insurance services to lower - income people, particularly in those areas where traditional financial services are hardly there or do not exist. microfinance is also increasingly being seen as an effective tool for poverty reduction. moreover, when microfinance is provided in an environment where there are sufficient alternatives for diversified household income generation, and where access to information, appropriate physical infrastructure, and integrity in loan repayments are present, can be and it is a key success factor in reducing poverty. ladies and gentlemen, looking back through history, one of the best - known microfinance success stories is perhaps the grameen bank of bangladesh. its success may be expressed in terms of its staying power and that it has offered to help disadvantaged groups to enable them meet basic needs. this has been attributed mainly to its concentration on lending to women groups. around the world, various grameen models have been replicated, especially in south america. within africa, microfinance organizations have emerged in bukina fasso, the gambia, ghana, kenya, malawi, south africa, tanzania, uganda, and zimbabwe, to mention a few. however, what appears to be the common factor in all these areas is the lack of adequate supervision for the sector. in the zambian case, the principal financial legislation, the banking and financial services act of 1994 ( bfsa ) did not provide for the regulation and supervision of microfinance organizations until the 2000 amendment. chairperson, ladies and gentlemen, in most developing and transitional countries, microfinance institutions are using field - based “ best practices ” that have emerged from many years of world - wide experience in providing credit and savings to lower - income groups. however, best practices alone cannot guarantee the success of microfinance programmes in the absence of an appropriate legal and regulatory framework. practioners and policy makers worldwide now realize that without appropriate regulatory and supervisory framework, support from commercial banks and appropriate infrastructure, most microfinance services will continue to be donor - dependant and will remain limited in outreach. ladies and gentlemen, since i have been given the floor i now wish to take this opportunity to briefly share with you the zambian experience with regard to the microfinance market. despite its land - based wealth, zambia faces very significant development challenges. the rapid structural adjustment process that took place during the 1990s has had a harsh impact on our people, with the result that poverty is now widespread in our country. currently, a significant number of the 10 million or so zambians

strive for survival on far less than one us dollar a day and like in many other african countries there are high hiv / aids rates and indebtedness which have contributed to persistent low economic performance. thus, our government ’ s focus with assistance from cooperating partners has to increasingly be on poverty alleviation via income generation and micro enterprise stimulation, using small business development and microfinance as mechanisms to improve household standards. following the structural adjustment period, particularly from the early 1990s, affordable and publicly funded rural financial services have collapsed. a private microfinance movement, though still in its infancy, has had to emerge offering modern microfinance services. today in zambia we have an interesting blend of microfinance institutions that are private sector, for - profit firms, and non - profit, non - governmental organizations ( ngos ). although expansion is much slower in rural areas, growth is evident along the line of rails and the peri - urban areas of our country. invited guests, ladies and gentlemen, in 1999, a survey of the microfinance market in zambia was conducted to determine the status of the microfinance market and its players, and the basis for establishing regulation and supervision of the industry. the survey revealed that although most microfinance institutions were exceptionally weak, they had the potential to grow as an industry and to provide sustainable financial services to the majority zambians. the results of the survey enabled us to recognize that appropriate legislation, regulation and supervision were essential to assist this young industry to grow and be able to find investors, expand and provide sustainable services to an increasing number of low - income groups. accordingly, we have placed our focus on the establishment of a regulatory and supervisory framework that would encourage responsible growth and create a safe, sound, stable and efficient environment in which microfinance institutions can operate. the regulation development process that we have adopted has been a regular system of consultations with stakeholders and various interested parties. we have managed to achieve this through public and focus group discussions and one - to - one meetings with key players in the market. further, we have also made consultations with supervisory bodies, practitioners and other stakeholders from other countries at various workshops as well as regional and international training forums. i am happy to note that some of the countries we have been sharing ideas with are represented at this forum. i wish to acknowledge the valuable information and lessons that these different forums have provided to us in developing the regulatory and supervisory framework for microfinance in zambia. i