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FINANCIAL institutions should be responsive to demand and support the country’s economic growth journey, while maintaining stability, the Bank of Zambian has said.

And the central Bank said K8.7 billion of the K10 billion Targeted Medium-Term Liquidity Facility had been approved with K6.9 billion gobbled by commercial banks while K1.8 billion went to nonbank financial institutions at March 31, 2021.

BoZ deputy governor-operations, Francis Chipimo said support to SME’s under the TMTRF had been constrained on account of some of the specific challenges that they have faced in access to finance, even before the onset of the Covid-19 pandemic.

Dr Chipimo said although lending rates had fallen in response to the bank’s TMTRF initiative, they were still unaffordable while collateral requirements remain unchanged He said to mitigate the adverse economic impact of the pandemic, BoZ was able to quickly and effectively deploy the Targeted Medium-Term Liquidity Facility (TMTRF) of K10 billion.

He said this at the policy workshop on Access to Finance for Small and Medium Scale Enterprises (SME) in Zambia Dr Chipimo said it was essential that the financial sector continued to expand its portfolio of products and services by leveraging reforms, digital innovations and targeted outreach in order to be responsive to demand and support Zambia’s economic growth journey. He said the Covid-19 pandemic has caused unprecedented economic challenges and devastation globally and Zambia was no exception.

Dr Chipimo said local SMEs had faced severe liquidity constraints, with decreasing demand, supply chain interruptions and an uncertain recovery timeline.

“While some SMEs are adapting through diversification of their business models, a significant proportion of SMEs are faced with challenges in meeting financial obligations and investing in enterprise growth,” he said.

And Dr Chipimo said the latest Credit Market Monitoring Report showed that credit conditions remain constrained for households and SMEs, with more stringent credit criteria being implemented.

He said demand for working capital had increased considerably as businesses seek to finance ongoing operations.

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