caleb m fundanga : financial sector development in zambia remarks by dr caleb m fundanga, governor of the bank of zambia, at the farewell cocktail hosted in honour of the barclays bank zamia limited managing director, lusaka, 4 february 2010. * * * the chairman – barclays bank zambia plc, mr j j sikazwe the chairman – bankers association of zambia, mr saviour chibiya chief executive officers of commercial banks outgoing barclays southern africa regional managing director, mr zafar masud acting barclays bank plc, managing director, mr bret packard management and staff of barclays bank zambia plc colleagues from bank of zambia distinguished guests ladies and gentlemen ladies and gentlemen i am privileged to officiate at this farewell cocktail as we say goodbye to mr. zafar masud who has been the managing director of barclays bank zambia since january 2008. in the past few years, barclays bank zambia plc has contributed to making banking more accessible through its outreach programme which saw an increase in its atm and branch network to over 150 atms and 55 distribution points comprising branches and agencies nationwide. clearly the grass - root population in zambia has continued to benefit from this initiative. as is the case with a number of other banks, barclays bank zambia plc has continued to innovate and positively contribute to financial sector development in zambia. notable innovations that came under mr. masud ’ s time include the commissioning of the bank ’ s branch queue management system at its mutaba and kafue house branches and northend atm lobby, as well as the launch of premier banking. barclays bank zambia plc may have not pioneered all of these innovations, but they have provided reasonable competition to their colleagues which we at bank of zambia believe will be of benefit to the zambian financial sector in the medium to long - term. it is my expectation that barclays bank zambia plc will continued to contest the market in a meaningful and beneficial way. let me also acknowledge the contribution made by barclays bank zambia plc under mr. masud through the bank ’ s partnering with the corporate world to cosponsor the first ever euromoney investors ’ conference in zambia. in addition, it is worth mentioning that baz, under the chairmanship of barclays bank zambia plc and mr. masud, helped initiate the beautification of cairo road by adopting the maintenance of its wonderful gardens. the positive change to our immediate surroundings particularly around the bank square is there for all to see.

the number of hours worked is usually one quarter in sweden, while the time lag between gdp and employment is usually twice as long, that is, six months. a well - known relationship between economic activity and activity in the labour market was formulated by arthur okun in the early 1960s. 1 this describes a negative relationship between gdp growth and changes in unemployment, which has become known as “ okun ’ s law ”. he found, for instance, that the us economy needed to grow by at least 3 per cent to avoid an increase in unemployment. okun ’ s law can thus be interpreted as a short - term relationship that expresses the link between changes in economic activity and changes in activity in the labour market. as the relationship between growth and employment is dependent on factors such as labour market policy, productivity, social norms and demography, the relationship varies between different countries and different periods in time. okun, a. m. ( 1962 ), “ potential gnp : its measurement and significance ”, american statistical association, proceedings of the business and economics statistics section, pp. 98 – 104. a recently - published economic commentary on the riksbank ’ s website 2 estimates this relationship using swedish data. 3 the study shows that there is a relatively strong link between gdp growth and unemployment, a link that has also varied over time. the connection has increased over time and between 2004 and 2008 it was relatively high, which indicates that unemployment was more sensitive to changes in gdp during this time. however the relationship has weakened over the past year, when gdp fell heavily without unemployment rising as much as one would have expected, given the historical relationship. according to the study, a gdp growth of more than 2. 8 per cent is now needed for unemployment to decline, which can be compared with the historical average of 2. 3 per cent. at present a higher level of economic growth is thus required to change the level of unemployment compared to the average historical relationship since 1980. the time lag between gdp and unemployment also appears to have increased during the 2000s. thus, it now takes longer before the full impact of a change in growth has an effect on unemployment in sweden. what is different this time? part of the explanation for unemployment not having risen as much as one might have expected given the historical relationship could be that not all of the economy has suffered. the main fall in employment has been in the manufacturing industry, while the services sector, which is more labour intensive, has fared better