We have permitted that reserves on such loans may temporarily not be increased so that banks can carry out this large-scale, really large-scale, programme, spread losses over time, and enable businesses and households to regain their creditworthiness. But in the short term, I urge banks to do this. Banks must assess the real loan portfolio quality. It is very important that the recognition of losses on non-refundable loans is not overly delayed. I understand that banks will want to drag out this regulatory easing, but “delaying” the recognition of losses can lead to banks not being able to direct resources to lending to effective companies. Having non-performing assets on the balance sheet reduces investor confidence. There are many examples in global practice where there was a delay in recognising bad assets: the “lost decade” in Japan in the 90s, the situation in a number of European countries following the global financial crisis of 2007–2009, and our own experience in 2008–2009. Therefore, we have decided to gradually phase out regulatory easing. We will really phase it out, as Mt Aksakov has urged, carefully. But the phase-out is necessary. And the banks that made use of the easing will have to build up reserves in full for loans to large companies by 1 April next year, and for household loans and loans to SMEs — by 1 July next year within a timeline convenient to them. Banks can also use capital that has been formed to meet capital adequacy buffers but with appropriate restrictions on profit distribution.
As we speak, the PPMLA is being reviewed, and it is expected that the amendments to PPMLA as well as the new law for the establishment of the Financial Intelligence Unit will impose some reporting requirements on accountants. To maintain the reputation of your profession, all accountants should uphold good ethical and professional standards as custodians of financial resources. There is also the need to ensure that financial matters are prudently managed in organisations for we have seen an increase in reported cases of accountants involved in unlawful practices which does not reflect well on the profession. Notwithstanding, allow me to commend ZICA for the hard work leading to the enactment of the Accountants Act in 2008. This is a positive development for the regulation of the Accountancy profession in Zambia. I note that the Act prescribes the relevant qualifications for accountants and also provides for disciplinary action against accountants found guilty of misconduct and corrupt practices. It is my sincere hope that the enactment of the Accountants Act will deter potential offenders and will also ensure that accountants found guilty of malpractice receive the appropriate punishment. Distinguished Members, I further wish to commend ZICA for the development of the local qualification, the ZICA Accountancy program which has been in existence since 2006. This is a positive achievement for ZICA as it provides affordable training to accountants. I am encouraged by the statement in your annual report that you intend to make the ZICA qualification the most preferred in the market.