Editorial

Roll out package

ALTHOUGH the Bank of Zambia has injected K10 billion stimulus package into the country’s economy, it appears that the initial excitement with which it was received has brought also raised some anxiety among stakeholders.
One of the most asked question has been who is eligible and how to access the facility.
Government has stipulated that the package is meant to help local businesses navigate through the uncertain terrain brought about by the global coronavirus pandemic (Covid-19).
But amidst the uncertainly, we are glad that Government appears to be aware of the nagging questions and has come out to reassure the nation on how the stimulus package would work.
Finance Minister Bwalya Ng’andu on Wednesday said Government had increased the number of Non-Financial Institutions that will lend money under the K10bn lending facility.
Commercial banks, according to Dr Ng’andu were expected to peg the interest rates for funds obtained from the facility around 16 to 17 percent.
Interest rates on the market are currently hovering between 28 and 30 percent.
The initial understanding was that the facility would be handled by commercial banks.
This is what unsettled some sections of society as they assumed only established companies would benefit, especially the foreign-owned entities.
Genuine fears were expressed that the banks would be selective on who accessed the facility. As former Finance Minister Katele Kalumba said, it was prudent that businesses which were struggling to survive during this period benefitted.
Dr Ng’andu was categorical on Wednesday when he stressed that the facility was for both existing and new businesses.
But Dr Ng’andu also brought out another new element, that there has been slow uptake amongst Small and Medium Enterprises (SMEs) of the K10bn stimulus package.
The official reason given by the minister is that most of the SMEs usually borrow from non-bank financial institutions as opposed to directly from the commercial banks.
We do not think so. It could be because of the unorthodox manner in which they conduct their businesses – operating by instinct.
But perhaps Government should consider the suggestion from the Economic Association of Zambia (EAZ), that a multi-sectoral economic recovery think-tank comprising the public and private sectors must be set up immediately to identify the most hit sectors in dire need of an urgent stimulus package instead of leaving it to banks with predatory lending rates.
EAZ president Lubinda Haabazoka sounded the warning on Wednesday that many companies were on the verge of collapse unless they get immediate help.
“We must immediately identify the most-hit sectors in the economy and provide them with a stimulus package failure to which we will be hit with massive job losses shortly,” Dr Haabazoka warned.
Clearly, all stakeholders are concerned with the looming job losses which are likely to be lost – some for ever – as economies contract and companies shutdown.
Dr Ng’andu also explained that the increase in the number of Non-Financial Institutions was meant to ensure that small businesses easily accessed the funds.
We too are aware, as the minister alluded to that small businesses borrowed money from Non- Financial Institutions as opposed to commercial banks.
Government has done the right thing by increasing the number of Non-Financial Institutions that will lend money under the K10bn lending facility.
Government wants to ensure that even amidst Covid-19 and after the pandemic, companies are kept afloat and jobs are saved.
The coronavirus outbreak could affect a third of the 440 million formal and informal jobs in Africa as lockdowns across the continent deprive people of the means to make a living.
According to a report, Finding Africa’s Path by McKinsey & Co., between nine million and 18 million of the continent’s 140 million formal jobs could be lost as a result of the crisis.

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