ZAMB NKER MARCH 2020 EDITION www.boz.zm A BANK OF ZAMBIA JOURNAL

Zambanker March 2020 1 ZAMB NKER March 2020 Edition www.boz.zm A Bank of Zambia Journal

CONTENTS Views expressed in this publication are not necessarily PG 8 - Collaboration is key to those of the Bank of Zambia minimising regulatory loop- Management or the Editor holes HEAD OFFICE Bank of Zambia, Bank Square, Institutions like the Bank of Zambia that are concerned with public policy objectives can Cairo Road P. O. Box 30080 no longer afford to work in isolation, Deputy Lusaka, 10101, Zambia Governor-Operations, Dr Francis Chipimo has said. Tel: + 260 211 399300 Fax: + 260 211 221764/237070 E-mail:[email protected] Website: www.boz.zm PG 10 - Kwacha, Shilling trade side by side FOLLOW US ON: The Bank of Zambia (BoZ) and the Bank of Tanzania Flickr: Bank of Zambia (BoT) have launched the currency exchange programme between Zambia and Tanzania. The Twitter: @BankofZambia launch, which took place at the one stop border YouTube: Bank of Zambia District Commissioner Mr Fred Simwinga and Facebook: @BankofZambia inMomba Tunduma, District Tanzania Commissioner, was officiated Honourable by Nakonde Juma Irando.

MISSION: To achieve and maintain PG 16 - ZICA CEO Courts price and financial system Regional Office Accountants stability to foster The Zambia Institute of Chartered Accountants sustainable economic development. Kashinga paid a courtesy call on ZICA members (ZICA) Chief Executive Officer, Mr Bonna highlights on various developments the institute atwas the undertaking. BoZ - Regional The Office developments where he includeshared keythe introduction of short courses, launch of the CFI ZAMB NKER MARCH 2020 EDITION www.boz.zm A BANK OF ZAMBIA JOURNAL

Certification and digitalisation of study materials.

PG 36 - Staff tutored on 2019-Coronavirus

The novel Coronavirus outbreak which started in

vaccine. Patients who are symptomatic receive Wuhansupportive City treatment in China hassuch no as specific oxygen therapy,treatment pain or and fever relief as well as antibiotics if they fall very ill.

Zambanker March 2020 1

2 March 2020 Zambanker BoZ responds to deteriorating macroeconomic environment & Covid-19

...The Bank will continue to monitor the situation and take any additional measures it deems appropriate to safeguard financial system stability...

By ZAMBANKER REPORTER The Bank of Zambia has put together a set of comprehensive measures to safeguard financial system stability, promote the greater use of digital financial services and mitigate the negative effects of this shock on the economy to complement the measures taken by other arms of Government.

n a press statement issued recently, and restructuring of facilities to critical Mobile Money Trust accounts to support Bank Governor, Dr Denny Kalyalya sectors. the provision of sanitisers at mobile said key among these measures money operator booths. Additional are the following: establishing a The transitional arrangement provided support will be provided to promote I awareness amongst the public and Facility with an initial amount of wherein FSPs were granted a 3-year mobile money service users; and urging K10Targeted billion Medium-Term to provide medium Refinancing term transitionalfor under CBperiod Circular from 2018 No. to 11/2017, 2020 to commercial banks to remove transfer liquidity. The amount will be reviewed amortise the ‘Day 1 Impact of the IFRS 9’ fees on the bank account to electronic as conditions warrant. This is a three to for capital adequacy purposes has been wallet transactions for an initial extended for a further two-year period period of (3) months and to reduce to eligible Financial Service Providers up to 31st December 2022 on account of the Merchant Discount Rate (MDR). (FSPs)five years to Facilityenable that them will berestructure available COVID-19. Business Continuity protocols that will ensure that systemically important on-lend to eligible clients. Detailed implementationor refinance qualifying guidelines will facilities be rolled or have been allowed to henceforth partially infrastructures remain available,” he out as soon as the on-going discussions useEligible capital non-bank instruments financial that institutionswould not said.payment systems and financial market with the Bankers Association of Zambia ordinarily qualify as common equity are concluded. Tier 1 and Tier 2 capital, for purposes of He said other monetary policy tools computing regulatory capital. available will remain options that “The Bank has also scaled up open may be deployed should conditions market operations to provide short- The sensitisation on the use of digital so warrant, consistent with the Bank term liquidity support to commercial channels and contactless mobile of Zambia forward-looking monetary payment mechanisms aimed at policy framework. The Bank will obtaining before the outbreak of COVID- preventing the spread of the disease by continue to monitor the situation and 19,”banks he on explained. more flexible terms than those minimising person-to-person contact, take any additional measures it deems

Further, rules governing the operations institutions premises and reduced use of system stability. of the interbank foreign exchange market cashdecongesting has been banks stepped and up other by: adjustingfinancial appropriate to safeguard financial to support its smooth functioning have downwards the Zambia Interbank The Zambian economy has been facing been revised to strengthen market Payment and Settlement System (ZIPSS) discipline and provide a mechanism for processing fees to increase the use of addressing heightened volatility in the the Real Time Gross Settlement System significant macroeconomic challenges exchange rate in periods of stress. (RTGS); increasing transaction and obligationsas reflected as in well low as growth, low international high fiscal wallet limits for individuals, small- reserves.deficits, rising The inflation outbreak and debtof COVID-service Similarly, the Governor explained that scale farmers and enterprises as well 19 pandemic has compounded the as removing these limits for agents situation, resulting in unprecedented through the issuance of new Directives as and corporates; waiving charges for global public health and economic theloan replacement classification to and Statutory provisioning Instrument rules person-to-person e-money transaction crises. Although the full impact of the values of up to K150 by all electronic COVID-19 shock on public health and of being revoked have also been money issuers, which will be reviewed the economy cannot be determined at revised.No. 142 ofThis 1996, will which allow is FSPs in the to process better at end April 2020; approving the use the moment, indications are that it will of K8.0 million from interest earned on be unprecedented.

accommodate lending, refinancing, Zambanker March 2020 3 News in Brief March 2020

Value Limits Increased of the forecast period, but decline towards the upper In the wake of COVID -19 (coronavirus), the Bank boundinflation of is the expected target torange remain thereafter high in theas food earlier supply part of Zambia in consultation with commercials banks and payment service providers, introduced a set of measures aimed at reducing cash transactions currentlyimproves. projected Much of theon inflationaccount hasof the been anticipated driven by and facilitating increased use of mobile money improvementrising food prices; in agriculturalinflation could output decline due faster to thanthe transactions. The immediate objective is to reduce favourable rainfall pattern observed so far during the the risk of transmission of COVID – 19 through the 2019/2020 crop season; handling of cash. Subdued economic activity with growth prospects The following measures have been adopted and will remaining weak over the period 2020–2021; apply with immediate effect: stability. Electronic money issuers shall not charge for person- persistent liquidity challenges and risks to financial to-person e-money transactions valued up to K150. Thumbs up BAZ This will apply until 30th April, 2020. The Central Bank has congratulated outgoing BAZ Transaction and balance limits on agents and Chairperson Mr Kola Adeleke, and his Team for coming corporate wallets have been removed while those for up with a well-articulated 2020-2022 Strategic Plan individuals, small-scale farmers and enterprises have and for updating the Code of Ethics and Banking been adjusted upwards as follows: Practice document which will undoubtedly help in transforming the industry and ultimately contribute to economic development. Speaking at his Meeting Type of Customer Old New Limit Per New with CEOs of Commercial Banks recently, Central /Client Limit Transaction Maximum Per Day (‘K) Balance (‘K) Bank Governor, Dr Denny Kalyalya also welcomed the new Executive Committee led by the Chairperson Individuals Tier 1 10,000 20,000 100,000 Mr Herman Kasekende; the Vice Chairperson Mr Individuals Tier 2 20,000 100,000 500,000 Simangolwa Shakalima; the Treasurer Mr Leina Small scale farmers 250,000 1,000,000 1,000,000 /Enterprises (not and hoped that the new team would emulate the good incorporated) workGabaraane of the and previous the Ex-Official, committee. Mrs Joanna Bannerman

The current Anti-Money Laundering and Countering Legal symposium to be held in the second quarter Terrorism Financing (AML/CFT) measures will of 2020 continue to apply.

In addition, the Bank of Zambia has also reduced the interaction with the legal and compliance functions of Zambia Interbank Payment and Settlement System regulatedThe Bank ofentities Zambia as hasa way identified of promoting the need knowledge for close (ZIPSS) processing fees. This is meant to increase the sharing and enhancing compliance with various use of the Real Time Gross Settlement System. Legal Services Department shall be hosting a Legal Outcome of the Monetary Policy Committee Symposiumfinancial laws on andan annual regulations. basis Toat which this end, various the Meeting of 17th – 18th February 2020

The Monetary Policy Committee at its Meeting held presentedtopical issues and discussed. such as new financial regulations, on February 17–18, 2020, decided to maintain the proposed legislation and new financial laws will be Policy Rate at 11.50%. In arriving at this decision the Committee took into account the following factors: June 2020. The first of such Legal Symposium is planned for end-

4 March 2020 Zambanker Higher inflation expected over the first half

By ZAMBANKER REPORTER

Inflation is projected to remain above the target range over the first half of 2020 on account of the effects of on-going electricity supply challenges and increased external debt service, the Bank of Zambia Monetary Policy Statement has disclosed.

he Statement, which covers 2019. This was mainly due to a sharp declined mainly on account of a drop the period January to June, increase in prices of maize grain and in copper export volumes. However, 2020, notes that elevated copper prices rose due to favourable food prices as well as the depreciation of the Kwacha against the market sentiments associated with the Tsecond round effects of increases in USrelated dollar. products To moderate and pressure the significant on the “US-China Phase One Trade Deal” and electricity and fuel prices in January exchange rate, the statutory reserve supply disruptions in Chile. Imports of 2020 are also expected to contribute ratio was raised to 9.0% in December goods declined as a result of subdued from 5.0% and the compliance shifted economic activity. to daily from weekly. declineto higher faster inflation than overexpected the first should half improvementsof the year. However, in agricultural inflation output could The Overnight Lending Facility rate during the 2019/2020 crop season was also adjusted upwards to 28% in programmedThe fiscal performancespending on remained capital materialise. projectsunfavourable, and reflectingexternal debt higher service than rates continued to rise in the second payments, compounded by the Monetary policy will focus on bringing halfNovember of 2019 from mostly 18%. due Market to sustained interest depreciation of the Kwacha. The Government domestic borrowing that continued volatility in the Kwacha in the medium-term using the forward kept yield rates high. In this regard, exchange rate is likely to pose additional lookinginflation monetaryback to the policy 6-8% targetframework. range commercial banks’ lending rates risk to the performance of the 2020 The framework is anchored on the continued to rise while credit to the budget. Further, the accumulation of Policy Rate as the key signal for the private sector remained subdued as domestic arrears remains a risk to monetary policy stance. This takes credit conditions tightened further and weak economic activity persisted. Therefore, there is need for effective the stability of the financial sector. into account inflation forecasts and Indicators of economic activity adjustment and structural measures to consolidation.outcomes, identified The Policy risks, Rate as wellwas suggest a further slowdown in addressand sustained elevated implementation debt levels and of fiscaldebt maintainedas progress inat the11.5% execution in February of fiscal growth in the second half of 2019 service, the accumulation of domestic 2020, taking into consideration weak owing to the contraction in mining arrears, and liquidity constraints. domestic growth and the need to output, electricity generation, cement production, consumer spending The global economy is estimated to policy continued to focus on bringing and manufacturing. In 2020 and the have expanded at a slower pace in safeguard financial stability. Monetary medium-term, real GDP growth is 2019 than the preceding year. Growth 6-8% in the second half of 2019. In this projected to pick-up, albeit at a weaker decelerated mainly on account of trade regard,inflation the back Policy to theRate target was raised range by of pace, driven largely by the anticipated and geopolitical tensions, weather recovery in the agriculture, electricity, related disasters, as well as uncertainty and mining sectors. surrounding Brexit. Over the medium- above125 basis the pointstarget torange 11.5% of 6-8%. in November term, global growth is projected to as inflation was projected to remain A lower merchandize trade surplus pick-up, albeit at a reduced pace, driven was recorded in the second half of 2019 by the recovery in manufacturing, and averaged 11.3% in the second half due to a higher contraction in exports Annual overall inflation remained high relative to imports. Export earnings global trade. business confidence, investment, and of 2019 from 7.5% in the first half of Zambanker March 2020 5 Barclays Bank Zambia Completes Rebranding as ABSA

Deputy Governor – Operations Dr Francis Chipimo and Director - Bank Supervision Ms Gladys Mposha with Absa Managing Director Ms Mizinga Melu and her staff during the official announcement of the name change from Barclays Bank Plc to Absa Bank Zambia Plc in Lusaka.

By ZAMBANKER REPORTER

Barclays Bank Zambia completed its transition to Absa Bank on 10th February 2020. Speaking during the media breakfast to announce the completion, Absa Bank Zambia Managing Director, Mizinga Melu, said the official name change to Absa Bank Plc is a great milestone the bank is proud of.

he explained that the rebranding bank is built on a long and rich history the service of its current and future could not have been possible in Zambia, having been established in customers. This change in name is without the support from the 1918 as a branch of Barclays Bank Plc, not only happening here in Zambia, bank’s key stakeholders and U.K., and later as a fully incorporated but in all other African countries Sclients. company and licensed bank in 1971. where Barclays Bank Plc, UK still had a presence,” he explained. “Our stakeholders and clients have He explained that this makes Absa been extremely supportive during the Bank PLC, at over 100 years, one of the He added that Absa has continued transition because they understand oldest banks in Zambia, adding that to be in the top tier of the industry that this is just a change in shareholders and ranked 1st in terms of loans, 2nd but that the commitment to delivering of resilience, capacity and capability. in terms of assets, and 4th in terms Helongevity however in the said financial this is sectorno guarantee is a sign of deposits. He said Absa has a wide needs will continue,” she said. that the future will be as kind, because footprint in all 10 provinces of Zambia financial services that meet our client’s through a network of 37 branches Speaking at the same function, Deputy repeat itself but not always with the and agencies, 101 Automated Teller Governor-Operations, Dr. Francis samein the players. financial sector, history tends to Machines (ATMs), 2,241 Point of Sale (POS) machines, and 144,451 mobile of Barclays Bank PLC to Absa Bank “What we witness here today is a and internet banking facilities. He ZambiaChipimo, PLCsaid theis officialan important name change and change in name and not a change in elaborated that it is the Central Bank’s the commitment of Absa Bank Zambia expectation that Absa Bank Zambia PLC and economic history given that the PLC to excellence and dedication in will continue to grow from strength to historic event in Zambia’s financial 6 March 2020 Zambanker strength.

As the regulator, the Bank of Zambia has been actively engaged with Absa Bank Zambia PLC management (formerly Barclays Bank Zambia PLC). This engagement has included discussions with the Group, the South African Reserve Bank and other regulators in other jurisdictions where Barclays Bank operated across the continent.

