BOZ Covid-19 Funds Await Disbursement
According to Bank of Zambia (BoZ) governor Denny Kalyalya funds are yet to be disbursed as part of the K10 billion stimulus package announced in the form of a Medium-Term Financing facility in order to support businesses during the Covid-19 pandemic.
During an interview on ZNBC Dr Kalyalya has revealed that so far K1.2 billion has been approved, with a total of K3 billion in applications received. The majority comes from commercial banks. However, BoZ is yet to disburse money due to the various checks it has to perform before doing so.
The fund was part of a comprehensive list of measures that the bank has taken to respond to the crisis. It is expected to run for between three to five years, allowing financial service providers to restructure or refinance their facilities, or indeed lend on to eligible clients such as SMEs.
Earlier this month Finance Minister Dr Bwalya Ng’andu said businesses had been slow to apply for funding from the K10 billion stimulus package set aside by the Bank of Zambia to boost economic recovery.
Dr Ng’andu said a lack of information was to blame for so few businesses accessing the funding made available via commercial banks.
He said that the government would increase the number of non-bank financial institutions that are able to disburse the money because many small and medium-sized enterprises (SMEs) access loans through these facilities.
Meanwhile, Dr Kalyalya has called for the full implementation of the Seventh National Development Plan (7NDP) while Zambia battles coronavirus.
“We have frameworks which underline the economic focus such as the 7NDP, and this is the time to reinvigorate them. We have good plans but implementation of our plans has been our shortcoming. That must stop,” Dr Kalyalya said.
Other measures announced by the BoZ in response to the pandemic include:
Scaled up open market operations to provide short-term liquidity support to commercial banks on more flexible terms than those obtaining before the outbreak of COVID-19;
Revised rules governing the operations of the interbank foreign exchange market to support its smooth functioning, strengthen market discipline and provide a mechanism for addressing heightened volatility in the exchange rate in periods of stress;
Revised loan classifications and provisioning rules through the issuance of new Directives as the replacement to Statutory Instrument No. 142 of 1996, which is in the process of being revoked;
Extended the transitional arrangement provided for under CB Circular No, 11/2017;
Allowed eligible non-bank financial institutions to henceforth partially use capital instruments that would not ordinarily qualify as common equity Tier 1 and Tier 2 capital, for purposes of computing regulatory capital;
Stepped up sensitization and and is encouraging the use of digital channels and contactless mobile payment mechanisms aimed at preventing the spread of the disease by minimizing person-to-person contact, decongesting banks and other financial institutions premises and reduced use of cash;
Implemented Business Continuity protocols that will ensure that systemically important payment systems and financial market infrastructures remain available.
The Bank is also recommending people to stay safe by going cashless where possible.