The Bank of Zambia (BoZ) has disclosed that Zambia’s development potential has been hindered by limited access to financial services and the low number of products available to the different sectors.
BoZ Governor Michael Gondwe said there was therefore need to ensure that the financial sector was capable of meeting the challenges of providing affordable finance in order to accelerate sustainable investments in key sectors of the economy.
Dr. Gondwe said this could only be achieved where the financial system was able to improve its allocative efficiencies by providing appropriately designed products and services to all segments of the population.
The Central Bank Governor was speaking during the launch of the Islamic finance guidelines in Lusaka today.
And Dr. Gondwe said it was envisaged that the major challenge of rolling out the Islamic finance will be the lack of the necessary capacity by financial service providers in the area of Islamic finance.
Dr. Gondwe has therefore encouraged financial service providers to put in place appropriate programmes and structures to provide high quality and Shari’a compliant financial services in Zambia.
He said this will play a complementary and supportive role to the effectiveness of the supervisory oversight of the Central Bank in the emerging area of the financial system.
Speaking earlier, Islamic Supreme Council president Suzgo Zimba said the issuance of the guidelines on Islamic finance in Zambia will contribute towards fostering economic growth by providing viable financing options to a cross section of the population.
He said the launch of the Islamic finance guidelines in the country was an important milestone because the guidelines were being issued at a time when interest rates were very high in the country.
Mr. Zimba said the introduction of interest free financing structures will no doubt have a positive impact in reducing the cost of borrowing in Zambia.
He said for Islamic finance to flourish in Zambia, there will be need for continued cooperation and consultations by all stakeholders to ensure common understanding of the principles of Shari’a on the one part and the demands of business dynamics on the other.
Mr. Zimba also dispelled the misconception that Islamic finance was only intended for Muslims and to force people to embrace Islam.
He said anyone can access Islamic financial services regardless of their religious faith as long as they comply with the basic contracts governing Islamic financing structures.
He further stated that the launch of the service will help many of the council members who were keeping millions of dollars in their houses and warehouses to now keep their monies in the banks.