“The separation from Barclays Bank Plc, U.K. has indeed been challenging and complex and includes the separation and migration of all its systems that were previously being Deputy Governor – Operations Dr Francis Chipimo at the Absa Bank Plc rebranding event. provided by Barclays Bank Plc, U.K. The change-over has proceeded very well and I commend management for this,” he said the bank has ensured that customers andThe Deputyemployees Governor had wasremained gratified at thatthe heart of its operations. He said that the transition itself has been relatively seamless as the bank worked to ensure that there were no major disruptions in service delivery at any given point.

He further stated that the Absa Group has committed to ensuring that the bank remains well capitalised and that any capital or liquidity challenges, should they emerge, would be supported. He said it was very Deputy Governor – Operations Dr Francis Chipimo, Director - Bank Supervision Ms Gladys Mposha and Absa important for the Bank of Zambia as Managing Director Ms Mizinga Melu. regulator and for the customers of Absa Bank Zambia PLC to note that the bank rests on a strong foundation „„ Customers can look forward to also changed, but continue to of support from its parent company. I new and innovative products and operate as usual during normal believe that this support will ensure services from Absa Bank Zambia banking hours. that Absa Bank Zambia PLC can PLC such as updated internet and continue to be a progressive force mobile banking apps. In March 2018, Barclays Africa Group

What has not changed? hosted a tele-conference from South Drwithin Chipimo our financial also noted sector. that Absa’s Africachief executivewhere he officer,announced Mario that Ramos, from commitment to Zambia extends „„ Cards, accounts, cheque books March, 2020, the Barclays Bank brand to community events, such as the etc. continue to work as normal. will no longer exist in Zambia or any All new cards issued from 10 of the other markets in Africa where for footballers; the Absa Marathon; February 2020 bear the Absa Barclays operated. scholarshipsAbsa Cup, financial for over literacy 50 vulnerable training brand. Barclays-branded cards students; and the ready-to-work and cheque books continue to be Absa Group Limited (ABGL), is an program that has reached over 15,000 valid until they expire, at which youths. point a customer can have it group, offering personal and business replaced with an Absa-branded banking,African basedcredit financialcards, corporate services What has changed? card or cheque book. and investment banking, wealth „„ The look and feel of all channels and investment management. The „„ The Bank’s website is now www. (e.g. ATMs, internet banking, Absa group which is listed on the absa.co.zm Johannesburg Stock Exchange is the „„ Branch colleagues have stylish mobile banking app) has changed, majority shareholder of 11 banks with butmobile they bankingwork. and our official a presence in 12 African countries, warm, vibrant red color palette. „„ The branches look and feel has including Zambia. new uniforms reflecting their new Zambanker March 2020 7 Enactment of NAB Bill 2019 to enhance linkages

By ZAMBANKER REPORTER

The Bank of Zambia is confident that the proposed National Planning and Budgeting Bill 2019, N.A.B no. 22 of 2019 once passed into law, will greatly enhance the linkage between national planning process and the national budgeting system, thereby allowing the country to align its on-going spending patterns to sustainable long term development goals.

aking a submission to and budgeting process and enhanced responsible for its implementation. For the joint Parliamentary budget credibility. We believe that the clarity, it is important to state whether committee consisting of Bill, with amendments, will strengthen the two are different, including an the planning and budgeting process indication of the committee that will be MEconomy, Trade and Labour Matters and and contribute to improved economic responsible for implementation. the Committee on National management and accountability. In section 2(5) of the Bill, the Medium 22the of Budget 2019, CommitteeBank Governor, on the Dr National Denny Comments on specific sections KalyalyaPlanning said and that Budget in general, Bill, N.A.Bthe Bank no. observes that the Bill clearly asserts that In section 1(2) of the Bill, the proposal developmentTerm Development plan Planwhile is definedin section as a linkages between policy, planning and is to appoint different dates for the 2(15)five year the national,Medium provincialTerm Budget and localPlan budgeting are fundamental to improving coming into operation of different Government’s ability to model provisions or parts of the Act. While the the resources of Government and their development according to the local allocationis defined across as a three-year heads of projectionexpenditure of environment. Coordinating and taking of the need to ensure that the relevant control of our planning will ensure pre-conditionsproposal can be are justified put in onplace the before basis and developmental expenditures of that Zambia’s development agenda is the operationalisation of different and functions to finance the operational achieved and will also serve as reference provisions and parts of the Act, this Development Plan. Given the differences and as a guide to the cooperating provision has the danger of postponing inthe theGovernment time horizons in line withbetween a National the partners, as they offer their development the operationalisation of very useful Development Plan and the Budget Plan, support. Basing the budget on national provisions of the Act on account of lack the Bank recommends that the time priorities will imply transforming a horizon be harmonised between the policy vision into strategic choices them. Further, such a piecemeal two. compatible with available resources. approachof sufficient presents preparedness a problem to implement for the implementers of the Act because they The Bank welcomes the inclusion of will have to be constantly checking which the 11 principles relating to national Budgeting Bill 2019 provides for an part of the Act is effective. This challenge planning and budgeting in section 3(1) integratedThe proposed national National planning Planning and is further exacerbated by the fact that in this regard, the Bank also recommend budgeting process; strengthened the various instruments putting into that the principle of ensuring that there accountability, oversight and operation different parts and provisions is performance, evaluation and value participation mechanisms in the of the Act will not be contained in one for money should apply to the national national planning and budgeting process but different instruments. planning and budgeting process. This and principles and modalities for principle should be stated explicitly. formulation, approval, implementation, In light of the above, the Bank proposes monitoring and evaluation of long that the provision for appointment In section 3(2) of the Bill, the proposed term national, provincial and district of different dates for the coming into development plans and budgets. operation of different provisions or is couched in abstract terms without parts of the Act be eliminated from the referencedefinition to of citizens “intergenerational of the Republic. equity” For The Bill also provides for a participatory Bill to avoid legislative ambiguity. the purpose of clarity, the Bank proposes and decentralised national planning and budgeting process, which promotes equity’ is enhanced by contextualising it the participation of state and non- Development Plan is given. However, it is tothat Zambia the definition and in relation of ‘intergenerational to its citizens. state actors in the planning and notIn section clear if 2(4), the Locala definition Development for the Local Plan In this regard, consideration should be budgeting process, evidence based is different from a District Development decision making in national planning plan and which committee will be holding and upholding the natural made for the definition to mean ‘citizens 8 March 2020 Zambanker and cultural environment in common of prescribing the guidelines. with other members of the present thereby enhancing the implementation generation and with other generations, ofwill projects be able and to programs. influence every budget, Section 19 provides for the content of past and future’. In section 7(2), the composition regard, the Bank proposes that the The Bank notes in section 4(2) of membership to the Provincial contenta National of Developmenta Provincial Development Plan. In this Development Coordinating Committee Plan as well as a District Development Development Co-ordinating Committee (PDCC) is outlined. However, in section Plan be provided for under relevant the composition of the National 7(3), it is indicated that members under sections. This will provide clarity as Bill. However, there is no representation sub-section 7(2) (f) shall be nominated to what to expect in these plans. In from(NDCC). other This is astatutory welcome inclusionorganisations in the by their organisation. The sub-section such as the Bank of Zambia (BoZ) and Plan frameworks cited under section the Zambia Revenue Authority (ZRA). council secretaries to be members of 19addition, (1) of the the Bill Nationalmust explicitly Development develop The Bank further notes that section thereferred PDCC. to In specifiesthis regard, town there clerks is need or and adhere to unique benchmarks for 4(2) (iii) includes a representative of to correct section 7(3) to refer to 2(h) planning and budgeting that matches a parastatal, which ordinarily should which is more appropriate rather than Zambia’s circumstances and political include BoZ and ZRA. Given the role 2(f). environment. that the Bank plays in the formulation and implementation of monetary and In section 11, the functions of the District The Bank welcomes the inclusion of the supervisory policies in the economy, Coordinating Committee are provided provision for projects and programmes and the importance of ZRA in revenue to be appraised before inclusion in the collections, the Bank recommends the for a District Development Plan in the development plans as indicated in section inclusion of representation of BoZ and mannerfor, but therein which is no section definition 8(2) providedprovides 24(1). This will ensure that only projects for a Provincial Development Plan. In and programmes that are of economic necessary to reconsider the presence of this regard, there is need to consider theZRA head in the of the NDCC. Industrial Further, Development it may be major projects and programmes are in Corporation vis-à-vis representation Development Plan. theand plan social and significance, budgeted particularlyfor. To ensure for from a parastatal organisation. There providing a definition for the District that Government achieves the desired is also need to consider representation Section 14 requires clarity with results through the implementation from the academia. In particular, the regard to the period that an appointed of the projects and programmes, we Committee should consider including member will serve in the Group as well recommend the formulation of Key a seasoned development economist or as the composition and actual size of Performance Indicators (KPIs) to track a development expert from one of the Cluster Advisory Groups, which are not progress. These indicators, which can be leading public universities in Zambia. indicated. In this regard, we recommend that the composition of the Groups and Framework, should be designed In addition, it is worth considering that embedded within the National Planning in order to maximise the effectiveness of maximum period one will be required to the medium term budget plan from servethe actual on the size Cluster be specified Advisory as wellGroup. as the ministries,according toprovinces specific objectivesand districts. as per It and/or institution, other than members is also important that the assessment the NDCC function, an independent entity In section 15, it is indicated that the of indicators is undertaken at the right Finance, must be engaged to fully Minister shall initiate the preparation trackfrom Cabinetprogress Officeof the andimplementation Ministry of of a Long Term Development Plan, results. While the Bill has provided for specifying the national long term time in the financial year. Typically, the an independent entity in the form of aspirations of the Republic. However, statisticsassessment from needs the toprevious be sufficiently year have far Cluster Advisory Groups, as prescribed there is no indication of the duration beeninto thecollected financial and year analysed, to ensure yet early that in section 13(1), these cluster groups of the Long Term Development Plan. enough to ensure that they can inform should be established at provincial level, The Bank, therefore, proposes that the the priority setting and the subsequent and feed into an independent advisory duration of the Long Term Development budget preparation and national entity at national level. This independent planning. feedback will support implementation of budgeting policy at Provincial level. DevelopmentPlan should be Plan. specified to distinguish The Bank welcomes the inclusion it from the 5-year cycle of the National of Section 27 that provides for the Further, the Bank is in support of the In section 17 of the Bill, the Minister is participation of non-state actors as being obliged to prescribe guidelines for If the Framework is successfully indicated in section 4(2) (g) of the undertaking the review and formulation implemented,National Planningit will enhance Framework. the Bill as this will promote coordination of the successive Long Term Development facilitation of better service provision, and harmonisation of planning and Plans, four years prior to the expiry of the budgeting processes, which have been implementation of the existing one. The of funds, and greater accountability unstructured in the past. This provision language does suggest that the Minister forefficient policy use implementation. of resources, targeted However, use creates an enabling environment for must do this exactly four years before. To Government’s challenge has been trying citizens’ participation, especially in eliminate uncertainty, we recommend to improve planning, budgeting, and the the budget process and cycle. This will that the wording be amended to ‘at links between the two process areas. ensure that policy documents that have least four years prior to…’ which should Typically, the challenges arise from the the full support of all stakeholders need to establish clear policies, ensuring Story continues on page 10 introduce some flexibility in the timing Zambanker March 2020 9 Story continues from page 9 Enactment of NAB Bill 2019 to enhance linkages Similarly, section 49 which requires the that spending is in line with allocations, Development Plan. This is because Minister of Finance to lay before the asthat well budgets as the reflect need tothose measure policies results and introducingimplementation unplanned of theprojects National will and feed those back into policymaking. distort the implementation of the Plan performance report does not indicate The Bank is of the view that this Bill has and the budget as funds for unplanned theNational date when Assembly to deliver a mid-year the report. budget The outlined the link between the national projects will have to be diverted Bank’s recommendation is for such a budget and the national development from some planned and budgeted for policy as the basis for social and projects or programmes. This will economic development planning. This ultimately compromise the quality and Thedate toBank be specifiednotes from in the the Bill. composition is expected to systematically organise delivery of the projects or programmes of membership of the proposed service delivery as well as ensure that that were planned and budgeted for. Committees that these are likely to

allocations. Section 42 provides a requirement for policies influence national budget the Minister of Finance to lay before be large and this will have significant In section 30(2), the Minister is implicationsfinancial implications of having large whenever Committees the required to prepare annual and mid- budget of the Republic for the next willCommittees be exacerbated are sitting. by the The requirement financial the National Assembly the national that they meet at least once in every Plan, which will include an assessment Republican Constitution, however, three months as indicated in the ofterm the reviews impact of of any National unplanned Development projects thefinancial date year.of delivering Unless statedthe national in the schedule. In light of this, there is need to reconsider the size of the Committees Development Plan and the annual not categorically stated in this Bill and/ the number of times they will be budget.on the implementation However, it is of indicatedthe National in evenbudget though to the the National delivery dates Assembly for the is required to meet in a year in order to section 24(1) that projects, particularly other planning and budget processes major projects and programmes will the Committees. This is particularly have to be appraised before inclusion we propose that the date for the importantlessen the if financial the Bill were burden to be of runningenacted in the Plan. In the Central Bank’s view, presentationhave been specified. of the national To be consistent, budget to and operationalised in a challenging no unplanned projects or programmes economic environment, like what the should be taken on during the Bill. country is facing currently. National Assembly be specified in this Collaboration is key to minimising regulatory loopholes

By ZAMBANKER REPORTER

Institutions like the Bank of Zambia that are concerned with public policy objectives can no longer afford to work in isolation, Deputy Governor-Operations, Dr Francis Chipimo has said. Speaking during a signing ceremony of the Memorandum of Understanding (MoU) between the Bank of Zambia and the Zambia Institute of Chartered Accountants (ZICA) at the Central Bank recently, Dr Chipimo indicated that collaborative effort was not only desirable but also necessary to ensure that regulatory loopholes that may arise from information asymmetry are minimised.

rapid regulatory responses. As a result, Dr Chipimo explained that the signing sector was very dynamic having cooperating partners such as ande stated sometimes that the financialvery ZICA who are ready to provide their volatile. Because of this, expertise at short notice enhanced the wasceremony becoming was ever significant more complex for twoand H Bank of Zambia’s ability to effectively thismain required reasons: first,increased the financial cooperation world are fast paced and sometimes require address any emerging issues. among the various regulators and developments in the financial sector 10 March 2020 Zambanker Deputy Governor – Operations Dr Francis Chipimo speaking during a signing ceremony of a Memorandum of Understanding between BoZ and ZICA at the central bank. With him are Deputy Governor – Administration Ms Rekha Mhango (l) and the ZICA team comprising CEO Mr Bona Kashinga, Director Membership and Corporate Services Ms Patricia Sitali and Director Standards and Regulation Mr Mwelwa Mwaba.

standard setters; and second, the Supervision.” practice standards for Zambia. In accounting and auditing standards, addition, the MoU recognises the need The Basel Core Principles state to leverage on each other’s expertise that for banking supervision to be in order to achieve optimal outcomes which govern the financial sector, have effective, a country should have, “ in respective areas of operations. sector.a significant The MoU impact therefore on the provides Bank ofa frameworkZambia as a for regulator exchanging of the ideas financial and accounting principles and rules that A recent demonstration of the information in a more coordinated arecomprehensive widely accepted and internationally, well defined and a system of independent external cooperation between ZICA and BoZ and BoZ. audits, to ensure that users of wasimportance on the implementation and benefits of of the closer IFRS manner to the mutual benefit of ZICA 9 which has profound effects in the In this regard, the Deputy Governor have independent assurance that said that “Accounting and auditing thefinancial accounts statements, provide including a true and banks, fair allowances for loan loss provisions. standards are very important to the Theway financialDeputy serviceGovernor providers was hopeful handle work of the Bank of Zambia because company and are prepared according that collaboration and cooperation of their critical role in Prudential toview established of the financial accounting position principles, of the between the two Institutions would Financial reporting. These standards with auditors held accountable for now be scaled up following the signing have an important impact on the their work”. of a memorandum of understanding. information that is available for examination and other supervisory The Banking and Financial Services He further added that it was the purposes. The better the quality of expectation of the Central Bank that the Joint Working Group proposed to accounting and auditing standards providersAct requires must that financialcomply statementswith the be established under the auspices of thatfinancial shape information, this information, and of the accountingprepared bystandards financial promulgated service the MoU would endeavour to develop greater our ability to monitor and by the ZICA. This is because, ZICA is robust working plans comprising supervise banks effectively. This is mandated, through the Accountants key issues of mutual concern and also true for the supervised entities Act, to develop, promote and enforce interest in order to effectively utilise internationally comparable practice the available resources in the two a critical component of the banks’ standards. ZICA has therefore institutions. He also urged ZICA to creditas well, underwriting as financial standards. statements, In fact, are come up with a framework which is accounting and auditing standards are reporting standards (IFRS) and the aimed at periodic monitoring and part of the preconditions for effective Internationaladopted the InternationalAuditing Standards financial evaluation of the key milestones that banking supervision of the Basel (ISAs), which are internationally Core Principles for Effective Banking accepted standards, as the required plans. will be defined and agreed in the work Zambanker March 2020 11 Kwacha, Shilling trade side by side

By ZAMBANKER REPORTER

The Bank of Zambia (BoZ) and the Bank of Tanzania (BoT) have launched the currency exchange programme between Zambia and Tanzania. The launch, which took place at the one stop border in Tunduma, Tanzania was officiated by Nakonde District Commissioner Mr Fred Simwinga and Momba District Commissioner, Honourable Juma Irando.

