Boz k10bn package can curb or cushion against economic slump, says Stanbic

LUSAKA, ZAMBIA – If properly implemented, the Bank of Zambia’s monetary stimulus package has potential to curb negative economic growth, experts at Stanbic Bank have said. The central bank intervention has potential to spur growth in a suppressed environment weighed by disease pandemic effects.

Zambia’s largest bank by asset size has integrated its internal support strategy with the central bank to tailor support that which will assist local businesses to remain viable amidst the COVID-19 pandemic.

Earlier in the year, the central bank announced a K10 billion stimulus package to mitigate COVID-19 related financial and economic shocks on businesses and the nation’s Gross Domestic Product -GDP.

Stanbic’s Risk Head and Economics Association of Zambia National Secretary Mutisunge Zulu notes that while the virus’ impact on the economy will be significant, there remains a likelihood that the adversity may be cushioned as projections by many stakeholders have projected.

“COVID-19 has had a tailing effect on global trade with widespread supply disruptions across several markets which as a result, the 2020 global GDP growth rate is expected to recede to -3 percent as per World Bank and the International Monetary Fund projections,” he said during a Stanbic webinar on the subject.

“In Zambia, we expect our GDP to grow at a rate of -3.5 percent should the current trend continue. However, with effective implementation of measures prescribed by the stimulus package, Zambia may record positive yet weak growth in 2020.”

Mr. Zulu, who was speaking during the debut Stanbic Anakazi Banking Webinar, further explained that interventions by financial institutions and the central bank were offering critical buffers and support to the local economy during these tough times.

“As digitalisation becomes increasingly critical to everyday transactability aligning to the prescribed health protocols by implemented by the Ministry of Health, the Bank of Zambia has increased limits for usage of electronic money for both retail and corporate clients to allow for efficacy in transactions for client classes from individual, to SME and corporate level.

“Further, the bank has issued strict guidelines on the K10 billion stimulus package to ensure key sectors of the economy receive adequate investment allocations.

The Bank of Zambia directed that 60% of the fund be channelled into priority sectors such as Agriculture, Tourism, Manufacturing and Energy aligning to the governments 7th National Development Plan while the remaining 40% will be injected to SME’s and micro-enterprises.

This is all designed to complement interventions from other stakeholders aimed at helping cushion the economy from the COVID-19 storm.

“If implemented properly, we could see our GDP growth creep above the zero-percent mark – which would undoubtedly be better than the projected -3.5% recession.”

Meanwhile, Stanbic Bank Zambia Regional Executive Investment Banking Head, Mr. Chungu Kaunda said financial institutions have a social obligation to aid local businesses and support key sectors of the economy in difficult times as these.

“Stanbic’s commitment to businesses of all sizes is real,” Mr. Kaunda said. We have been offering COVID-19 relief packages to businesses even without external intervention for some time now.”

“Our approach has been to provide relief in terms of capital financing, loan repayment and support for importers and cross border traders. Our goal is to see businesses survive in this period and minimise the disease’s impact on the local economy.

“While the initial intervention period was expected to last about three months, the recently availed stimulus package from the Bank of Zambia will go a long way in helping us be there for our clients in the long term.

“Stanbic Bank will leverage its position as the country’s largest bank and will use the central bank’s support through the K10 billion stimulus package to navigate and shape a sustainable way forward for our clients and help propel the economy thus ensuring its economic growth rate is as high as it can be – because Zambia is our home, and we remain committed to driving her growth.”