manufacturing base, government is promoting the establishment of multi - facility economic zones ( mfez ) on the copperbelt ( chambishi ), and lusaka ( lusaka south and east ) provinces by providing for fiscal incentives and quality infrastructure development in the budget. operations at the chambishi mfez have already commenced. further, the budget reclassified and re - categorised certain manufacturing materials with the aim of lowering customs duty rates. ( iv ) mining sector : – in light of the adverse impact of the global economic crisis on the mining sector and with the view of easing these effects, the zambian government introduced tax concessions, which included removal of the windfall tax, increasing capital allowance to 100 percent as an investment incentive, and reduction of customs duty on heavy fuel oils. as the central bank, we have continued to monitor and review developments in the foreign exchange market and provide prudent support when necessary in order to dampen excessive volatility in the exchange rate and safeguard the recently achieved macroeconomic stability. to this end, the bank has been a net seller of foreign exchange to banks. however, the bank ’ s interventions were limited, given the global extent and magnitude of the crisis. some of the specific measures the bank of zambia implemented include the following : • improving information flows : the bank of zambia has enhanced its vigilance and interaction with the domestic financial system to ensure adherence to its supervisory guidelines and to enhance information flows. the boz is continuously interacting with banks to ensure that detailed information regarding foreign exchange transactions is provided and has also engaged major business entities to understand their expected foreign exchange requirements. this is necessary to ensure market constraints are addressed expeditiously. • sale of foreign exchange : increased the supply of foreign exchange to the market with the primary purpose of smoothening short - term volatility in the exchange rate and the foreign exchange market generally. since september 2008 to date, the bank has sold us $ 364. 5 million to the market against purchases of us $ 9. 5 million ; • issuance of directives : on march 2, 2009, the bank of zambia issued directives to commercial banks prohibiting the extension of loans and / or credits and providing other sources of kwacha funding to non - residents for any maturity period of less than one year. the government is in the process of issuing a statutory instrument, which will clarify this position, in order to protect the integrity of the financial market. • collaboration with

financial problems and the credit crunch in their countries of origin. availability of credit perhaps the most challenging effect of the global financial crisis, especially for developing countries like zambia, was its impact on private sector investment. between 2006 and 2008 credit to the private sector grew strongly ( at an average of 45. 6 % per annum ), largely driven by the expansion of consumer credit and the strong growth in the domestic economy. an immediate consequence of the financial and economic crisis was limitation of credit lines and a slow - down in fdi flows. in 2009, domestic credit is expected to slow down as financial institutions adopt more conservative lending practices and tighten their lending standards. in addition, the deterioration in corporate and household balance sheets has now been translated into higher non - performing loans ( npls ) as a percentage of total assets in the banking sector ( from 6 % in mid - 2008 to 13. 1 % in september 2009 ). the deterioration in npls entails more vigilance for the bank supervision function of the bank of zambia. iv. strategies to maintain stability in responding to the crisis, the government has taken steps to maintain macroeconomic stability and continue encouraging investments that will lead to diversification of the economy and safeguard vital social services. further, the government found new investors to take over the running of the closed mining operations and negotiated with the owners of the bigger mines on modalities of continuing with operations at the mines to forestall further job losses. the 2009 budget prioritised infrastructure development with the view to opening investment opportunities for diversification, particularly in agriculture, tourism, and manufacturing sectors. some specific measures include the following : ( i ) agricultural sector : – increased allocation of funds to the sector for livestock development and creation of at least one disease - free livestock zone, farm block infrastructural development and irrigation projects. further, the value added tax on selected agricultural equipment and spares, was zero rated as incentive to increase agricultural production and productivity. ( ii ) tourism sector : – in order to diversify the economy and attain broad based economic growth, government increased the allocation to the sector to improve access to the northern tourism circuit ( infrastructural development in mbala and kasaba bay ). further, government will embark on the development of a new world class tourism area in livingstone, and step - up the development of road infrastructure in key national parks namely, luangwa and kafue. ( iii ) manufacturing : – in order to expand the