Senior Economist - Liquidity Forecasting Mr Philippe Masengo during a sensitisation campaign in Nakonde.

his follows the signing arrangement among EAC member surrendered by market participants of a Memorandum of states. (EAC Currency Convertibility in respective jurisdiction as well as Understanding (MoU) on MOUs of 1994 and 2014). purchase the currencies of the other currency convertibility and Party submitted by the banks and Trepatriation (signed 21st September, For operationalisation of the MOU, arrange for repatriation to the issuing 2018) between BoZ and BoT, which each Central Bank shall authorise Central Bank,” says the MoU. is intended to facilitate acceptability commercial banks along the border of the Zambian Kwacha and the Further, each Central Bank shall not Tanzanian Shilling by the banking other Party’s currencies surrendered by only determine the rates at which it will system in Zambia and Tanzania thus, marketof Tunduma participants and Nakonde in their to acceptrespective the purchase the other Party’s currency resolving mediation challenge at the jurisdiction; each Central Bank will put from the domestic market and apply in place mechanisms for collecting and a spread that enables the market to and facilitating cross-border trade. i.e. receiving the other Party’s currencies function while supporting convertibility allowingborder towns the citizens (Tunduma along & the Nakonde) border surrendered by market participants in but also allow commercial banks in their area to make payments for goods and respective jurisdiction; each Central respective jurisdictions to open and services originating from either country Bank shall purchase the currencies of operate accounts in the currencies of using currencies of their respective the other Party submitted by the banks the two countries, strictly for facilitating home countries, i.e., TZS and ZMW. and arrange for repatriation to the buying and selling over the counter. issuing Central Bank. Bank’s clients shall not be allowed to The move is as resolved during the 6th open an account denominated in other Joint Meeting of Permanent Secretaries “Each Central Bank shall authorise Party’s currencies. of Zambia and Tanzania on 25th April, commercial banks along the border 2016. Informal trade of foreign currencies has other Party’s currencies surrendered by Further, these milestones bode well marketof Tunduma participants and Nakonde in their to acceptrespective the with foreign exchange (Between the with the regional integration agenda jurisdiction; each Central Bank will put Zambianbeen rife atKwacha Tunduma/Nakonde and the Tanzanian border in the SADC region of promoting intra- in place mechanisms for collecting and Shilling) being largely traded on the regional trade. It draws on a similar receiving the other Party’s currencies black market.

12 March 2020 Zambanker PACRA plays a critical role in the economy

By ZAMBANKER REPORTER

Bank of Zambia Governor, Dr Denny Kalyalya has stated that the Patents and Companies Registration Agency (PACRA) plays a critical role in the economic affairs of the Republic, being the place where all corporate entities begin their lives.

The BoZ delegation led by Governor - Dr Denny Kalyalya appearing before a Parliamentary Committee.

peaking when he appeared Bill has recognised the newly enacted and Companies Registration Agency, before the Parliamentary and amended legislation outlined in a critical institution in the economic 5 (1) (a). These include the Movable development of our nation by Economy, Trade and Labour (Property Security) Interest Act, 2016, facilitating development of a thriving SMattersCommittee where the Bank on was National asked which was instigated by the Bank of commercial enterprise sector,” he said. to provide comments on the Patents Zambia and the Corporate Insolvency and Companies Registration Agency Act, 2017 whose provisions are The following are the Central Bank’s relevant for harmonisation with explained that the Patents and the insolvency provisions under the Bill: CompaniesBill, NAB, No.3 Registration of 2020, DrAgency Kalyalya is Banking and Financial Services Act views on the specific aspects of the one of the Bank’s key stakeholders, (BFSA). The Bank provided an input „„ The proposed Patents and which it constantly interfaces with in the development of both Acts Companies Registration Agency in achieving its regulatory mandates. prior to their enactment to ensure Bill provides for the continued existence of the Patents and regulator, the Bank’s regulated allow the implementation of related Companies Registration Agency entitiesHe added begin that their as journey a financial to existing sector Actsavoidance to be ofadministered conflict. The under Bill would one- regulations from the Patents and umbrella institution. At the heart of all re-constitutes the Board of Companies Registration Agency and it this is effective implementation and theand Agency re-defines and itsprovides functions, for remains an important stakeholder in its functions as well as repeal the Patents and Companies “Weoperational are grateful efficiency. for the opportunity Registration Agency Act, 2010. Thethe lives Governor of financial noted service that providers.the Bank to comment on the Patents and In clause 5 of the Bill, while of Zambia generally welcomes the Companies Registration Agency there is an exhaustive list of Acts Patents and Companies Registration which the Agency is mandated to that the proposed Bill, once passed administer, it may be advisable intoBill, No.law, 3 will of 2020. greatly We areenhance confident the to include an enabling provision Agency Bill, No.3 of 2020 as it corporate governance of the Patents to allow the Agency administer redefines the functions of the Agency Story continues on page 14 for operational efficiency. Overall, the Zambanker March 2020 13 Story continues from page 13 PACRA plays a critical role in the economy

any other Acts as Parliament may determine. This is to avoid a scenario where subsequent Acts of Parliament may not properly and legally be within the mandate of the Agency to administer on account of the restrictive manner clause 5 is currently couched. „„ On the composition of the Board of the Agency as proposed under clause 6(1), we would propose providing for the appointment of a representative of the Law Association of Zambia to ensure Members of Parliament with the BoZ delegation (not in picture). the presence of independent external legal practitioners on the Board considering the number However, there is no provision Bill to eliminate the ambiguity. of statutes which the Board is for a term of the Board under „„ Clause 16 (1) does not indicate mandated to administer. Our the Bill. What is provided under proposal can be accommodated, clause 9 (1) of the Bill is term of Registrar. We propose that the without increasing the number of the tenure of office of the people on the Board, by limiting the whole Board. It is also a good be indicated in the Bill under this the number of direct appointees corporateoffice of each governance member and practice not of section.tenure of office for the Registrar under clause 6(1) (f) to one for the tenures of members of „„ Clause 17 (1) we propose that person. a Board to expire at different the appointment of the Deputy „„ Clause 6 (1) constitutes the Board times to ensure continuity and Registrar be the prerogative of the of the Agency which consists of institutional memory. We would part-time members. We note the recommend that the term of the reference to part-time members new member whom the Minister RegistrarBoard. Further, and the the Secretary qualifications of the in the PACRA Act, 2010. There is may appoint to replace the Boardand tenure be included of office in the for Bill. the Vice no reference to full-time members vacating member be tied to the „„ In clause 21(3), there is a general provision in clause 9(1) proposal to provide that the member. We therefore propose of the Bill which already provides Auditor General’s fees must be thatnor either definition the term of part-time a part-time be paid by the Agency. This provision deleted and that members listed „„ Clause 14(1) of the Bill prohibits is not an optimal utilisation of under Section 6 be non-executive thefor theunauthorised term of office. disclosure of public resources between two information by a person ‘in the member be spelt out. course of that person’s duties’. „„ Sectionor the definition6 (3) refers of part-timeto the The true import of this provision thepublic Agency offices. by theWe Auditor expect thatGeneral the appointment of the Board is to narrow the prohibition of isauditing an exercise of the offinancial a public books good, of Chairperson by the Minister. Since disclosure of information only ‘in a statutory duty and within the the Minister will appoint Board the course of a person’s duties’ members, we propose that the which means that the person of Auditor General which must Board Chairperson and the Vice- would be at liberty to disclose notstatutory attract mandate additional of audit the Office fees Chairperson be elected by the the same information, though members themselves instead of unauthorised, if done outside the public purse to discharge this the Chairperson being appointed the person’s duties. We believe, mandate.as that office We is alreadywould fundedtherefore by by the Minister and Vice- as drafted, this may not contain recommend deleting the proposed Chairperson elected from among Parliament’s true intention amendment and maintaining the the members. which is to prohibit unauthorised clause 18(3) of the Patents and „„ Clause 9(5) of the Bill provides disclosure both in and outside the Companies Registration Agency that the person whom the Minister course of a person’s duties. We Act, 2010 which provides that may appoint to replace the therefore recommend the deletion the Agency shall pay audit fees of the words ‘in the course of that to accommodate a scenario as a member for the unexpired person’s duties’ appearing in the where the audit is done by an partvacating of themember term shall of the‘hold Board’. office third line of clause 14(1) of the independent auditor.

14 March 2020 Zambanker Financial Literacy: An Enabler of Financial Inclusion

By ZAMBANKER REPORTER

Minister of Finance, Dr Bwalya Ng’andu has called on financial service providers to integrate financial inclusion and financial capability issues like financial literacy in their operational and business plans. Government’s commitment to enhance financial inclusion levels as outlined in the 2017 National Financial Inclusion Strategy seeks to scale up financial inclusion levels from 59 percent in 2015 to about 80 percent by 2022. Undoubtedly, financial education will play an important role in actualising this ambitious objective.

peaking in Lusaka during his Authority, Securities Exchange national address to launch the providers to leverage on technology Commission of Zambia and the Bank of 2020 Financial Literacy Week, Dr inDr order Ng’andu to reduce urged financialtransaction service cost Zambia. On its part, the Bank of Zambia and also expand the out-reach to the SEducation plays an important role in underserved population. “Maximise the pillar of its 2020-2023 strategic plan. realisingNg’andu the primary explained objective that Financial of the use of digital platforms for customers to Accordingly,has adopted pursuantfinancial inclusionto the provisions as a key make transactions such as payment of of the Banking and Financial Services which is to empower Zambians with bills, transfer of funds, online banking Act of 2017, in January 2020, the Bank knowledge,National Strategy understanding, On Financial Education, skills, as well as purchase of merchandise in of Zambia issued a circular to compel all order to lessen human interactions as means of preventing the spread of covid- themselvesmotivation and theirconfidence families. to help them financial service providers regulated by to secure positive financial outcomes for village banking groups, who have become the Bank to integrate financial inclusion Government through the Ministry of an19 pandemic”.important Dr source Ng’andu of also affordable implored and financial capability issues like providersfinancial literacyare also inexpected their operationalto include and minimize human interactions for and business plans. The financial service finance launched the second phase of the theirfinance, transactions. to also leverage digital platforms activities in their annual reports from National Strategy on Financial Education 2020a statement onwards. on financial inclusion Educationin November, which 2019, expired to buildin 2017. on The the To jump-start the digital transformation strategyfirst National outlines Strategy a set-out on framework Financial process, Government through the The Bank has also, together with three Smart Zambia Institute is in the process Zambia. of establishing a Government-wide Joint Messaging Campaign, which aims for improving financial education in interoperability platform through the atfinancial raising sector awareness regulators on developedfraudulent a The 2020 Financial Literacy week was Government service bus and payment commemorated from 23rd-29th March gateway aimed at digitalising its on how to distinguish such products under the theme ‘Be Money Smart to Live payments. fromfinancial genuine products ones. and The educate campaign the public will a Better Life’. Due to the unprecedented also instill a sense of responsibility outbreak of the coronavirus, the towards the choice and uptake of Government of the Republic of Zambia associations and institutions for applied precautionary measures to theirDr Ng’anducontinued applaudedcommitment variousto the level of awareness and appreciation for safeguard the lives of all citizens. In this financial products as well as increase the regard, this year’s commemoration was literacy in Zambia over the years. conducted through the dissemination Thesecampaign included and the the growth German of financialSavings Thisfinancial year, sector Bank regulatory of Zambia oversight. is also Bank for International Cooperation, scheduled to conduct a FinScope survey, on various media platforms including Financial Sector Deepening Zambia, that will help establish the progress made of financial literacy related information Rural Finance Expansion Programme, provincial activities such as exhibitions Insurers Association of Zambia, Capital inclusion from the 59% recorded in thatprint andrequire electronic physical media. assembly National were and Markets Association, Association of 2015.towards Being increasing a comprehensive the level of financialdemand not conducted. The campaign covered side survey, the 2020 FinScope survey a number of topics including earning, Zambia Association of Pension Funds insurance, pensions, investing, budgeting andMicrofinance Bankers InstitutionsAssociation of Zambia,Zambia. and capability issues that continue to and savings to empower citizens to make Others were the three Financial Sector hinderwill also widespread highlight some access financial and usage literacy of smarter money choices. Regulators-Pensions and Insurance

formal financialZambanker services. March 2020 15 ZICA CEO Courts Regional Office Accountants

By ZAMBANKER REPORTER

The Zambia Institute of Chartered Accountants (ZICA) Chief Executive Officer, Mr Bonna Kashinga paid a courtesy call on ZICA members at the BoZ - Regional Office where he shared key highlights on various developments the institute was undertaking. The developments include the introduction of short courses, launch of the CFI Certification and digitalisation of study materials.

