our financial system has certainly faced increased competition. whereas the number of commercial banks at the end of the 1990s was 14 after the failure of some insolvent banks, zambia now boasts of 18 commercial banks who in aggregate have a total of 263 branches. in the non - bank financial subsector, growth of nonbank financial institutions offering bank - like products has also tremendously increased. as at end june 2010 there were 24 registered microfinance institutions while the number of leasing firms also increased to 12 over the years. ladies and gentlemen, apart from increasing the number of financial service providers, we have also scored some successes in the availability of credit to zambians. in the period prior to the 2008 global financial crisis, the economy was experiencing not only phenomenal growth in credit availability but also a changing pattern in the distribution of credit. annual growth in credit peaked and averaged 131 % between 2000 and 2008 before succumbing to the adverse effects of the global economic crisis. with regard to the direction of credit, it is heartening to note that bank loans, which have been largely a preserve of corporate businesses for a long time, are finally within reach of our many working zambian individuals. ladies and gentlemen, the flow of credit to individual workers has literally exploded in recent years. you may wish to know that personal loans, which stood at a paltry 6 % of total bank loans at the turn of this decade now account for 26 %. you may also remember the aggressive manner in which commercial banks rolled out their loan products in the period prior to the 2008 global financial crisis. although the degree of aggression may have somewhat subsided in the aftermath of this crisis, banks are still extending loans to persons they assess as creditworthy. outside the banking system, credit availability by non - bank financial institutions has also increased in many forms with annual growth in direct loans disbursed by microfinance institutions and leasing finance institutions showing a significant rise. chairperson, although these developments are encouraging and commendable, i do not think we should be fully satisfied with them. it is not enough to merely increase the number of financial institutions, nor is it enough to concentrate on building consumer loan portfolios to salaried workers only. in my view, the real gains should arise not only from increased accessibility to financial services by more of our people, but also the cost at which such accessibility is made possible. i am sure you will readily concur with me that access to finance in zambia is still relatively

competition. as competition intensifies, banks and other financial institutions would start to reposition themselves by lowering the cost of finance. on the policy front, the central bank and government in general will continue to pursue appropriate policies that promote financial sector growth so as to enable them to reduce the cost of financial intermediation and improve the delivery of high quality financial services. on its part the government contributes to reducing the cost of capital through lower deficit spending. this frees resources for private sector borrowing. chairperson, i wish to strongly encourage the accounting profession to join hands with the central bank and other government organs in the task of reducing the cost of doing business. in answering the question : the cost of capital – wither the zambian financial markets? – i would say that zambia has made significant achievements in making the financial markets as properly functioning as possible. in its current state, the banking system, being the dominant player in the financial sector, should embrace competition and offer products and services that can spun growth of the entire economy. the capital market has the challenging task of mobilising small number of participants and limited range of long - term investment products. despite these challenges i am optimistic that working together, we can reduce the cost of finance in zambia. the bank of zambia will continue to provide the required leadership and act as the catalyst for the emergence of viable and responsible markets to serve the interests of all investors. ladies and gentlemen, i wish you success in the deliberations of this conference and in the rest of your endeavours for 2010. i thank you for your attention.