News Column

Zambian Bank Increases Lending Charges

June 17, 2014

The central bank introduced the limits in December 2012 to spur economic growth and create jobs through lowering the cost of capital.

Yields on Zambia's one-year treasury bills reached a record 19,99 percent at an auction last week.

The kwacha has lost 10 percent against the dollar this year, the biggest drop among the 24 most-traded African currencies after Ghana's cedi, according to data compiled by Bloomberg.

The increase in the maximum interest rates "very much reflects the higher cost of funds, but also the intent of the authorities to keep loan spreads sensible," Razia Khan, head of Africa research at Standard Chartered (STAN) in London, said in an e-mail.

Lending rates will probably rise further because of the increased cap.

This may attract foreign investment and lead to a stronger currency, FNB Zambia, the local unit of FirstRand Ltd. (FSR), said in an e-mailed note.

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Source: AllAfrica

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