The ZICA CEO Mr Bonna Kashinga with Regional Office staff who attended the meeting when he paid a courtesy call on his members.

r Kashinga was on the Mr Shadreck Mukuwa thanked Mr Copperbelt with his The ZICA Chief informed Kashinga for taking time to meet management team for stakeholder engagements the Bank’s accounting He stressed the importance of ZICA Mwith various companies. professionals that the institute membershis members to continually at the Regional interact Office. and would continue to periodically create networks as that was key to The ZICA Chief informed the Bank’s engage its members to ensure their profession. Mr Mukuwa also accounting professionals that recognised Mr Stanley Siame who is the institute would continue to their needs were adequately Manager - Currency Accounts and periodically engage its members to met. He expressed gratitude also ZICA Disciplinary Committee ensure their needs were adequately for the good turnout of staff member. He urged other members of met. He expressed gratitude for the who attended the meeting and staff not to shy away from contesting good turnout of staff who attended ZICA positions as that enhanced their the meeting and encouraged them to encouraged them to engage Curriculum Vitae. engage his team on the Copperbelt for his team on the Copperbelt queries or any other issues they may for queries or any other issues BoZ employees who attended the have which needed to be resolved. they may have which needed meeting include Ms Kamuti Chama, Mr Joseph Kawaya, Mr Lovemore Mr Kashinga was in the company of his to be resolved. Chakatala, Mr Brutus Chitumbo and Director - Membership and Corporate Ms Beatrice Mazyopa. Others were Services Ms. Patricia M Hantumba visited the Bank. Mr Munalula Kayama, Mr Felix Goma, Sitali and ZICA - Regional Manager Mr Brian Mulenga and Mr Robert Assistant Manager – Human Resources, Mtonga.

16North, MrsMarch Violet 2020 Zambanker Chibawe when he Achieving balance between innovation, competitive marketplace and consumer protection – Part 1

By MOSES MUSANTU In many countries around the world, Zambia inclusive, innovations in products, services and technology have significantly expanded the reach of financial services, including new economic activities and previously excluded segments such as small businesses and communities in the lower income groups. Mr Musantu

complex and multifaceted (e.g. policies, innovation, competitive and international risks associated to the device, the marketplace and consumer bodiesany financial such regulators as the delivery channel, behavior and Alliance for Financial knowledge of consumers etc.). DFS discussion, we shall highlight four MInclusion (AFI), World Bank and related consumer protection issues interventionsprotection. In that this can first be part instituted of our Organisation for Economic Co- such as fraud, data protection, in order to achieve the desired operation and Development over-indebtedness, inadequate balance. have noted that deepening of transparency/information, Digital Financial Services (DFS) is unbalanced marketing/selling of 1. Identification of associated bringing in its wake a widening in products/services etc., is adversely risks innovations and scope of products, impacting trust of consumers, services, delivery channels, use discouraging uptake and usage The need for regulators to be cases, geographical reach, users, of DFS, eroding the gains made alert to the risks from a consumer and providers. AFI reports that perspective that can arise with globally 515 million adults own accounts and this is an increase of markets.in financial This inclusion is harmful with not the importance of developing more seven percentage points since 2014 justpotential to the to destabiliseaffected consumers financial robustfinancial solutions innovation, to andmanage the largely driven by the rise in usage but to the broader economy and these risks effectively cannot be of DFS. Despite this progress, about 1.7 billion adults globally remain consequences. The emerging trends achieving the balance is clearly unbanked. The global gap between financial system, with long-lasting byoveremphasized. identifying Thethe firstrisks step and in men and women in account point to an increasing convergence constraints consumers face when ownership has remained almost ofacross DFS financialwith consumer markets protection therefore they register with a DFS provider without change since 2011, with a policy. including the challenges that may gender gap of 7% between men and arise when they use DFS. It is women account ownership, globally, The regulators face a dilemma further critical that regulators are and of 9% in developing countries. of protecting consumers of DFS aware of and understand all the without imposing high compliance At the same time, research in costs on DFS Provider. This has of DFS provider and to manage the recent years has shown how badly brought to the fore the need for risksfactors and that inherent influence costs the involved. conduct things can go when innovation regulators to rethink the approach Development and implementation disregards legitimate consumer to regulation and supervision of of effective policy interventions needs and expectations for fair DFS for consumer protection. This are therefore anchored on correct and responsible treatment. The article will therefore discuss how to achieve the balance between with DFS usage. identification of risks associated risks associated with DFS are fluid, Zambanker March 2020 17 2. Establishment of an enabling customer funds; Regulators should also ensure that policy and regulatory framework „„ Authorisation, authentication, DFS are offered with appropriate and data security requirements; disclosure of terms and conditions. DFS has the potential to accelerate „„ Liability for errors, fraud, and unauthorised transactions; 4. Collaboration and Partnership services for all if appropriately „„ Data protection and privacy; in DFS provision harnessedaccess and throughusage of enabling quality financial policies „„ Dispute resolution mechanisms; and regulatory frameworks. It is and Supervisory dialogue with DFS therefore important that regulators „„ Risk management framework. providers and their consumers is adaptable regulatory approaches The Basel Committee on Banking regulators clearly explain to the inconsider response adopting to fast flexible evolving and Supervision has advocated for strong key. It is important that financial technologies and business models governance framework that speaks innovation and measures put in place while also minimising risk. These to establishment of specialised topublic safeguard why they customer promote interests financial regulatory approaches should be Consumer Protection Unit/ principle based and proportionate Department within the regulator, This intervention shall greatly to ensure service provision is Financial Ombudsperson or a contributeand financial in averting system public stability.distrust Financial Conduct Authority. In some to innovation and DFS providers risks. jurisdictions, the general consumer efficient and commensurate to the protection and competition regulators should create outreach There is also need to come up with authority and telecommunication programmesin general. Additionally,to bring financialtogether innovative regulatory approaches regulator also have legal mandate regulators and market participants such as regulatory sandbox and to address consumer protection policy innovations such as e - matters in the DFS subsector. existing regulatory framework. money, digital identity/eKYC, This situation therefore requires to clarify how innovation fits into the cybersecurity, data protection and inter-agency cooperation and Research has further shown that privacy frameworks. Regulatory coordination. The regulatory most jurisdictions dealing with DFS sandbox approach offers a window framework should also permit the supervision tend to have different into regulators’ attempts to balance establishment of consumer and self- regulators mandated to address promotion of innovation with regulated associations. Additionally, consumer safety. the regulator should promote In such instances, it is strongly development of industry code of recommendedspecific areas of for DFS supervision.supervisory In addition, it is critical that conduct to ensure that the market authorities to collaborate with other adopts self-regulated standards that domestic regulatory authorities through competitive pricing, enhance fair customer treatment. (e.g. telecommunications authority, innovationregulators fosterand consumer market efficiency choice competition authority) to harmonise 3.Consumer Protection and regulations related to DFS and and products. In order to achieve Market Conduct Principles this,with athere range should of financial be a servicespolicy from regulatory arbitrage. In or regulation that encourages addition,reduce the industry possibility collaboration of benefiting competition, restrains abuse of Conduct Supervision guides that helps to improve interoperability dominant position, cartels and other regulatorsAFI Guideline should Note ensure 21 onthat Market they and resolution of technology related non-competitive market barriers. create an enabling environment risks. in which consumers (particularly The regulatory framework should disadvantaged and low-income The Financial Stability Board has also further include licensing, regulatory, noted that stronger international supervisory and enforcement powers cooperation is critical in advancing that ensure effective market conduct ofsegments the collective of society) actions are confident of all effective consumer protection in the provision of DFS. The licensed they will benefit from the outcomes measures, education and protection DFS providers should operate under regulator should thus promote the from fraud and abuse. This clear rules to protect consumer existencemarket participants.of these outcomes The financial which funds from misappropriation by include: an inclusive and competitive the DFS providers, insolvency, fraud marketplace, suitable products, proper indevelopment which weak reflects consumer the increasingly protection or any operational risk. The World transparency and marketing, proper canglobal have dimension repercussions of financial that services, extend Bank has stated that at a minimum, ethics and professional standards, due beyond national borders. It is therefore the regulatory framework should care, safety and security. important that regulators collaborate include: at domestic, regional and global level.

„„ Transparency and disclosure under consumer protection include Join us in the next Zambanker edition requirements; butSpecific are principlesnot limited to to be bundling included as we discuss the last three policy „„ Consumer protection measures and tying DFS products, cooling off interventions. on fair treatment and business periods, unfair contract terms, fair conduct; debt collection, responsible lending, The Author is a Senior Analyst in the „„ Protection and availability of sales and marketing practices. NBFIS Department.

18 March 2020 Zambanker Personality profile

By ZAMBANKER REPORTER

Mr Kashweka Kashweka is Manager – Archives and Records Management in the Board Services Department. He joined the Bank on 2nd September, 2002 and is due for retirement on 11th November, 2020. Zambanker caught up with him to get his reflections on his journey in the Bank.

Who is Kashweka Kashweka?

Kashweka and Mrs Margaret Kashweka,I am the first born born in sonMongu of Mr District Thomas of Western Province about 55 years ago. I have one brother and three sisters.

I did my primary education at Kaba Hill and Limbotwa primary schools in Kaoma District of Western Province from 1975 to 1981 and my secondary education at St Johns Secondary School in Mongu from 1982 to 1986.

I did my undergraduate degree in Library Studies at the University of Zambia from 1987 to 1991 and Mr Kashweka Kashweka was later on sponsored by the German Foundation for International Development to do a Master’s Degree again, this time for a different position, One of the changes that has had some in Library and Information Studies at I decided to apply and I was offered profound impact on the operations University of Botswana from 1996 to the job in September 2002. At this of the Bank is the computerisation of 1998. time, I had another option to join the most of the Human Resources business University of Zambia. processes. I married Grace Miyutu in 1997 and we have four daughters. How has your career progression What have you found most been like in the Bank? challenging about the Bank? What attracted you to join the Bank and when did you join? Generally I have had a good time in the I worked in the public service for Bank. I spent 12 years in the Human ten years where the management Before joining Bank of Zambia, I was Resources Department as Manager – of records was critical in ensuring working for the Ministry of Education Library and Archives and six years in effective business operations. Although under the Zambia Library Service Board Services Department as Manager the records management system in as Deputy Chief Librarian and at the – Archives and Records Management. Government was not perfect, it was same time Acting Chief Librarian. At Working in the Library for 12 years much more organised than it is in the that time, the Ministry of Education gave me an opportunity to meet and Bank. Very few people appreciate the was undergoing some restructuring know a lot of people in the Bank. importance of records in the Bank and there were some changes in and it is for this reason that records the reporting lines which I was not What has surprised you most about management has lagged behind. Most comfortable with. For this reason, I the Central Bank? people think records management is started looking for a Job elsewhere. The Bank of Zambia has gone through do it. After graduating from the University a lot of changes both in terms of about filing and therefore anyone can of Zambia, I was invited for interviews structure and the manner of doing If you could change one thing about at Bank of Zambia but I missed the business. Most of the operations of the the Bank, what would it be? interviews as I was in the village at Bank have been automated and this has the time. So when the Bank advertised made work much easier than before. There is need to give attention to line Story continues on page 20 Zambanker March 2020 19 Story continues from page 19 working life.

Do you have anyone who has influenced your decisions in the Bank and/or your social life?

During my working time in the Bank, I have met and interacted with a lot of colleagues but the ones that have

Mr Christopher Mweetwa who was myinfluenced supervisor my whendecisions I joined the mostthe Bank are and Mr Dinde Simacheche. They were dedicated to their work but at the same time focused about life after the Bank.

What is it that people may not know about you? That someone might be surprised to know about you?

I am a very social person, I enjoy interacting with people.

What would you tell someone who is thinking about joining and/or prematurely leaving the Bank?

The Bank of Zambia is a prestigious institution which many people would like to work for. In addition, the Bank offers employees opportunities to develop both career wise and at a personal level. People leave employment for different reasons and therefore leaving the Bank is a personal decision, but it should be a well informed decision.

What do you consider your greatest achievements while in the Bank?

achievements but my contributions toNot the operations necessarily of the Bank. greatest When With his wife Grace at Government Complex during a Likumbi Lya Mize fundraising Dinner I joined the Bank, the institution did not have an approved Records and Archives Management Policy and management employees at BoZ 5 and other important documents such BoZ 6 levels. These employees are ready to help where possible. He was a as Procedures Manuals, Retention key operatives in the Bank as they listeningwork for colleaguethe first time, who lovedhe was his always work. Schedules, File Plans, etc. and I played are directly involved in the delivery of He retired from the Bank in 2019 but a role in the production of these services. They need to be motivated to we still communicate. documents. retain them. What’s your personal work What do you think will change Who are some of the most interesting philosophy? about the Bank over the next five people you’ve met while working in years? the Bank? I am resourceful. My training background has helped me to look for The Bank has become more and I have met a good number of interesting solutions or answers when I am given more of an information organisation people while working in the Bank, but an assignment even if it is not in my whose operations revolve mainly the one who was most interesting was area of competence. I know how and around the creation, distribution and Mr Harry Mulenga. Apart from the way where to look for information and this manipulation of information. In this he welcomed me when I reported for has helped me both in and outside my regard, the Bank is expected to adopt

20 March 2020 Zambanker Mr Kashweka hosting church mates at his home in Lusaka a lot of information systems in order to enhance business processes.

If you weren’t working for the BoZ, what would you be doing instead, or what would your life be like?

I indicated earlier on that I had an opportunity to join the University of Zambia, but I am not sure where I would have been at the moment. It’s

I believe that God has a plan for our pathvery difficultof life. to predict the future but

What do you do when you aren’t working?

When I am not working, I will either At a workshop hosted by Eastern and Southern Africa Management Institute be engaged in Church activities (ESAMI) in Arusha Tanzania in 1995. or at my farms in Kamaila area of Chisamba or in Chiyuni area of Chibombo district. I should be talking of having at least during my tour of duty. 300 herds of cattle. What have you done to prepare for Your last words. your retirement? What would you want to be remembered for, after you leave I am very grateful for being given an I will spend most of my time managing the Bank? opportunity to say farewell to the my farms. Currently I have about 50 breeding herds for beef. I intend to I would like to be remembered for would like to urge my colleagues who increase the number to about 100 whatever little contribution I made areBank still through working my to personal give their profile. best to I cows so that in the next three years, to support the operations of the Bank the Bank.

Zambanker March 2020 21 PHOTO FOCUS

The BoZ team during the industrial tour of Indeni. Regional Director Mr Visscher Bbuku presenting some BoZ branded giveaways to Indeni Chief Operations Officer Mr Emmanuel Mulenga after the Industrial our.T

(l-r) Senior Economist - Market Structural Risk Modelling in Bank Supervision Department Manager – Strategic Communications Mr Nkatya Kabwe exchanging notes with Assistant - Ms Shula Sikaona, Assistant Director - Balance of Payment Monitoring in Economics Manager - Social Media Ms Kateule Nakazwe in one of the meetings at the Bank. Department - Dr Ivan Zyuulu and Analyst - Domestic Markets in Financial Markets Department - Mr Cosam Chanda during a presentation of research findings of a study on “The Segmentation of the Interbank Money Market in Zambia.”

Board Services Department hosted a farewell function for Former Manager – Board and (l-r) Assistant Director - Examination and Surveillance Portfolio B in Bank Supervision Mr Protocol Services Ms Mirriam Lupindula who left the Bank in January, 2020. Ms Lupindula is Raphael Kasonde, Assistant Director - Examination and Surveillance Portfolio B in Non- flanked by Director - Board Services Ms Namwandi Ndhlovu (l) and Assistant Director - Board Bank Financial Institutions Supervision Mr Joseph Munyoro and Executive Assistant to the Services Ms Chanda Punabantu (r). Deputy Governor Administration Ms Kombe Soteli following proceedings of a meeting in the Boardroom.

