ENP Newswire - 21 July 2014
Release date- 18072014 - REMARKS AT THE OFFICIAL LAUNCH OF THE BARCLAYS BANK ZAMBIA LIMITED CREDIT CARD By Dr. MICHAEL GONDWE, GOVERNOR, BANK OF ZAMBIA,TAJ PAMODZI HOTEL, LUSAKA.
The Board Chairman, Barclays Bank Zambia Ltd - Mr. Jacob J Sikazwe
The Managing Director Barclays Bank Zambia - Mr Saviour Chibiya
Senior Management and Staff from Barclays Bank Zambia
Distinguished Invited Guests
Members of the Press
Ladies and Gentlemen
It is an honour and privilege for me to be here this evening to join Barclays Bank on this important and auspicious occasion marking the launch of Zambia's First Kwacha Denominated Credit Card, another first from Barclays Bank Zambia.
Allow me, through you Chairman, to extend our congratulations to Barclays Bank Zambia Limited for this important addition to your range of products and services. As you may be aware, affordable and innovative banking solutions not only play a critical role towards the sustainable growth of the banking sector but the economy at large.
Mr. Chairman, as Bank of Zambia, we remain committed to empowering the Zambian people through the provision of affordable, accessible and convenient banking services. It is for this reason, therefore, that we will continue to encourage financial institutions in developing banking solutions that will increase the levels of financial inclusion in Zambia.
Ladies and Gentlemen, I am reliably informed that over the years, Barclays Bank Zambia Limited has taken a leading role in driving excellence through the provision of quality and innovative services. It was the first Bank to introduce Free ATM services which eased customers' access to funds as well as the introduction of Cashsend Money Transfer services that enable its clients to send money to both customers and non-customers, just to mention a few.
The Credit Card that is being launched today is a very prominent product in many developed countries across the world. As you are aware, credit cards have a long established history of extensive usage around
the world. Despite these cards not being very common in a lot of developing countries that include Zambia, I am proud to see that our banking sector is responding, and through institutions like Barclays Bank Zambia are making a transition to being among the other countries that are offering these global payment solutions. However, let me hasten to say that more can be done. In this regard, allow me Mr. Chairman to challenge all commercial banks to work towards introducing credit cards. We need to move beyond the holding, by our citizens in some instances, credit cards issued offshore.
This initiative by Barclays Bank should potentially contribute to an increase in the number of people holding credit cards and taking advantage of the range of benefits that can be derived from their use. Credit Cards have a number of benefits as already outlined by the Managing Director, some of which I would like to reiterate:
1. Elimination of the risk associated with carrying large amounts of cash as it may be lost or stolen. The cardholder is also protected from fraud on the card except in event of negligence on his/her part;
2. Cards make it easier to buy things as one can pay for a range of goods and services from small grocery items to airline tickets, hotels, and other products and services. They are also particularly appropriate for online purchases;
3. Cards offer additional protection if what you purchased is lost, damaged or stolen as the credit card statement can vouch for the fact that you bought the item even in the absence of the original receipt;
4. Cards help build a credit history which can be used by the credit reference company to support your creditworthiness when applying for a loan; and
5. In the case of emergencies, a card can become handy in paying for requirements which may be completely outside your budget.
Distinguished Guests, apart from the cardholders, credit cards have other wider advantages which impact on the greater economy. From our perspective as a Central Bank, we are keen to promote the use of non-cash and more efficient payment systems for convenience, flexibility and security. As
earlier alluded to, it is one of the instruments that can contribute to the promotion of financial inclusion. This has been clearly demonstrated in other countries where cards are a common tool for the settlement of financial transactions. In the United States of America, for instance, a larger majority of households have at least one credit card.
In Zambia, with the growing emphasis on trade within the regional economic groupings like SADC and COMESA, plastic money in the form of credit cards, is increasingly becoming a very practical way of facilitating settlement of cross border transactions, and therefore should promote inter and intra-regional trade among member countries.
Ladies and Gentlemen, another benefit which could be associated with the use of credit cards, and generally more extensive use of e-money, is the potential increase in tax compliance among the various economic sectors. The use of credit cards generates accurate records of purchases which would aid Zambia Revenue Authority in the tax assessment and collection efforts to raise the much needed revenues for Government. Whilst on the subject of greater tax compliance, I would encourage businesses to fully use points of sale terminals and other non-cash forms of payment in our shopping malls, retail outlets, wholesalers and other businesses where we have seen some resistance to embrace this technology in favour of cash.
Mr. Chairman, the Bank of Zambia is committed to ensuring that as the new products and technology are adopted in the banking sector, customers are assured of security. In this regard, we are actively engaging the commercial banks through Bankers Association of Zambia for the country to become fully compliant with Europay, Mastercard and Visa (EMV) standards. The EMV standard is a global standard for card capable point of sale terminals and automatic teller machines for authenticating credit and debit card transactions. We are confident that once the whole industry becomes EMV compliant in due course, levels of fraud will reduce significantly as has been the experience in Countries that have implemented EMV compliant card standards.
Ladies and Gentlemen, it is without doubt that credit if harnessed and directed effectively and efficiently can make very positive contribution to business growth and improving household's livelihoods. But there are also a number of challenges that might be associated with the use of credit cards.
One of the major challenges of credit cards is that they encourage the holders to spend money they don't have. If the credit card does not require paying off the balance each month, this balance will accumulate. The longer it takes to settle, the more money will be owed since interest will be charged each month on the unsettled balance. Cardholders therefore need to be prudent and avoid using the card liberally.
May I caution citizens to therefore avoid falling into the debt-trap. The responsibility of avoiding falling into a debt-trap lies primarily with the cardholder. It is prudent to remember that whilst a credit card can make your life easier and can be a wonderful tool for facilitating payments, if you do not use it wisely, it could become a massive financial burden for you.
Distinguished guests, the Bank of Zambia is cognisant of the high interest rates that may obtain on credit cards, in some countries interest rates on credit cards can be several times higher than what banks are willing to give on deposit balances. Let me assure the public that we at the Bank of Zambia are firmly focused on ensuring that affordable interest rates prevail in the market consistent with the policy of increasing access to loanable funds, particularly among the small and medium enterprises for growth and employment creation.
Ladies and Gentlemen, let me reiterate my words of commendation to Barclays Bank for introducing another product on the market. It is a great product which, when used properly can benefit both the bank and its customers. This outcome is however, predicted on customers using the card wisely and responsibly and on the bank issuing cards to clients after a careful vetting and scrutiny and charging fair interest on the product.
Distinguished guests, ladies and gentlemen, may I take this opportunity to also commend Barclays Bank Zambia Plc for the good work that you are doing in uplifting the lives of the Zambian people through the products and services you are offering, as well as the Corporate Social Responsibility programmes that have continued to positively impact lives of people across the country.
May I also reiterate my appeal to other corporate entities to emulate Barclays Bank Zambia Plc by investing in technology so as to develop world-class products and services that make lives easier for our people.
The Bank of Zambia will continue to support initiatives in the financial sector that empower the people of Zambia and contribute to financial inclusion, growth of the financial sector and the economy in general.
Distinguished Guests, it is now my singular honour and privilege to declare the Barclays Credit Card Officially launched.
Thank you for Listening.