance in the agricultural as well as other sectors of the economy is expected to continue, which will invariably translate into higher incomes in zambia. potentially, the scope for savings both in the formal and informal sectors is expected to improve ; hence, products such as the one cetzam is launching today are likely to capture this potential. furthermore, i am reliably informed that the “ tusunge ” savings product offers a cheaper option of funding for cetzam which undoubtedly should trigger a reduction in the cost of credit. the product has a minimum deposit balance of k20, 000, unlimited withdrawals, no withdrawal charges and an interest rate of 6 percent per annum. the product is specifically targeted at the informal sector and smes. 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