According to government official data, the Bank […]

According to government official data, the Bank of Zambia (BoZ) in its 2026 quarter one report indicated that the overall domestic credit growth slowed sharply to 7.5 percent in March 2026 from 14.4 percent recorded in December 2025.

 A check on the same report revealed that BoZ has reduced the Monetary Policy Rate (MPR) by 25 basis points to 13.25 percent effective May 13, 2026, in an effort to support economic activity and improve access to credit.

 However, Economic Expert, Kelvin Chisanga has told Zambian Business Times-ZBT that rising non-performing loans are among the major factors forcing commercial banks to become more cautious in issuing loans adding that banks are now operating under high risk conditions after many borrowers failed to service existing loans, making financial institutions more selective on who qualifies for credit.

“The banking market has a high premium in terms of working out on some of the loans that have been contracted, meaning banks are now careful on whom they should be able to dispense loans to,” he said. He added that external economic pressures, including geopolitical tensions and weakening trade patterns, are also negatively affecting Zambia’s domestic credit environment and investor confidence.

 Chisanga noted that the uncertainty in key sectors such as agriculture and energy, combined with political undertones ahead of major national events, has created a wait-and-see attitude among businesses and investors.

“Most investors are now on wait and see because of the political situation and uncertainty in the market, especially when looking at long-term productive investments,” he said.

He further argued that although BoZ has started reducing the policy rate, commercial lending rates remain high, preventing the expected transmission of cheaper credit into the private sector.

“Despite the Monetary Policy Rate coming down, interest rates are still quite high, and the cost of borrowing has not reduced to levels that can stimulate productivity,” said Chisanga.

 He has since urged BoZ to abandon what he described as a “blanket interest rate structure” and instead introduce sector-based lending incentives targeting industries such as agriculture and energy to stimulate economic production and industrial growth.

Article by Phillip Sinkala