own forecasts and in private sector forecasting. for example, the bank ’ s growth forecasts made in 2010 were derailed by the euro - area crisis. these outcomes are a combination of not understanding at the outset how slow the healing process from the 2008 crisis would be and subsequent unforeseeable and unfortunate events. secular stagnation story there is another rather different story however, one more reminiscent of our friend the mythical boiled or frozen frog. in this other world, we are not on a slow healing path, subject to a series of unfortunate events. rather, there are deep secular and structural forces pushing down on our economies. these began to have an impact before the financial crisis. but their effect was masked somewhat by stimulative effects of the financial sector bubble as it inflated and was only exposed in the post - crisis world. in this story there is recovery from the crisis, of course, but it is recovery to economies with both considerably weaker growth potential and considerably greater vulnerability to shocks. we are in a “ secular stagnation ” world but have not fully woken up to it. there are different hypotheses as to why we might be in such a world. one is that we are stuck in an era of very low demand because there are more savers than opportunities to invest. this is due to fundamental factors such as demographic changes, inequality and preferences for low - risk assets. when the supply of savings exceeds demand for borrowing the price – i. e. the natural real interest rate – goes down. if this natural real interest rate is pushed down below zero and held there by this imbalance between supply of savings and demand for borrowing, central banks can ’ t push demand back up and economies remain stuck. in this world, neither central banks nor the private sector can easily break the cycle ; the government has to step in to borrow massively to invest thus correcting the imbalance of savers and borrowers and pushing the natural interest rate back up. another, somewhat different take, is that we are stuck in an era not of low demand but of low supply growth. in this view, productivity growth slowed in the 1970s after the benefits of the second industrial revolution had finished working through. and, despite the manifest technological developments, such as ict, technological change has not since had an equivalent impact on productivity. or, as peter thiel said : “ we wanted flying cars, instead we got 140 characters ”. this is a world in which it

of unplanned residential areas. in spite of the growth in the share of real estate to gdp, the zambian real estate finance sector is still characterized by inadequate long - term finance. prior to 1990, the sector was dominated by the zambia national building society ( znbs ), which following the liberalisation of the economy in the 1990s, is unable to meet the demand for real estate finance. much as there are other building societies now, their impact on real estate finance is still minimal. consequently, most of the people who are constructing nowadays are doing so out of their own funds. since they are building using their own meagre resources, the quality of their structures leaves much to be desired and the projects take long to complete. this, in part, explains the mushrooming of shanty compounds i have alluded to earlier. what i have said clearly shows that there is need for new players in the real estate financing sector. to this effect, i wish to challenge the private sector to invest in the real estate financing business. having said that, what is the role of the bank of zambia in enhancing investment opportunities in the real estate business? as you may be aware, the primary mission of the bank of zambia is to formulate and implement monetary and supervisory policies that will ensure price and financial system stability. how does this tie in with real estate business? the relationship between real estate business and monetary policy and financial system stability is a much debated issue among academics and policy - makers, alike. the relationship brings to the fore important challenges involving policy design, financial regulation and risk management. in zambia, however, like most other developing countries, we have had difficulties in quantifying the relationship due to paucity of reliable information on property markets, thereby limiting the scope for meaningful analysis as an input into policy formulation. it is therefore, critical that improvements are made in the quality of real estate sector data to enhance analysis and policy response to developments in this sector. there is no doubt that the rate of inflation is still too high in zambia compared to some of our neighbours, like tanzania, botswana, and mozambique. however, i wish to assure you that lower rates of inflation are within reach given government commitment to fiscal discipline and macroeconomic stability. it is a well established that high inflation ( that is, above ten percent ) is a cost to economic activities. this happens through : 1. increased investment costs. high and persistent inflation adversely affects savings mobilization in the economy because savers