Some of the departmental representatives that participated in the detailed mapping Deputy Governor – Administration Rekha Mhango with Director - Board Services Ms exercise of Bank of Zambia business processes. The exercise, which took place from March Namwandi Ndhlovu at Governor’s Meeting with Chairpersons of banks. 2-18, 2020 in the Annex building, is part of the ongoing Enterprise Architecture project.

22 March 2020 Zambanker PHOTO FOCUS

(l-r) Assistant Director - Examination and Surveillance in NBFIS - Ms Mankolo Beyani, AB The Zambia Union of Financial Institutions and Allied Workers (ZUFIAW) led by Mr Alfred Bank Board member Mr Paul Nkhoma and Deputy General Counsel Ms Helen Banda at Chifota and the Management team led by Ms Gladys Mposha finalising and signing off the Governor’s Meeting with Chairpersons of banks. 2018 - 2020 Collective Agreement. The Bargaining Unit was chaired by Mr David Mwape, Director - Strategy and Risk Management.

Deputy Governor - Operations Dr Francis Chipimo and ZICA CEO Mr Bonna Kashinga Deputy Governor - Operations Dr Francis Chipimo responding to a question during the exchanging documents after signing the MoU on behalf of the two institutions. February MPC Media Briefing.

Staff who attended the MPC Media Briefing. Ms Gladys Lwizi of Zambia Business Times asking a question during the media briefing.

Assistant Director - Regional Office Mr Musapenda Phiri led a BoZ team to Chilengwa Members of staff taking part in the 2020 International Women’s Day march past. Primary School in Masala, Ndola where they donated fruit trees as part of the Bank’s efforts to mitigate the impact of climate change. Above, learners being helped by a BoZ employee to plant trees. Zambanker March 2020 23 Priority list in a liquidation: Contrasting fortunes for creditors of financial service providers and non-financial corporates

By LUNGISANI ZULU

When a company is placed under liquidation, the possibility of being paid as an unsecured creditor from the proceeds of liquidation is directly proportional to your standing on the priority list. Further, where you are on the priority list depends on whether the company in liquidation is a financial service provider or not.

Mr Zulu

n this write up, I set out to dissolution. These will have to be 2017. discuss the issue of priority list paid from the liquidation proceeds for payments in a liquidation. I ahead of any other creditor. The previous and now repealed will discuss the two different Banking and Financial Services Act, I Second in priority are depositors 1994 under the repealed section 107 provided a different priority corporates.priority lists applicableIn the conclusion,to financial This means that part of the costs list. Iservice point providers out the and philosophicalnon-financial of liquidation, the financial depositors service providers. of banks underpinnings of the priority list to Like the new Act, necessary and the continued life of a company. superior protection in a liquidation reasonable expenses incurred processand financial as they institutionsare paid ahead enjoy of by the Bank of Zambia in the Firstly, by priority list of creditors, numerous creditors. application of the provisions of I mean the schedule set out in the this Part, basically liquidation applicable law showing who should Taxes and rates follow in third in costs, were number one on the old be paid earlier than the other from the priority list followed by wages priority list. the proceeds of the company that and salaries of employees of the has gone into liquidation. Second in the priority list were period of three months at number taxes and rates due, whether When the company that has gone four.financial service provider for a payable to the Government or to a local authority. service provider, the provisions Charges and assessments due to ofinto section liquidation 132 of the is Banking a financial and the Bank of Zambia are number

regulate the priority list of creditors Number three on the list were toFinancial be paid Services from the Act proceeds No. 7 of of 2017 the providerfive in the in priority such order list while of priority other providerwages and in salaries liquidation of officers for andthe liquidation. asclaims the againstHigh Court the financialmay determine service three-monthemployees of period the financial preceding service the on application by the Bank of effective date of seizure, within the Zambia as liquidator, close the list limit as prescribed. a scenario? at six. So who is paid first and last in such Then came the depositors of On top of the priority list in a It must be noted that this is a new priority list introduced by number four followed by fees and provider are expenses incurred the provisions of the Banking and assessmentsfinancial service due to providersthe Bank of at inliquidation the process of aof financial winding serviceup or Zambia and claims established

24 March 2020 Zambanker Financial Services Act No. 7 of under a deposit protection scheme This group has to be paid second in compensation which accrued before priority to the costs of liquidation. the commencement of the winding- up. Otherat number deposits five and and six other respectively. claims Third on the list are wages or salaries accruing to every employee Third in the priority list were any service provider in such order of within the period of three months taxes, duties, rates payable by the priorityagainst theas the liquidated High Court financial may before the commencement of the company for any period prior to determine upon application by the winding-up, leave accruing to every the commencement of the winding- Bank of Zambia closed the list at employee within the period of two up and Government rents less seven. years before the commencement of the winding-up, paid absence, commencement of the winding-up. From the above provisions, it’s safe not being leave, accruing to every than five years in arrears at the to conclude that depositors have employee within the period of three Closing the list at number four were months before the commencement all rates payable to a local authority the amendments brought about by of the winding-up and recruitment that were due and payable within thebeen Banking the greatest and Financial beneficiaries Services of or other expenses or other amounts three years before the date of repayable under a contract of commencement of the winding-up. have jumped from number four employment. Others are severance toAct number No. 7 two of in 2017. the priority Depositors list pay to each employee, equal to three The old priority list was silent on months’ wages or salary and all the fate of any other creditors of the proceeds of a liquidation. This is amounts due in respect of workers’ company in liquidation. Even then, notof creditorsa simple tomatter benefit and fromintended the compensation which accrued before it was always assumed they were to have the corresponding positive the commencement of the winding- the last to be paid in any event. up. From the changes in the priority sectorimpact asof enhancingthey can thefreely confidence deposit Closing the priority list at number list of creditors to be paid from of the public in the financial four in the priority list are any the liquidation proceeds of non- providers fully aware that in case other creditors of the company in oftheir a failure, funds they with stand financial to walk service away liquidation. conclude that government taxes, with something in light of their dutiesfinancial and rents corporates, have displaced we canthe lofty status in the priority list. emoluments payable to employees providers the above priority list is of the company in liquidation on the Enough said about the priority newAgain, having as only with been financial introduced service by priority list. Further, rates to local list of creditors in a liquidation of the Corporate Insolvency Act, 2017. authorities have enjoyed the biggest This has replaced the old priority list jump, from being last on the priority about the priority list of creditors list to second in the list joining ofa financialliquidated service entities provider. that are What not was contained in section 346 of the government taxes, duties and rents. repealedfor non-financial Companies corporates Act, 1994. which Finally, the fate of all other creditors companiesfinancial corporates? is provided for The in prioritysection On top of the old priority list, like the is more clearer under the new 127list of of the creditors Corporate of Insolvency non-financial Act, new one, were costs and expenses priority list, notwithstanding that 2017. Secured creditors of course of a winding-up including the they occupy the last position on the are generally paid in line with the payable taxed costs of a petitioner, priority list. security document and the asset the remuneration of the liquidator, subject of the security. and the costs of an audit carried out. It must be stressed that while the priority list is akin to a will For all other creditors, on top of the Second on the list were wages or and speaks upon the death of the priority list are costs and expenses salary accruing to every employee company, unlike a will, it is very of a winding-up including the within the period of three months important to the continued life of payable taxed costs of a petitioner, before the commencement of the the company as it shapes, at least the remuneration of the liquidator, winding-up, leave accruing to every in part, how people relate with it. and the costs of an audit carried out. employee within the period of two To a very large extent, potential years before the commencement creditors’ engagements with a Second in the priority list are of the winding-up, paid absence, any taxes, duties, rates payable not being leave, accruing to every position on the priority list in the by the company for any period employee within the period of three eventcompany that arethe influencedvery company by theirgoes prior to the commencement of the months before the commencement into liquidation. The higher you are winding-up, Government rents less of the winding-up and recruitment on the list, the more likely you are to or other expenses or other amounts freely engage and interact with the commencement of the winding- repayable under a contract of company as an unsecured creditor. upthan and five rates years payable in arrears to a at local the employment. Others are severance authority that were due and payable pay to each employee, equal to three The Author is a Senior Legal within three years before the date of months’ wages or salary and all Counsil in the Legal Services commencement of the winding-up. amounts due in respect of workers’ Department.

Zambanker March 2020 25 Covid – 19, a Black or Green Swan: Rethinking Risk, Controls and Business Continuity Plans

Ms Chibale By MAMBWE CHIBALE

“The Coronavirus pandemic has set a wave of financial and operational disruptions in the wake of remote work arrangements causing sudden shifts in risk exposures and mitigation measures” said Katherine Heires a freelance business journalist and founder of Mediakat LLC in her article, “For the Covid-19 New normal, Risk and Compliance Advisories Aplenty” published on 3 April, 2020. “Risk overall is going up and risk practitioners are likely to see overall changes in a lot of the key risk indicators” added Heires.

Is Covid-19 a Black or Green Swan? Steve Zwick published on Ecosystem These characteristics are all typical of a Market Place on 3 February 2020, black swan event. green swans generally describe risks American Essayist, scholar, statistician, that we humans create for ourselves by Similarly, Covid -19 has presented both Nassim Nicholas Taleb, a Lebanese pumping contaminants into our air and physical and transition risks which black swan as a highly improbable event water, destroying our ecosystems and are characteristic of a green swan. In withformer three trader principle and risk characteristics: analyst defines ita destabilising our climate. terms of physical risks for example, a is unpredictable; it carries a massive report by Inskit Group “Capitalising impact; and can only be explained Like black swans, green swans typically on Coronavirus Panic, Threat Actors after the fact. Black swans can take Target Victims World Wide” published many forms such as a terrorist attack fat tail distributions. They materialise in March 2020 revealed that the to a disruptive technology or a natural infit lowboth probability physical highand impacttransition events risks or number of references to Covid-19 in disaster. Black swans are typically and are characterised by uncertainty relation to cyber-attacks increased in referred to as fat tail events because and non-linearity and as such cannot January and February 2020. The report they exhibit a large skewness relative to be predicted by backward –looking further revealed that the number of that of a normal distribution and cannot probabilistic approaches. However, newly registered domains related to be predicted by backward-looking unlike black swans, green swans have Covid-19 increased since the outbreak probabilistic approaches which assume a high degree of certainty that “some in December 2019 with threat actors normal distribution such as value-at risk combination of physical and transition creating infrastructure to support models. Although black swans cannot risks will materialise in the future”, malicious campaigns referring to Covid be predicted using backward-looking 2; could pose an -19. probabilistic models, counterfactual existential threat to humanity Ripple reasoning, that is thoughts of what etNGFS al (2019) (2019a,3 ; and p4) the complex chain In terms of transition risks, a number might have been can help hedge, at least reactions and cascade effects associated of regulators and central banks have partially, against black swan events, with both physical and transition Epstude and Roese (2008).1 risks could result in unpredictable environmental, geopolitical, social and announced measures to afford flexibility According to Bank for International economic dynamics. ofand distressed targeted market relief to conditions. help financial The Settlement in its e-book, The Green Unitedfirms and Kingdom their clients (UK) Financial during the Conduct period Swan: Central Banking and Financial Clearly, the Covid -19 has characteristics Authority has granted UK companies Stability in the Age of Climate Change, of both a black and green swan. Arguably, published in January 2020, the term the Covid-19 was unpredictable, has so statements; the United States (US) far impacted business and all works bankingextra time regulators to complete on auditedMarch 27, financial 2020 the black swan concept and relates to of life massively and scientists are allowed for a two years extension on climategreen swan related finds risks. its inspirationIn an article from by still studying and explaining the virus. capital transition accompanying the

1 org/10.1177/1088868308316091 2Kai Epstude and Neal Roese, 2002. “The Functional Theory of Counterfactual Thinking”, Personality and Social Psychology Review 12(2): 168-92. https://doi.- prehensive-Report-Call-Action 3RippleNGFS 2019aWilliam “NGFS j, Christopher First Comprehensive Wolf, Thomas Report. M. Newsome, A Call for Phoebe Action Barnard,– Climate and Change William as aR. SourceMoomaw, of Financial 2019. “World Risk” Scientists’ April 2019. Warning Available of Climate on https://www.ngfs.net/en/first-com Emergence” BioScience. https://doi. org/10.1093/biosci/biz088 26 March 2020 Zambanker current expected credit loss standard theories related to written evidence What does this imply for financial and early adoption of the standardised that suggests that the Covid-19 could firms risk, controls and business approach for measuring counterparty have been predicted with some levels continuity plans? credit risk; Basel Committee on Bank of certainty and what this means Supervision deferred by one year the for risk management and future In a McKinsey article “A blue print for business continuity plans (BCPs). remote working: Lessons from China” III standards; and the Bank of Zambia published in March 2020, it is reported extendedfinal implementation by a further datetwo foryears Basel the In her book about the end of the that around 200 million people were transition period to amortise the world published in 2008, Sylvia working from home in China in the wake Day 1 Impact of IFRS9 for capital Browne wrote that in around 2020, of the Covid-19 crisis. The report, which adequacy purposes, revised loan loss a severe pneumonia like illness included advice on how to effectively will spread throughout the globe, manage work teams and communicate attacking lungs and bronchial tubes with employees in a way that reinforces 142classification of 1996 and among provisioning other measures. rules and and resisting all known treatments. company culture and helps to reduce revoked Statutory Instrument Number risk, added that while working from changes that have associated potential illness itself will be the fact that it transitionThese measures risks. are significant policy will“Almost suddenly more vanish baffling quickly than as it has the as boosting productivity and morale, arrived, attack again after 10 years home if done right has benefits such Further, the Covid-19 like a green swan later and then disappear completely”. work relationships and demotivate has some degree of existential risk to it can breed inefficiency, damage humanity considering the trends in Bill Gates in a 2015 Ted Talk warned reported number of new infections and that the world was not ready for Zambia,employees. have While effectively some financial implemented firms deaths. The Covid-19 can also be said the next pandemic. In 2018 during telecommuting,, including financial there service is providersincreasing in to have had some degree of certainty of a discussion on epidemics hosted concern in areas such as fraud and by the Massachusetts Medical anti-money laundering, record keeping, cyber security, data privacy and (1889-1894),happening judging Spanish by theFlu past(1918-1920), world flu of Medicine, Gates presented a Asian- like pandemics Flu (1957-1958) such as and the HongRussian Kong flu simulationSociety and for New disease England modelling Journal there are increased money laundering Flu (1968 – 1969) among others. concernsconfidentiality. arising In from Zambia, increased for example, mobile epidemic like the one that killed 50 money account limits and removal of You will agree with me that there is still millionwhich foundpeople that in 1918 a new would flu - now like fees for certain thresholds, suboptimal a lot of research being undertaken on most likely kill 30 million people in record-keeping for those that are using the Covid-19 and like all black and green six months. personal computers and laptops, cyber swans, it will only be fully explained risk arising from increased use of digital after the fact. But risk practitioners Virologist and Researcher, Robert should not wait until this pandemic G Webster, in his book called Flu spread of the Covid-19, unauthorised is over before they could start making Hunter: Unlocking the secrets financial services meant to curb the inferences because then will be too late. of a virus which was published by people in employees homes and in December 2019 predicted an deteriorationaccess to confidentialof corporate informationculture and Clearly, the Covid-19 has characteristics values as employees’ work outside their of both black and green swans. But questioned the possibility of another is Covid-19 a black or green swan? deadlyupcoming disruptive flu pandemic. pandemic Webster and With some people like Benjamin C concluded that the pandemic was Inoffices. a report “Covid-19 challenges and Halliburton, Forbes books author, possible and that it was just a matter calling it a black swan and others like again challenge mankind with an byopportunities the Aite Group, in a financial US based services”research World calling it an energy phoenix in his of time. “Nature will eventually andproduced consultancy for the company Boston based in March firms articleJessamin on Norton“Covid-19: of Renewable Fossil Fuel Energy Black virus” he wrote. 2020, a number of risks on banking and Swan or Renewable Energy Phoenix” equivalent of the 1918 influenza payments, securities and investments, published on 13 April 20204 it would With the knowledge and chronology insurance and frauds, AML and be prudent to say that the Covid -19 is a cybersecurity are outlined. According swan of its own color. to the report, more accounts payable (1918-1920),of the past flu Asianpandemics Flu (1957-1958) such as the scams and internal fraud are expected Was the Covid -19 unpredictable and andRussian Hong flu Kong (1889-1894), Flu (1968 –Spanish 1969) and Flu could it have been predicted with the above theories, what becomes some degree of certainty? Inon theanother AML andreport financial on “Assessing crimes side. the competitive landscape for US and P&C Undoubtedly, the outbreak of the covid- therefore,clear is that continue influenza to like treat pandemics them as core systems, the Aite Group added 19 pandemic has been met with different fatare tailnot eventsrare. Should especially financial in today’s firms, that fraudsters thrive when normal conspiracy theories. For purposes of connected world? The answer is a routines or ways of doing business are this write-up, we will look at some resounding no. disrupted. A lot of things can go wrong

