By Nation Reporter
THE Development Bank of Zambia (DBZ) could not be salvaged even after it had been undergoing 19 recapitasations in its financial life time and Government will establish a new financial institution after its takeover, Finance and National Planning Minister, Situmbeko Musokotwane has disclosed.
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Meanwhile, former DBZ board chairperson Noel Nkhoma has admitted that the bank failed to perform profitably because the institution was abused and overwhelmed by defaulting borrowers.Dr Musokotwae told Parliament yesterday that the Bank of Zambia (BoZ) had powers to take over any financial institution as had been the case in the matter of Development Bank of Zambia and Better Now Finance Company to safeguard the interests of clients.“The Bank of Zambia has powers to dissolve financial institutions. The Development Bank of Zambia is owned by government and other quasi-government institutions such as NAPSA,” he said.Dr Musokotwane was responding to follow up questions after he issued a statement on the takeover of the Development Bank of Zambia by the Central bank.The minister said the Development Bank of Zambia had been recapitalised 19 times since its inception and thereby the only way was to take it over.Dr Musokotwane said the Development Bank of Zambia had a weak capital position and poor asset quality.He the takeover was within the law as the central bank had the mandate to provide financial stability in the country.Independent Nkana MP Binwell Mpundu asked how 98 percent of loans were not serviced.In response, Dr Musokotwane said it was indeed shocking that 98 percent of the loans were not serviced as most of those who owed were politically connected persons.“More than 98 percent is an astonishing number for a bank. Interests are what sustains a bank. Running costs such as paying salaries and so on. DBZ was crippled as over 98 percent were not paying,” he said.Dr Musokotwane said at least, default rate should be at 10 percent and not 98 percent.He said the Development Bank of Zambia had been limping hence the need to take over it.Meanwhile, the House approved the K11.5 billion supplementary budget which was present by the Minister of Finance and National Planning Dr Musokotwane.And Mr Nkoma, an economist said that 98 percent of people who accessed loans from the bank failed to repay back rendering the bank not to be viable.Mr Nkhoma said that DBZ was extremely under utilised despite the previous government getting Eurobonds.He said from 2014, the bank was capital deficient and a stressful and difficult time for one to have been a chairman for the board.“Dr Situmbeko Musokotwane, the Minister of Finance and the board had good intentions but the circumstances were extremely difficult to run the bank,” Mr Nkoma said.Featuring on 5FM Burning Issues programme, Mr Nkhoma said the DBZ board had good intentions but they failed because the bank was overwhelmed with over-borrowing without paying back.
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