remarks by the governor on the launch of the 2023 banking industry survey report by pwc august 2024 presentation outline introduction state of the local economy liquidity risk cybersecurity financial performance and condition of the sector introduction ▪ the survey is a very useful tool to many stakeholders, including ourselves. ▪ the 2023 report is the eighth edition. we commend pwc for this initiative and we appreciate the cooperation of the respondents. ▪ the 2023 survey report raises a lot of important issues. however, will focus our brief comments on three top issues raised by respondents : o o o state of the local economy ; liquidity risk ; and cybersecurity state of the local economy ▪ will look at the state of the local economy through the lens of our recent monetary policy committee meeting. ▪ the mpc maintained the monetary policy rate at 13. 5 percent. while actual and projected inflation remain elevated relative to the 6 - 8 percent target band, the committee judged that the current monetary policy stance is appropriate. ▪ inflationary pressures have persisted, with inflation rising to an average of 14. 6 percent in the second quarter of 2024 from 13. 5 percent in the first quarter. ▪ persistent depreciation of the kwacha against major currencies and rising prices of food ( maize grain, maize products, and vegetables ) and energy, particularly fuel, due to constrained supply continued to drive inflation up. ▪ these factors remain key risks to the inflation outlook, exacerbated by extended hours of electricity load management, continued geopolitical conflicts and tight global financial conditions. ▪ inflation is, however, forecast to moderate to 12. 7 percent in 2025, albeit higher than the 9. 8 percent reported in the may 2024 monetary policy report. ▪ in the first half of 2026, inflation is expected to average 10. 8 percent. state of the local economy ( cont. ) ▪ the mpc decision further considered the impact of the drought and that of the past successive increases in pr, increases in srr, and the recent reforms in fx market. ▪ in maintaining the pr as opposed to raising it, the committee also considered the impact on financial stability and growth, particularly in 2024, in the wake of the drought. ▪ continued implementation of fiscal consolidation measures and structural reforms remains critical to lowering inflation, maintaining financial stability, and creating growth enabling environment and resilience of the economy against shocks. ▪ to safeguard macroeconomic stability needs concerted efforts and strengthened

foreign exchange exposures and an absence of or inadequate risk management frameworks. in other banks, the board chairman was also the majority shareholder and the chief executive of the bank. such basic risk management failures, to a large extent reflect a breakdown in corporate governance. chairperson, you may wish to note that the zambian banking system is stronger and properly regulated today than it was in the 1990s. the bank of zambia has been periodically reviewing the banking and financial services act ( bfsa ) to bring it up to date with international standards and current global practices. one of the areas the banks has continued to strengthen is the corporate governance provisions to ensure that the board of directors and senior management of banks and financial institutions conduct the affairs of their institutions prudently. in particular chapter iii, part iii and iv of the bfsa deal with the boards of directors of banks and financial institutions. under these parts : every bank or financial institution is expected to have a board of directors in which shall vest all the powers of management and control and which shall be responsible for the formulation of policies of the bank or financial institution ( section 30 ( 1 ) ; the board of directors shall consist of not less than 5 members ( section 30 ( 2 ) ; every financial service provider must have a chief executive officer and chief financial officer who shall not qualify to hold office unless it is shown that ; they are fit and proper persons, above 21 years old, have not been convicted of a felony or offence involving dishonesty, are not mentally incompetent, have never been removed from office under the bfsa, have not managed a company that has gone into liquidation or entered into a composition with creditors ( section 31 ) ; the majority of directors must be from outside the bank ( section 32 ( 1 ) ; directors, chief executive officers and chief financial officers are expected to act honestly, in good faith and in the interest of the company whilst exercising due care, diligence and skill ( section 33 ) ; a director is required to declare in writing to the board annually, the names and addresses of the director ’ s associates and full particulars of every material interest ( section 35 ) ; a director who ( a ) negligently or with intent to deceive, makes any false or misleading statement or entry or omits any statement or entry that should be made in any book, account, report or statement of the financial service provider, or ( b ) obstructs or endeavours to obstruct