youth, who usually make up the greatest proportion of the unemployed. however, this sector has faced difficulties in accessing credit for working capital and expansion of their investments. mr chairman, even if more smes wished to modernise their plant and equipment, they would find it hard to do so because of the difficulty of obtaining financing. many banks choose not to provide credit to smes as they are perceived to be more risky and yet less profitable. some banks that might want to make such loans may lack the knowledge of how to make small loans and package them appropriately. the other challenge lenders have to work with in assessing smes for them to access credit is the lack of reliable data. for example, data on the share of bank credit to smes are almost non - existent in zambia. even in banks where credit data are available from credit registries, in most cases they do not include information about the size of firms. any estimates regarding the share of credit to smes have to rely on proxies, such as the size of loans. mr chairman, it is clear that lending to smes is different from lending to large firms. in the case of young firms, it is more difficult to acquire information. moreover, given the small size of the loans, it does not pay for the bank to undertake a detailed review of the creditworthiness of smes. thus, for sme lending to be profitable, banks must experiment with new approaches and technologies for risk assessment and loan management. such experimentation produces positive externalities by generating knowledge that is difficult for the bank to keep for itself, since trained agents can leave the bank to work with competitors. the other benefit we get from smes is that when there are adverse shocks in the market, their small size and flexibility allow them to speedily adjust to market changes. ladies and gentlemen, it is encouraging to note that, in the recent past, banks and non - bank financial institutions have expanded their provision of finance to smes, although there is still a lot of room for further improvement. we have recognised that a long - term strategy for smes calls for action across a wide range of policy domains, including education, research and development, financial sector regulations, competitive policies and a sound banking sector. these actions should address the need to create a healthier overall economic environment in which the business sector, smes in particular, operate. all key stakeholders should therefore strive to put in place smespecific policies and programmes

of workshops, marked the end of phase i of the implementation programme of the risk management framework at the bank. following the end of the risk sensitization workshops the next stage required the implementation of the framework in the business areas. as mentioned earlier, the bank faced a number of teething problems in the implementation process of the first stages of the framework with departments having some difficulties in following written guidance that was being given by the risk management department. as one of the possible solutions to this, senior management agreed to the risk management department ’ s suggestion that phase ii of the risk management framework implementation process also be effected through workshops, targeting the risk liaison officers who are, by definition, the critical anchors of the approved risk management framework. this background therefore justifies the gathering that we have here today. ladies and gentlemen : your group, as risk liaison officers, alternates and risk coordinating officers, occupies and a plays a very important role in the governance structure of the risk management framework. you may wish to note that your group plays a function of a “ critical link ” between staff from your respective departments and the head of department who is, by definition, the risk manager. for this reason, the importance of your responsibilities should be very clear and need not be overemphasized. for those who might have forgotten their roles, i wish to encourage you to re - familiarize yourselves with the risk management and business continuity management ( bcm ) policies, where your respective responsibilities are clearly spelt out. having said this, the workshop you are attending today and tomorrow has the following key objectives : i. to explain the practical aspects of “ context establishment ” and the “ risk identification ” processes so as to ensure that you fully understand these initial, but critical steps, in the risk management process so as to enable you to assist your respective departments to complete these important stages of the process ; and ii. to remind you of your role and responsibilities, as risk liaison officers, alternates and risk coordinating officers, in the risk management framework. ladies and gentlemen : allow me to reiterate what i said during the risk sensitization workshops – the success of the bank of zambia risk management framework will in a large measure depend on how well this process will be understood and how well its implementation at departmental level will be facilitated by you. as risk liaison officers, alternates and risk coordinating officers for your respective departments, you will be expected to not only provide leadership and guidance to your respective departments on risk