4Available on renewableenergyworld.com Story continues on page 28

Zambanker March 2020 27 Story continues from page 27 in a shift to working from home where Should financial firms rethink risk, prepare for all employees working controls and business continuity remotely by investing in technology that of corporate settings, an environment plans? can accommodate an entire workforce whichfinancial is firms’less controlled.employees areThreats outside of that is working remotely. phishing attacks, malware and phone First, despite regulators’ statements based scams spike said the report in Fifth, Mariana Shafr, Regulatory Advisor part. “This calls for institutions to look with communications compliance and to providers of strong authentication, obligationsof flexibility or and allow forbearance, a backlog financial of archiving provider, Smarsh, suggests secure connectivity, distributed access compliancefirms should issues. not neglectThis is because compliance the that risk and compliance executives and managed security monitoring to inevitable is not going to disappear after review policies and procedures, assess help them extend private networking the Covid-19. the risk and compliance implications environments securely”. of changed work processes, update Second, most if not all risk management policies for new work model to include In his part 1 of 3 cyber security series frameworks and BCPs are premised on processes relating to Microsoft teams published on 9 April 2020, Brandon disasters that prevent or limit access and Zoom and continue to capture both Smith, Financial Crimes, Defense and to physical premises or technology customer and employee communication Intelligence Director at Financial platforms, very few if any anticipate records making sure to adhere to a situation where employees are not available to perform their functions. complianceNetworks Analytics,methods a relying UK based on Lastconfidentiality but not the and least, privacy Covid rules. -19 has centralisedanalytics firm rules-based stated thattransaction current in private equity transactions but risk the potential to permanently change monitoring are plagued with false- Notably, key personnel risk is common people’s priorities on what is important. positive results. “Suspicious activity to start thinking about key personnel Budgeting for what is essential and reports are generated from a vast risk.practitioners This implies in all financialthat for firmsemployees ought keeping more resources in precautionary minority of compliance cases, and the responsible for key enterprise and reserves may just become the new end user (Law enforcement agencies) compliance risk functions, there are two rate of use is somewhere between or more other employees who can step be presented with both a challenge unknown and abysmal” added Smith. in if the primary individual becomes ill. andnormal. an Financialopportunity. firms A may, challenge therefore, to He concluded and I agree that “it’s time to move from the traditionally held understand that they need back-up for and the opportunity to develop new position in the compliance industry everything,Financial firms not should just physical start to thinkpremises and productsmitigate theto potentialmeet the flight new to emerging liquidity and technology systems. need for precautionary reserves. guy, the money launderer. We are Prioritising precautionary reserves, herethat weto be are in not compliance” here to find and the adopt bad Third, there is need to start thinking should it happen, has the potential to solutions for compliance programs about bringing the same controls to homes of remote workers as they have in programs as well as investments in guy” and compliance objectives as certainaffect financialasset classes. inclusion Tourism and sector literacy on equalthat approachpriorities. the “finding the bad to be vigilant about risk, record keeping the other hand may become a stranded andthe offices data privacy. for financial In his firms blog to post continue of 17 asset as people may change the way they In the wake of these Covid-19 March 2020 on Trading Floors, FIs Eye view travel leading to heightened credit resultant risks and regulatory Record-Keeping Contingencies Amid measures, consultants and service Covid-19, Chris Wooten, Executive are exposed to this sector. There may be providers have advised checklists Vice President of Surveillance Group, increasedrisk for financial operational service risks providers as the long- that and solutions that may be helpful term effects of covid -19 on people who during the pandemic that may also communication need to be captured and recover from it are still unknown and change the focus of those in risk and analysedNice Vertical and that Market, there explains are capabilities that all may affect the health of employees. compliance beyond the Covid-19 on cloud that can be utilised to do that. pandemic. Deloitte for example, in its “If someone is going to do something In summary, like Albert Camus a French March 2020 publication on Covid-19 wrong, it is human nature that they will writer once said in his speech when potential implications for banking and talk about it or brag about it before or capital markets sectors – maintaining after they did it and that’s why analysing 1987, “Each generation doubtless feels business and operational resilience those communication across a broad calledreceiving upon the to Nobel reform Prize the in world.literature Mine in summarises actions that risk number of work channels is critical” knows that it will not reform it, but its practitioners should be considering. added Wooten. task is perhaps even greater. It consists According to Deloitte, questions in preventing the world from destroying such as: does current environment Fourth, pre Covid-19 BCPs did not itself”. These words are relevant to warrant an update in internal models; account for pandemics and this will how should any potential changes have to change going forward. Based on Covid-19 and hence the need to stop to counterparty credit worthiness businessthe fight againstas usual devastating and rethink effects risk, of be addressed in existing contracts; we cannot continue to treat a pandemic controls and BCPs. and how can risk controls regarding inliterature future like and any past other flu-like black pandemics, tail event. conduct risk be upheld in an Therefore, there is need to accommodate Mambwe Chibale is Senior Analyst- alternative work environment should this possibility in the BCPs. Most Liquidations in the Non-Bank Financial be asked by risk practitioners. Supervision Department.

28 March 2020 Zambanker importantly, financial firms need to Adapting to the changing operating environment

Dr Simwayi By Dr MUSONDA SIMWAYI

The changing operating environment, especially one brought about by the COVID-19, has brought fresh memories of negotiating street traffic in India and Kenya. These memories affirm the importance of thinking and acting flexibly. The mere unpredictability and diversity of life on the road demands a lot of flexibility. In India, vehicles come in all shapes and sizes and travel at a range of speed. Pedestrians and animals compete with cars, trucks, buses, cycles and scooters. The terrain is of varying quality and topography. Most of the roads, like in Zambia, are undergoing repairs and expansions. Surprisingly, a linear and orderly approach to driving in such an environment would lead to accidents. The only way to survive is, ironically, to accept the unpredictability of other road users and respond by being similarly adaptable, in both thoughts and actions.

The analogy of driving in India, where a convention of the medical industry of of cryptocurrencies. Unfortunately, to most drivers act in a disorderly manner, a patient visiting a doctor, when it can many this looks farfetched. How about demonstrates the prevailing operating be the other way around. That radical a completely disarmed state police and environment and the challenges question led him to consider a solution proper investment in robust Electronic brought by the coronavirus pandemic. that allows doctors to consult patients Security Systems for proper security Our operating environments can change without either party having to travel. monitoring and crime management? any time from bad to good or vice versa. Another example is that of Mr Harish Hande, an entrepreneur, who dared to related equipment are not making for both makers and implementers of think the unthinkable and succeeded. economicHuge investments sense when in criminals firearms have and decisionsHence the in importanceorganisations of cannot flexibility be He founded the Sola Electric Light revised their strategies. They are overemphasised. Like those drivers Company (SELCO) in 1995 which stealing using electronic means rather in India, there is need to act in a non- provided solar energy to rural poor than physical ones. I have consistently linear way and work outside the box. people of India and debunked the argued for serious investments in If organisations and individuals don’t sustainable technologies. adapt to the new environments, they might not make sense now but this is will become irrelevant. More often than To some people it remains unthinkable whatsolutions adaptability to fight is cyber-crime. all about. These not, this volatility and unpredictability that in the next ten years or so, a good 2. Rethinking long term go out of business or be rendered planning- while long term planning is Inenables order flexible to remain thinking relevant and actions. in the irrelevantnumber of financialby new institutions competition, will critical to effective accomplishment changing environments, organisations advancement in technology and of organisational objectives and and individuals ought to think and act changing customer behaviours. The mandates, these must be done in light unthinkable thing for central banks of prevailing social and economic achieve this: now is to start preparing for these circumstances which are constantly flexibly. There are a number of ways to developments. For example, central changing. The Bank of Zambia has just 1. Think the unthinkable- banks may start preparing for 100% put in place the 2020-2023 Strategic Traditional and cookie-cutter solutions outsourcing of support functions. There Plan, however most of the 2020 to new and complex challenges will benchmarks will not be achieved due not work. We must challenge many money is under threat and that there to the prevailing situation. Hence, it ingrained beliefs and traditional couldare strong be a signals global thatcurrency the future without of fiat a is vital to experiment along the way ways of doing things such as rigid sovereign issuer. The unthinkable in and show willingness to try multiple committees and archaic policies. A this respect is to equip ourselves with options, rather than adopting one well-known medical practitioner Dr skills and competencies to manage a approach at the start and sticking to it Mohan Kumar, for instance, questioned cashless economy and the emergence thereafter. The case in point here is the Story continues on page 30 Zambanker March 2020 29 Story continues from page 29 recent announcement by the Finance opportunities. Currently Financial often come from structured internal Technologies (Fintechs), have brought processes and, unfortunately, past about the unbundling of the core successes which breed complacency revisedMinister, in Drview Bwalya of the adverse Ng’andu effects that and sow seeds of failure. The danger of ofthe the 2020 coronavirus National pandemic. Budget would In this be relying, solely, on past successes is that functions of financial institutions. A lot it blinds organisations to the fact that recommended. industry.of non-traditional This situation financial is both institutions a threat every challenge is unique and requires regard, flexible short term plans are andare having an opportunity a large share which of the financialrequires a different approach for success. As 3. Act with speed and agility- A agility. a result, organisations when faced culture of agility is ideal for new threats with new challenges tend to reapply and opportunities. By acting speedily Unfortunately, a lot of entities, “tried and successful” solutions rather and embracing agility, organisations especially public organisations are than develop new ones. In sum, many can deal with unanticipated slow to adapt mainly on account individuals and organisations become challenges faster and seize unexpected victims of their own previous success.

of fixed mindsets. These mindsets FinTech4U in Zambia First Results of the intensive Capacity Building Programme

By MALI KAMBANDU

In January 2020, five fintechs enrolled in the FinTech4U Accelerator Programme to improve their service or product offering delivered through digital financial services (DFS). By partnering together, UN Capital Development Fund and BongoHive provided extensive technical assistance in areas such as product development, partnerships formulation and facilitated regulator workshops with Bank of Zambia (BoZ), the Securities and Exchange Commission (SEC) and Zambia Information Communication and Technology Authority (ZICTA) to assist the fintechs better manage regulatory requirements. The three-month accelerator programme classes ended in April 2020 with the five fintechs learning and growing a great deal from the programme.

he FinTech founders in the structure of the programme helped do „„ Weekly training sessions with this with components such as: a focus on product offerings, depth of getting to know customer journey mapping, data theirfirst cohortcustomers dug better into and the „„ analysis and governance; Tassessing if their proposed solutions models to ensure they had the most „„ Sessions with industry experts would deliver the perceived value. The appropriateCritiquing the value fintechs’ proposition; business Story continues on page 33 30 March 2020 Zambanker in the fields of tax, accounting Story continued from page 32

Acting Manager – Designation Mr Jack Dumingu, Kilyelyani Kanjo - Digital Country Lead, UNCDF and Manager – Payment Systems - Research and Development Mr Jimmy Couvaras at a FinTech4U Accelerator Programme in Lusaka.

and legal advisory to ensure the technical knowledge, but to potential addition, the Accelerator Programme start-ups were building towards strategic partners or investors who can provided an opportunity for regulators investment readiness. open doors and opportunities for the overcoming restrictive regulation to this linkage to pursue partnerships allowand fintechs for a more to begin agile finding DFS industry ways of not undertaken all of these processes thatfintechs. will “We help have us beenimprove able toour leverage value in Zambia that serves the people and asThe they fintechs began realised their businesses; that they hadthe proposition and offering to our target allows for growth of this sector. The opportunity to do so with high-calibre customer base,” said a representative Accelerator Programme saw the start experts at their disposal was invaluable of EduPay, a credit provider offering of this work, and though results will and enabled them to adjust their value micro-loans to parents of school-going not be visible for many months to proposition or seek additional guidance children. to address any areas where they did not to keep collaborating with regulators perform or score well. tocome, support both UNCDF and andfacilitate BongoHive these aim adaptations. “The Accelerator Programme has By nature, fintechs are highly specialised allowed for a lot of self-introspection oftenand sector-specific regulated in the in their same product manner and as The Accelerator Programme, though and has given our team the courage service offerings. However, they are run over three months, provides after- to question our solution design and (FSPs) which can hinder their growth andtraditional success financial during serviceFinTech4U, providers the an additional three months. “It takes lessons and one-on-ones, we have been start-ups had the opportunity to atraining few months support after to thethe fintechsAccelerator for ableproblem to focus fit. on Through the aspects the of our various core address their regulatory needs. As Programme for start-ups to become a bit stronger in their business said Esther Kanduza of Digital PayGo, technology, these businesses fall under models and operations before their anbusiness interoperable that were digital not fine-tuned,”payments variousa financial regulators service and provider have many using business really starts taking root and platform. policies that apply to their business. gaining traction in the industry. This It is easy for young companies, often In addition, the weekly sessions without in-house legal personnel, to omit various government directives or BongoHiveis what we expectFounder to seeand with Director our five of their performance and course- Entrepreneurship.fintechs,” said Simunza “As start-ups, Muyangana, the correctenabled as the needed fintechs if the to data closely revealed track shortcomings in meeting targets. mandatedthey find itto difficult supervise to accesstheir business. support many of which we have tried to help FinTech4Ufrom the relevantprovided regulator’san opportunity office solvefintechs in FinTech4U. face a number The diversity of challenges, in the A key element of FinTech4U was the regulation governing their business. In even now with the COVID-19 pandemic to fintechs to better understand the challenges the fintechsStory continues are addressing, on page 32 exposure fintechs gained, not just to Zambanker March 2020 31 Story continued from page 31 FinTech4U in Zambia

Partcipants during the FinTech4U Accelerator programme how fragile our society is without blowing against their sails, exposes

Infinancial March, security.” the last month of the Accelerator Programme, Zambia and the country began to practice the recommendedrecorded its first preventive cases of coronavirusmeasures, such as social distancing, to curb the spread of the virus. Reactions to the pandemic spread – businesses began to streamline or reduce their operations, Bank of Zambia strongly encouraged using digital methods to run transactions and schools closed three weeks earlier than expected. These measures impacted FinTech4U as all classes and meetings had to be conducted virtually. In addition, the start-ups were affected individually. recording month-on-month success in While those running payment their businesses. In the coming week, platforms, such as Digital PayGo and The diversity in the Mangwee mobile wallet, were afforded debrief sessions with each FinTech a new opportunity with the increase challenges the fintechs are toUNCDF fully and capture BongoHive their will undertakeindividual in digital transactions, others such addressing, even now with experiences and lessons, to inform the as EduPay were adversely affected. the COVID-19 pandemic next version of the programme. With With schools closed and parents not blowing against this cohort complete, and with many presently needing to meet school requirements, the start-up had to think their sails, exposes how and BongoHive will begin planning of how to manoeuvre through the crisis fragile our society is without thelessons next and cohort insights of revealed,the FinTech4U UNCDF in order to continue operating. Accelerator Programme. The second financial security.” Another FinTech, Bwino, who offers planned to begin in July and a call for emergency loans for medical expenses applicationscohort, with will another be announced five fintechs, soon. is to low-income earners used the With the on-going pandemic and opportunity to pivot into providing Zambia’s industries constantly Mali Kambandu is Knowledge pharmaceutical-related services. adjusting to changes, it’s unclear how Management and Communications begin at UN Capital Development Fund.

