Internationl Finance Corporation vice-president and treasurer Jingdong Hua (left) chatting with Finance Minister Alexander Chikwanda (middle) and Bank of Zambia governor Michael Gondwe. – Picture by Nancy Mwape.
By NANCY MWAPE
MINISTER of Finance Alexender Chikwanda says it is worrying that despite the strong macro-economic performance, poverty and inequity levels in Zambia remain unacceptably high, particularly in rural areas.
“Despite the strong macro-economic performance, the reality is that poverty and inequity levels in Zambia remain unacceptably high, particularly in rural areas,” Mr Chikwanda said.
He said this in Livingstone yesteday when he opened the 32nd International Organisation of Securities Commission (IOSCO)/African Middle East Regional Committee (AMERC) meeting hosted by the Securities and Exchange Commission (SEC) of Zambia under the theme `Balancing development and emerging regulatory challenge’.
Mr Chikwanda also called on the IOSCO to help small and medium-scale companies access capital to expand their business and contribute to poverty reduction.
Mr Chikwanda said access to cheap long-term capital is important to building and expanding businesses.
Mr Chikwanda said the financial landscape in Zambia, like any developing country, is dominated by the banking sector and that small-scale firms are disadvantaged.
He said it is known globally that where investment is strong, it is driven by new entrants and that of the small-scale firms.
He said efficacy and efficiency of capital markets rests on high standards of transparency in terms of accounting standards and information flows.
“Since the global financial crisis, we are now all too aware of how a lack of appropriate oversight can have catastrophic economic and political consequences at both the national and international level,” the minister said.
He said there is need to ensure that the regulatory framework encourages and supports the ability of entrepreneurs to take risks by offering a diversity of financial products that can be used to raise capital.
Mr Chikwanda said it is important to develop products that can help mitigate risks such as financial derivatives.
“Smart regulations with smart regulators must support faster and broader economic growth,” he said.
Mr Chikwanda said following the global financial crisis which occasioned a sharp contraction in the global economy and a near meltdown of the financial system, it is an opportune time to reflect on economic growth and development.
He said there has been significant activity by national and international regulators aimed at addressing the question of what regulatory framework is appropriate to support economic growth and development in a sustainable way.
Mr Chikwanda said Zambia has been able to achieve reasonable rates of growth with low inflation and a slow but steady reduction in interest rates.
Over the last three years, the Zambian economy has grown by an annual average rate of 6.8 percent, annual inflation averaging 7.5 percent and commercial bank weighted average lending rates falling to 16 percent from 25 percent.
He said the national current account balance has also been positive, supporting relative stability in the exchange rate.
Earlier, AMERC chairperson Arunma Oteh said last year was a successful year citing development of new products, launching of new trading platforms and removal of some jurisdiction from the global watch list of anti-money laundering.
Ms Oteh said a number of jurisdictions launched capital market master plans to provide a framework for growing and developing their markets for the next five to 10 years.