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

caleb m fundanga : broadening access to mortgage financing in zambia opening speech by dr caleb m fundanga, governor of the bank of zambia, at the re - launch of the pan african building society ( pabs ), lusaka, 24 july 2007. * * * • the shareholders of pabs ; • the board of directors of pabs ; • senior government officials present ; • the deputy governor - operations and registrar of banks and financial institutions ; • the general manager of pabs ; • distinguished ladies and gentlemen. it gives me great pleasure and gratitude for having been invited to speak on this occasion of the re - launch of the pan african building society. ladies and gentlemen : today marks an important day in the calendar of pan african building society which brings on board new shareholders. the bank of zambia is happy to note that this development has turned around the financial condition of pan african building society. ladies and gentlemen, as you are aware, there is shortage of housing in zambia and therefore the demand for housing finance is increasing. it follows therefore, that the primary challenge of housing finance institutions in zambia is the broadening of access to mortgage finance particularly to many people in urban areas. due to the prevailing macro - economic stability that the country is experiencing, we have seen substantial growth in the housing finance industry in recent years. for instance, in the last four ( 4 ) years to december 2006, the mortgage portfolio of the building society industry has grown five fold. ladies and gentlemen, in recognition of the need to provide a conducive regulatory environment which promotes sustainability, accountability, transparency and growth of the building society industry in zambia, the building societies act was amended in october 2005 to harmonise it with the banking and financial services act pending the modernization of the building societies act under the financial sector development plan law reform programme. ladies and gentlemen, bank of zambia is concerned about the levels of lending interest rates charged by most financial institutions in zambia, building societies included. with the achievement of relative macroeconomic stability in the recent years as evidenced by a significant reduction in the inflation rate to 11. 1 percent as at june 2007, it is the expectation of the bank of zambia that all prudent lending institutions would make downward adjustments to their lending interest rates to make financial services accessible and affordable. it is also important to note that high lending interest rates can lead to high levels of delinquency. ladies and gentlemen, it is in this light that we anticipate that credit referencing services will