32 March 2020 Zambanker long it will be before the fintechs Financial Health: A step beyond Financial Inclusion

Mr Sichone By GODWIN SICHONE The last decade has seen developing countries make significant strides in including formerly financially excluded populations, mostly driven by the rapid growth in digital financial services. While this has been the case, especially the financial access dimension, which has grown exponentially, the usage and quality dimensions of financial inclusion still remain a challenge for some countries.

n Zambia, for example, data day financial system functions well and crisis in the event of a shock and from the sex-disaggregated data increases the likelihood of financial chances of recovery in the event of baseline survey conducted under resilience and opportunity.1 such a shock are slim. the Alliance for Financial Inclusion Iproject showed that out of the 9.2 Measuring Financial Health million e-money accounts in 2018, only 1.5 million or 16% were active. From this definition, one would expect Consequently, more focus should now However,that financial this inclusionis not always should the always case. population (or are we as individuals)? Forlead tosome a financially individuals, healthy the population. very fact ThisHow article financially discusses healthy the is framework our adult products and services are affordable that they can access loans, get goods andbe towardsof good ensuringquality to thatspur financialgreater and services on hire purchase and usage. other forms of credit has led to them for measuring financial health. living beyond their means or like they health has four (4) components: There is another aspect, beyond say, punching beyond their weight. In expenditure,The framework saving, for measuring borrowing financial and addition, with savings groups and other planning. These components actually receiving a lot of attention from forms of informal credit now readily financial inclusion, that is increasingly available, without proper checklists to of the components has eight (8) ascertain the credit worthiness of an indicatorssummarise that our are financial used to lives. ascertain Each health.financial Although sector most indicators development of individual, this has led some individuals 2 experts and policy makers; financial to accumulate huge debt burdens, from progress, they do not tell us about both formal and informal sources. Forone’s each financial indicator, health CFSI status. proposes three financial inclusion show significant (3) colour codes, that is, green, yellow would love to know the true extent and red. If an individual’s response is our ability to navigate our financial ofWhile an individual’s formal financial debt burden, institutions there coded green, for a particular indicator, islives therefore or withstand useful. financial shocks. is no way of capturing an individual’s it depicts behavior that can propel the Establishing our financial health status level of informal credit. Informal The Bank of Zambia and its partners lenders, on the other hand, don’t Yellow shows behavior that neither will this year attempt to measure really care whether an individual has individual to greater financial health.

population through the FinScope institutions or not. whilemoves redthem shows significantly behavior towards that norcan survey.the financial health of Zambia’s adult lines of credit from formal financial preventaway from them greater from achieving financial greater health, There are also people who do not What is Financial Health? have huge debt burdens, but spend indiscriminately with no expenditure Indicatorsfinancial health. of Financial Health According to the United States plan, do not save enough, and with no based Center for Financial Services life assurance. Such individuals are To measure the indicators in the Innovation (CFSI), financial health is unknowingly vulnerable and face a framework, eight (8) questions are achieved when an individual’s day-to- asked. Do you….? 1Center for Financial Services Innovation, 2015. Understanding and Improving Consumer Financial Health in America. Chicago. 2 Center for Financial Services Innovation (CFSI). 2016. Eight veryWays to high Measure risk Financial of going Health. into Chicago. a financial Story continues on page 34 Zambanker March 2020 33 Story continues from page 33 Financial Health: A step beyond Financial Inclusion 1. Spend less than your income, on a These are considered to be struggling monthly basis? proportion to one’s income, they are with all, or nearly all aspects of their Ability to do this on a monthly basis greenlead to if further debt is financialless than difficulties. 36%, yellow In shows an individual’s ability to build if it ranges from 36%-43% and in red if savings and to be resilient in the wake it’s more than 43%. fromfinancial which lives they and might are therefore fail to recover. at a very of unexpected events. On the scorecard, high risk of going into a financial crisis green means expenditure is less than 6. Have a good credit score? As consumers, we need to know that income; yellow means expenditure Credit scores shed light on an the spending, saving, borrowing, and is equal to income; and red means individual’s ability to access low-cost planning decisions we make today can expenditure is greater than income. credit and their propensity to pay it either help us build towards achieving back. On the scorecard, individuals are resilience and our ability to pursue 2. Pay high priority bills on time and opportunities, which is our long term in full? is excellent, good or prime; yellow if goal, or can prevent us from achieving High priority bills are those that it’sclassified fair or nonprime;as green if andtheir red credit if it’s score poor the same. So at individual level, let us or subprime. examine ourselves by answering the consequences if left unpaid, such as eight questions. If your status is green rentals.have less On flexibility the scorecard, and moregreen means severe 7. Have appropriate insurance? for a particular indicator, keep doing the individual pays all bills on time Having appropriate insurance allows what you have been doing. If it’s yellow, and/or in full. Yellow means most bills individuals to be resilient in the face of there is still room for improvement. If, are paid on time and/or in full, while unexpected expenses, such as the death however, you’re in red, you need to take red means only some of the bills are of a loved one or a medical emergency. drastic measures to change the situation. paid on time and/or in full. have coverage for assets and potential Conclusion 3. Have sufficient liquid savings? shocks;So one yellow is classified if the ascover green is only if they for It is clear that at individual level, we This is important for coping with some assets and/or shocks and red an unexpected expense such as car status in order to take measures to repair, major health issue, a sudden that some individuals may be covered maintainalways need or toimprove, know our depending financial onhealth the drop in income or job loss. Individuals throughif they have the head no coverageof household at all. or other Note status. I hope by now, you know yours. in green are those that have planned family member. This counts. monthly savings, those that use the At institutional level, it is also very savings principle: Income – Saving 8. Plan ahead for expenses? = Expenditure. Those in yellow save Planning ahead for expenses indicates whatever is left over at the end of that individuals are future-oriented and potentialimportant borrowers for financial and service individuals providers who the month: Income – Expenditure = alreadyto know have the credit financial lines. health Some status of these of Saving. People in red don’t really save. situation. Those in green have monthly indicators can be computed using data They have no regular savings plan and budgets,interested always in improving plan ahead their for financial large usually spend about as much as, or unexpected irregular payments and set institutions. Employers also need to more than their income. knowthat is the already status available of their with employees. financial who fall short of budgeting monthly and 4. Have sufficient long-term savings long term financial goals. Individuals or assets? productivityPoor financial of health employees. more often results have no not monthly fully set budgets, long term do not financial plan in financial stress and can affect the forgoals large are unexpectedclassified as irregular yellow. Those payments that Financial education, combined with the andHaving take sufficient advantage long-term of opportunities savings is availability of high quality and affordable necessary to achieve financial security goals are considered to be in red. education. This indicator, like the 3rd and have not set long term financial undoubtedly helps consumers make one,such is as not investing easy to measure. in fixed One assets proxy or Based on the indicators, individuals financial products and services for measuring this indicator in surveys are grouped in three (3) categories. is to ask the respondent if, when they forbetter the future. financial Therefore, decisions, Government, maintain think about saving money for the includes those who are spending, saving, control over their finances, and plan future, they think of the next 5 years borrowing,First, the and financially planning healthy, in a way which that service providers and other stakeholders or longer (green), next year (yellow), will allow them to be resilient and shouldfinancial not sector relent regulators in their and efforts financial to or the next few weeks or months (red). pursue opportunities over time. The second category is for individuals who 5. Have a sustainable debt load? provideThe Author financial is education.Assistant Manager Having a manageable debt load struggling with some, but not all aspects Research, Monitoring and Evaluation reduces chances of an individual are financially coping, meaning they are in the Non-Bank Financial Supervision becoming over-indebted, which may Department. of their financial lives. Category three is 34 March 2020 Zambanker for those who are financially vulnerable. Frequently Asked Questions on the K10 billion Stimulus Package Ms Mwanza By BESNAT MWANZA

The Zambian economy has been facing significant macroeconomic challenges as reflected in low growth, high fiscal deficits, rising inflation and debt service obligations as well as low international reserves. The outbreak of COVID-19 pandemic has worsened the situation as it is already having an adverse impact on the economy through the closure of businesses and restrictions on important trade routes as countries fight the spread of the pandemic.

Without compensating policy action, for ALL other sectors and households. FSPs. the decline in economic activity and the drop in incomes for businesses 2. Is the facility free? 5. Which Business and Households and households will also impact can access this facility? The facility is not free. The Bank of non-performing loans and this Zambia (BoZ) is lending funds to Everyone is entitled to the fund on the financial sector through rising Financial Service Providers (FSPs) the facility through their respective stability. who, when they borrow from BoZ, are FSP. However, priority is to support may compromise financial system obliged to on-lend this to businesses sectors that will propel economic The Bank of Zambia has therefore and households. recovery and stimulate private sector introduced a Targeted Medium- 3. How much money is available Financial Service Providers (FSPs) to under the facility? manufacturing,led growth. Sectors energy identified and tourism in the supportTerm Refinancing businesses Facility and households to enable and7NDP these as prioritywill receive are 60% agriculture, of the that are being impacted by COVID-19. The facility has an initial amount of fund on the facility. The rest of the sectors including mining shall access Following the introduction of this for targeted sectors (agriculture, the remaining 40%. facility, a number of questions have manufacturing,K10 billion and tenorstourism of fiveand (5) energy) years and three (3) years for other sectors 6. Which FSPs are eligible to borrow how this facility will be implemented. including households. from BoZ under this facility? been asked seeking clarification on 1. What is this facility? FSPs will access this facility from BoZ FSPs that are licensed and supervised at 12.5%. This interest rate is arrived by BoZ are eligible to participate. The The Targeted Medium-Term at by taking the current Monetary FSPs must meet minimum criteria Policy Rate (MPR) of 11.5% and which are set out in the Terms and facility which allows Financial Service adding 1 percentage point. Further, Conditions (T’s & C’s). These are ProvidersRefinancing (FSPs) Facility (commercial (TMTRF) banks is a FSPs will have a one-year grace period available on the BoZ website (www. (moratorium) for both principal and boz.zm). under the supervision of the Bank, to interest payments on the facility. This accessand non-bank funds from financial the Bank institutions) of Zambia facility became available for access by 7. At what rate will the funds be for on-lending to businesses and FSPs on April 15, 2020. available? households. 4. How can Households and FSPs will determine the interest The TMTRF will prioritize key Businesses access this facility? rates at which the funds will be on- lent to their clients. However, FSPs Business and individuals can agriculture,sectors identified manufacturing, in the tourism 7th access the Facility through their andNational energy. Development Sixty (60) percent Plan, notably, of the FSPs. Businesses and households ratesare obliged and the to possibility pass on of the a payment benefits funds will go to these sectors while interested in accessing this facility holidayof lower tointerest their rates,clients. fixed BoZ interest will forty (40) percent will be reserved must therefore do so through their Story continues on page 36 check onZambanker the benefits March being 2020 passed on35 Story continues from page 35 prior to the disbursement of funds. continuous surveillance through on- mandatory repayment as provided Further, BoZ has provided additional site and off-site inspections. Failure for under section 13. With regard to incentives to FSPs which lend to their to report appropriately shall result in interest rates, the Bank has provided clients at no more than 5 percentage sanctions as guided under section 14 incentives for FSPs that offer lower points above the cost of funds from and the imposition of such sanctions interest rates to their clients. BoZ. If FSPs borrow the funds at is without prejudice to the Bank’s use 12.5% from BoZ and lend to clients at of its regulatory powers as provided 10. Will SMEs be discriminated no more than 17.5%, then they have for in the Bank of Zambia Act and or prevented from accessing the access to more funds from the facility. Banking and Financial Services Act. facility?

8. Will BoZ fine a FSP that breaches 9. How will BoZ ensure benefits on the terms and conditions set out? the facility trickle down to intended SMEs that are eligible to participate in beneficiaries? There are FSPs that specifically service The Bank has put in place from the facility particularly through mechanisms to ensure adherence to It is one of the requirements stipulated the Facility.FSPs that SMEs already can therefore serve small benefit and the set terms and conditions. Firstly, under the terms and conditions of the micro enterprises. However, because access to the funds on the Facility by Facility that FSPs should demonstrate these funds are a loan, SMEs need to any FSP is subject to the terms and conditions as provided for under Facility are passed on to their clients. by FSPs. section 2.4. All FSP are subject to Thehow theBank benefits will regularly obtained monitor on the fulfil some minimum criteria required regular reporting to the Bank and performance and any FSPs that The Author is Acting Assistant Director this is in addition to the Bank’s fail to comply will be subject to - Cummunications. Staff tutored on 2019-Coronavirus

By ZAMBANKER REPORTER

The novel Coronavirus outbreak which started in Wuhan City in China has no specific treatment or vaccine. Patients who are symptomatic receive supportive treatment such as oxygen therapy, pain and fever relief as well as antibiotics if they fall very ill. Infectious Diseases Specialist at the Zambia National Public Health Institute (ZNPHI) Dr Paul Zulu said this when he made a presentation to staff during a novel Coronavirus (Covid – 19) sensitisation exercise in the BoZ Auditorium.

Staff who attended the Coronavirus (2019 – nCov) sensitisation exercise in the auditorium.

36 March 2020 Zambanker Staff asking questions during the Coronavirus (2019 – nCov) sensitisation exercise in the auditorium. Staff were encouraged to wash hands with soap and running water when hands were visibly dirty and to use an alcohol-based hand cleanser whenever hands were not visibly dirty. ‘Avoid unprotected contact with sick people including spitting in public, touching one’s eyes, nose or mouth and with live farm or wild animals,’ he added.

