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

##e that we have a flexible exchange rate regime that has served us well after doing away with exchange controls in the early 90s. the exchange rate of the kwacha against other international currencies has enjoyed relative stability since 2003 when the interbank foreign exchange market system ( ifem ) was introduced. with this system, the bank of zambia intervenes in the market mainly to smoothen fluctuations and to build international reserves. the exchange rate is expected to be driven by economic fundamentals such as the terms of trade. an attempt to fix the exchange rate would have disastrous effects especially when the fundamentals suggest that the rate should depreciate as this would wipe out all the reserves we have struggled to build over the recent past. in such circumstances, the bank intervenes to moderate short term volatility of the exchange rate but not to change the direction dictated by the fundamentals. on the other hand, an improvement in the terms of trade provides an opportunity for the bank of zambia to build reserves as it smoothens the rate of appreciation. finally, mr president, i wish to congratulate you on the contribution made by manufacturing sector to the gdp growth in 2009. the performance of the sector was favourable, recording a real growth of 2. 5 % compared with 1. 8 % in 2008. i am confident that as the economic fundamentals continue to improve, banks are expected to increase lending to the private sector at reduced rates. we therefore expect the sector ’ s contribution to growth in 2010 to increase. in order to assist the country ’ s diversification process away from copper, i wish to implore you to seek ways of enhancing productivity in your various sectors as a means improving competiveness of your products for exports. mr. president, one way by which your members can contribute to increased gdp is through participation in the multi - facility economic zones ( mfezs ) for which the government has approved establishment of three. you may wish to note that the construction of the chambishi mfez on the copperbelt has reached an advanced stage while work on the lusaka south mfez is underway. several enterprises with significant investments are already being established at the chambishi mfez. there is also a proposal for the establishment of the lumwana mfez in north - western province. these zones are expected to enhance the country ’ s efforts of promoting value addition to raw materials which will in turn boost the manufacturing sector. they are also consistent