##mediating between those with surplus resources ( depositors ) and those in need of resources ( investors ). in view of the foregoing, effective and efficient supervision is crucial to limit the risk of loss to depositors, henceforth maintaining public confidence in the financial system. in response to the liberalised environment, there has been a proliferation of linkages between institutions operating in various segments of the financial sector and a growing number of financial mergers and acquisitions, thus creating, in the process, huge financial conglomerates. for instance, banks and insurance companies are searching for growth through the diversification of their activities in such a way that they can no longer be considered as homogeneous institutions falling within the scope of one economic sector and one supervisory system! these conglomerates aim to exploit the synergies that exist among banking, insurance and investment. this market evolution towards huge financial conglomerates, with integrated product development is slowly blurring the traditional boundaries between banks and non - bank financial institutions, on the one hand, and the supervision of these institutions, on the other. in spite of these trends in the international financial markets, regrettably, supervisory systems, in our sub - region, are mainly structured along the traditional boundaries demarcating banks, insurance companies, investment and micro - finance institutions. these integration changes represent major challenges to the supervisors of the different sectors, especially as the financial institutions become more complex in their structures and operations. notwithstanding the foregoing, the sluggish growth of our economies in the sub - region has also created a difficult operating environment for financial institutions, especially banks. as a result, this has contributed to the mushrooming of non - bank financial institutions, such as, micro - finance. it is a fact that the financial sector in our sub - region is dominated by commercial banks, which have continued to service only a small section of the population. the majority of the people are denied access, largely, due to numerous reasons, including perceived risks, high costs involved in dealing in small transactions and the inability to provide marketable collateral for loans. it is against this background that financial sector supervision should also be directed at financial institutions that pose the greatest risks, such as, non - bank financial institutions. in this regard, the adoption of the risk - based approach allows the supervisor to devote more supervisory effort to those areas that have a high - risk profile. this therefore, entails that supervisory authorities should shift their focus from the traditional capital, assets, management, earnings, liquidity

need for provision of affordable banking services to the majority of our people can not be ever emphasised. such services will greatly benefit our people and contribute positively to poverty reduction in the country. as access bank ventures into full fledged business, i urge the bank ’ s management to devise strategies that will contribute to government ’ s efforts of reducing the cost of borrowing and increasing the level of inclusiveness in the country. i also implore management to provide support to various sectors of the economy, especially the priority sectors of agriculture, tourism, manufacturing and small - scale mining to effectively contribute to the development of the country. ladies and gentlemen, the introduction of the fourteenth bank in the banking sector will obviously come with its own challenges. for us at bank of zambia, this entails further strengthening of our supervisory capacity. we welcome this challenge and hope to rise to the occasion by providing adequate supervisory infrastructure and an environment conducive to conducting good business. in the past few years, the bank has embarked on a process of strengthening its supervisory framework through various initiatives. one such initiative is the adoption of an enhanced riskbased approach to supervision ( rbs ). the enhanced rbs approach will entail more regular interaction with the banks than previously in order to understand and monitor activities and risks on a continuous basis. as part of the adoption of the enhanced rbs, the boz has formulated risk management guidelines to banks which will serve as a minimum standard in their design and implementation of risk management frameworks, relative to their size and complexity. further, in 2006, the bank issued corporate governance guidelines to all financial service providers. the guidelines set forth a broad framework of fundamental governance principles to guide the actions of directors and managers. this will strengthen governance in institutions and minimize the risk of bank failures as a result of bad governance. your excellency, honourable ministers in order to insulate the financial system from external influences like the financial turmoil currently being experienced in some western countries, the bank has been working on a macro prudential approach to supervision of the financial system. macro prudential analysis looks at the health of the underlying financial institutions in the system and performs stress tests and scenario analysis to help determine the system's sensitivity to economic shocks. this analysis also looks at macroeconomic data including gdp growth rates, inflation, interest rates, balance of payments, exchange rates, asset prices and the correlation of markets within the system. distinguished guests, i am advised that access bank comes with a bouquet of banking