Dr Zulu also said that traveller screening had been enhanced at all ports of entry by conducting travel history and symptom screening as well as temperature checks on all passengers. He added that the Ministry of Health had also engaged various stakeholders to coordinate response efforts.

Dr Zulu informed staff that the source of infections with a history of fever and The Health expert informed staff that Covid – 19 was not yet known but what cough and any of the following: those was known was that the virus spreads who had undertaken a trip to China campaigns and that the exercise through coughing and sneezing. The in the last 14 days prior to symptom undertakenZNPHI was at intensifying the Bank was sensitisation one way symptoms include fever, headache, sore onset, had close physical contact with a of sending out the message to the throat, cough and shortness of breath. people. He hoped staff would help in In more severe cases, infection can visited a healthcare facility in a country sharing this information with people cause pneumonia, respiratory failure, confirmed case of Covid – 19 infection, they come in contact with as a way of organ failure and even death. 19 infections had been reported or spreading the message. werewhere healthcare hospital confirmed workers working Covid in – Dr Zulu stated that primers for an environment where patients with coronavirus were not available in- severe acute respiratory infections and orientation of national, provincial country and Africa Centre for Disease were being cared for. andHe, however,district confirmedrapid response that trainingteams Control (CDC) was providing diagnostic on the novel coronavirus and capacity in three referral laboratories ‘Frequent hand hygiene and wearing of preventive measures had already in South Africa, Uganda and Senegal. facial masks are key steps of prevention,’ started. Development, printing Dr Zulu said. He implored staff to and dissemination of information, The Health Specialist highlighted perform hand hygiene after potential education and communication that suspected cases were those who contact with respiratory secretions and material on Covid – 19 including presented severe acute respiratory self-isolate where necessary. clinical guidelines were underway.

Zambanker March 2020 37 Bank of Zambia Online Central banks worldwide have over the last two decades shifted towards greater transparency, with varying levels of success. With this shift has come an elevation of the communication function. The Bank of Zambia has been no exception.

By LWANGA MWILU Ms Mwilu

The role of communication is closely tied to disseminate information in real-time and ii. Lessons/Looking ahead the Bank of Zambia’s mandate and critical beyond geographical borders. to the attainment of such objectives as As Communicators, we are aware that making transparency, which in turn strengthen i. Benefits information available to the public does not accountability and credibility. Further, necessarily equal making it accessible. This communication facilitates the dissemination is because as a subject matter, economics is of information on and explanation of from our use of social media: not always easily understood by the larger the Bank’s operations and policies, two- Below are some of the benefits we derive part of the general public. way communication with the various „„ We are able to communicate and stakeholders, and consumer education, receive feedback in real-time. This This reality, therefore, underpins our which in turn protects members of the two-way interaction has proved to be a strategy going forward to present the same public. useful source of feedback that, in turn, information at different levels of detail and informs our day-to-day strategy. This complexity. The aim is to have different regular interface with members of the ‘layers’ of communication each tailored to role in monetary policy, the Bank’s public also allows us to identify any a different target audience. For example, primaryCommunication objective, also ensuring plays athe significant decision information gaps as well as appreciate we currently live-tweet a summary of the is disseminated in real-time and across how we can communicate better. different platforms for optimal reach. This „„ We are able to reach some stakeholders for the lay audience then share the full access to information contributes to greater that would otherwise be unreachable, statementmonetary and policy Governor’s decision presentation as first ‘layer’ as public appreciation of the rationales behind including those that would otherwise second ‘layer’ for experts and others able to the policy decision, targets, forecasts and understand. outlook. „„ We receive a lot of alerts from members offind the engaging public, theincluding Bank intimidating. on suspicious With no ability to segment our social media Delivering communication at a level followers, all layers reach the entire audience „„ Our platforms are recognised as a and inevitably, some feel overwhelmed by bank requires constant evolution of strategy. reliablefinancial and activity timely such source as Ponzi of Bank schemes. news what is essentially jargon to them. Onereflective outcome of a modernof this andstrategy dynamic has central been by both local and international media the addition of social media to the Bank’s and experts, as well as members of One of the plans going forward is to simplify communication avenues. information further and enhance the use of because we achieve our objective of infographics as well as present it in a way Social Media disseminatingthe public. This information is mutually beneficialand our that is relatable to the average follower’s stakeholders’ information needs are lived reality e.g. instead of ending at The Bank has a presence on Facebook, met. Twitter, YouTube and Flickr. These platforms „„ We are able to report stories in full, are used as extra avenues to meet the thereby reducing the risk of being Enhanced“inflation”, comprehensionwe break it down of to our “price messages rises”. information needs of our various external misquoted/ quoted out of context and can potentially enhance the trust with stakeholders. The platforms provide other forms of misrepresentation. which members of the public receive our enhanced interactivity and the option to „„ Through monitoring of news and communication and policy positions. sometimes present information in a less commentary and ‘social listening’, we formal way. Internally, we use Yammer to are able to spot misinformation/ fake Connect with us and share with your complement the intranet and email as well news and decide on the action (e.g. networks: @BankofZambia as achieve more interactive communication. issue statement to counter claims, demand retraction, ignore etc) in good Further, we have acquired live streaming time. This is critical to the protection equipment to enhance our ability to of the Bank’s image and reputation. broadcast key Bank events such as our Left unchecked, fake news aimed at undermining the Bank and its The author is Manager- Committee Announcement and Press credibility can potentially have far- e-Communications in the Board flagship, the quarterly Monetary Policy reaching negative consequences. Services Department.

38Briefing. WithMarch Livestream, 2020 Zambanker we are able to SOCIAL MEDIA SECURITY

Now more than ever, consumers spend increasing amounts of time on the internet. With every social media account you sign up for, every picture you post, and status you update, you are sharing information about yourself with the world. How can you be proactive to stay safe online? Be Cyber Smart and take these simple steps to connect with con idence and safely navigate the social media world.

* Remember, there is no “delete” button on the internet. Share with care, because even if you delete a post or picture from your pro ile seconds after posting it, chances are someone still saw it. o * Update your privacy settings. Set the privacy and security settings to your comfort level for information sharing.

* Connect only with people you trust. While some social networks might seem safer for connecting because of the limited personal information shared through them, keep your connections to people you know and trust.

* Limit what information you post on social media.

Zambanker March 2020 39 NEW FACES

By ZAMBANKER REPORTER

The Bank of Zambia has recruited University of Anti Money Laundering Specialist Malawi and a quarter of 2020. Management of UK and she is a Certified Bachelor of Arts seven members of staff in the first Money Laundering Specialist (ACAMS) degree from with the Association of Certified Anti- the University recruitment are Procurement and in Accountancy from Chingola of Zambia. MaintenanceDepartments thatServices benefited (PMS), from Bank the Accountancyof USA. She hasTraining a College College. Certificate Ms Before joining

Supervision, Security and Economics. Mpundu worked for the Pensions and the Bank, he Insurance Authority (PIA) as Manager worked for Procurement - Market Conduct in the Insurance

and Supervision Department before Economic Maintenance joining the Bank. She had also worked Advisory Council as theDeputy National CEO - Services (PMS) Principal Policy Analyst and before Department as Senior Auditor (Performance and that for the Copperbelt University received one Environmentalfor the Office ofAudits), the Auditor PRIDE GeneralZambia of Zambia as Lecturer 1, among new member as Head - Internal Audit Department, other institutions. Dr Mungule is an of staff in the Citibank Zambia Ltd as Head - Cash Executive member of the Economics name of Mr Management Operations and Grant Association of Zambia. Isaac Mushibwe. Thornton as Semi Senior Auditor. She Mr Mushibwe is a member of ACCA, ZICA, ACAMS and Mr Chimuka joined the PMS team in the transport also a member of the Zambia Institute Mweetwa also section on 2nd January, 2020 as a of Directors (IOD). joined the Supervisors on an Advanced Diploma in Automotive Mr Liywali 3rd February, EngineeringTransport Services and Officer.an Advanced He holds Mukelebai 2020 as a International Diploma in Chartered joined the Senior Analyst Institute of Logistics and Transport. Supervision – Liquidations. team on 3rd He holds a Transport Supervisor before joining February, 2020 Master of Arts theMr MushibweBank. He worked is a member for NAPSA of asthe a as a Senior degree in Business Administration Chartered Institute of Logistics and Analyst – (MBA) from the University of Zambia, Transport (CILT). Liquidations. He Master of Arts degree in Finance and holds an MBA Economics from the University of Bank Supervision Department received from Maastricht School of Management Lusaka and a Bachelor of Arts degree four new employees. The names are in Business Administration from Ms Velika Sakala Mpundu, Mr Liywali with Eastern and Southern African the Copperbelt University. He was

Mukelebai, Dr Oswald Kombe Mungule Managementof Netherlands lnstitute (MsM) jointly(ESAMI) offered of a Commercial Manager at Patents

and Mr Chimuka Mweetwa. Tanzania, a Bachelor of Arts degree and Companies Registration Agency in Public Administration from the (PACRA) before joining the Bank. Ms Velika Sakala University of Zambia and a Post He is a member of the Economics Mpundu joined Graduate Diploma in Lecturing and Association of Zambia. the Bank on Teaching Methodology from the 3rd February, University of Lusaka. Before joining Security Division 2020 as a the Bank, he worked for Patents received one Senior Analyst and Companies Registration Agency new employee - Research and (PACRA) as an Inspector of Companies. in the name Regulatory He is a member of the Zambia Institute of Mr Isaiah Policy. She of Human Resources Management. Mwalusaka holds an MBA who joined the in Finance from the Copperbelt Dr Oswald Kombe Mungule joined the Bank on 2nd University and is a Fellow of Bank on 3rd February, 2020 as a Senior March, 2020 Analyst - Research and Regulatory as an Assistant Accountants (ACCA) and Zambia Policy. He holds a PhD in Economics Manager – Electronic Security. He holds a Association of Chartered Certified from the WITS University in South Bachelor of Science degree in Computing (ZICA). Ms Mpundu also holds a Risk Africa, an MBA in Finance from the from the University of Greenwich and has Institute of Certified Accountants University of Akron, OH, USA, a Master an Information Technology Infrastructure Services from the Institute of Risk of Arts degree in Economics from the Management Certificate in Financial 40 March 2020 Zambanker Library (ITIL) Foundation Certification

the University Applications before joining the Bank. of Zambia and He had also worked for ZAMTEL as an Bank.from AXELOS. He is a memberHe worked of thefor NATSAVEInformation as E-Business Coordinator for Oracle EBS and andan ICT SupportCommunication Officer before Technologyjoining the in Systems for Ultimate Technology Limited as Senior Association of Zambia Managementa Certificate Systems Architect for Infor SunSystems. He from JICA is a member of the Engineering Institute Mr Kiza Moses Mbozi joined Economics among other of Zambia (EIZ) and the Information and Department on 10th March, 2020 as a Communication Technology Association Senior Analyst – ICT. He holds a Master of He worked of Zambia (ICTAZ). Science degree in Information Systems and forcertificates. Patents Management from Greenwich, Bachelor of and Companies Registration Agency The Zambanker wishes the new employees Science degree in Computer Science from (PACRA) as a Systems Analyst Business all the best in their appointments.

By ZAMBANKER REPORTER SEPARATIONS Seven (7) members of staff have separated on 19th January, 2004. She worked as a Manager - Board and from the Bank through statutory early Protocol in the Board Services Department Retirement, Voluntary Early Separation Mr Ackim at the time of her separation. She joined Mweemba the Bank on 1st December, 2003. of 2020. worked as a (VES) and resignation in the first quarter Command and ICT Three of the seven former employees who Department separated from the Bank were from Security in Security lost one Division and one each from Regional DivisionControl Officerat employee in the time of his the name of Mr separation. He Christopher CommunicationOffice, Non-Bank Technology Financial Institutions(ICT) and separated from Mwale. Mr BoardSupervision Services (NBFIS), Departments. Information and the Bank through VSS on 31st March, 2020 Mwale after working for close to 23 years. He resigned from Those who joined the Bank on 14th April, 1997. the Bank on left Security 26th February, Division are 2020 after Mr Clement Financial working for 5 months. He was a Manager – Sumwaumwa InstitutionsNon-Bank ICT Security and Compliance at the time of who separated Supervision his separation. He joined the Bank on 24th from the September, 2019. Bank through one member statutory early of(NBFIS) staff in lostthe Mrs Misozi retirement period under Mapala on 12th January, 2020 after working for review in the Chileshe name of Mr separated Operations at the time of his separation. Marvin Ilunga. Mr Ilunga separated from from the Mr29 years.Sumwaumwa He was joined a Security the Bank Officer on 1st – the Bank on 14th January, 2020 through Bank on 20th December, 1991. statutory early retirement after working March, 2020 for 24 years. He worked as an Assistant after working Dr Maybin Manager – Programmes at the time of his for over 34 Masando separation. He joined the Bank on 22nd years. She was worked as January, 1996. an Assistant an Assistant Manager - Currency Processing at Regional Manager Mrs Mirriam – Physical Lupindula joined the Bank on 16th September, 1985. Security in separated Office at the time of her separation. She the Security from the Division at Bank through the time of his VSS on 31st separation. He separated from the Bank January, 2020 through VSS on 25th February, 2020 after after working working for 16 years. He joined the Bank for 16 years.

Zambanker March 2020 41 MEASURES TO MITIGATE THE SPREAD OF COVID ‑19 PANDEMIC

In an effort to mitigate the transmission of COVID-19 (Coronavirus), the Bank of Zambia has taken measures to minimise the movement of people into its premises. Members of the public are therefore advised to visit the Bank only when it is absolutely necessary and after securing an appointment.

The Bank of Zambia can be contacted on the following numbers during normal working hours from 08:00hrs to 16:30hrs:

1. Bank Supervision Department 0211399334

3. Banking, Currency and Payment Systems Department 0211399319 2. 4. BankBoard of Services Zambia Department – Regional Office, Ndola 02113993250212399600 5. Financial Markets Department 0211399399 0211399343

7. Procurement and Maintenance Department 0211399370 8. 6. Non-BankSwitch Board Financial Institutions Supervision Department 02113993120211399300 9. BoZ Cellphone numbers 0971 270120/0963 885580/0963 884820

This restriction will not apply to Government Departments that collect revenue as well as entities that transact with banking division.

Stay safe and practice social distancing.

Issued by

The Communications Division Bank of Zambia Bank Square Email: [email protected] Twitter: @BankOfZambia Facebook: @BankOfZambia LUSAKA 24th42 March,March 2020 2020 Zambanker PROTECT YOURSELF FROM CORONAVIRUS DISEASE 2019 (COVID-19) Wash your hands regularly with soap and water or use alcohol based hand rub

Avoid close contact with anyone with cold or flu-like symptoms

Cook meat, eggs and other animal products thoroughly before eating

Cover your nose and mouth with flexed elbow or tissue when coughing or sneezing and throw tissue in a bin Avoid unprotected contact with live farm or wild animals

For More Information, Contact the Call Centre on: TOLL FREE LINE:

0974 493 553 | 0953 898 941 | 0964 638 726

Republic of Zambia MINISTRY OF HEALTH Zambanker March 2020 43 44 March 2020 Zambanker