Caleb M Fundanga: Brief background to the FinScope Zambia 2005 Survey Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, as background to the FinScope Zambia 2005 Survey, Lusaka, 8 November 2006. *  *  *  Hon. Ministers and Deputy Ministers; Secretary to the Treasury Hon. Members of Parliament; Your Excellencies and Members of the Diplomatic Corps; Representatives of Development Agencies; Chief Executives of Banks, Regulatory Authorities and Financial Institutions; Distinguished Invited Guests; and Ladies and Gentlemen. On behalf of the Financial Sector Development Plan (FSDP) Secretariat, it is my pleasure to present a brief background to the FinScope Zambia 2005 Survey. Ladies and Gentlemen - In recognition of the strategic importance of the financial sector to the country’s development and poverty reduction efforts, in 2003 Government launched a project to formulate the first Financial Sector Development Plan (FSDP) which was approved by Cabinet in 2004. This followed the joint World Bank and International Monetary Fund (IMF) Financial Sector Assessment Programme (FSAP) report of 2002, which identified various weaknesses in the Zambian financial system including the following: •  Unstable macro-environment  •  Low financial intermediation  •  No formal structures for a financial safety net  •  Poor credit culture  •  Weaknesses in the regulation and supervision of non-bank financial institutions. Since the approval of the FSDP in 2004, a number of weaknesses have been addressed.
Since May this year, many SMEs and think-tanks suggested that Hong Kong should develop a market-oriented platform to guarantee SME loans upon the phasing out of the Special Loan Guarantee Scheme. This suggestion has gained a good measure of support from the market and society at large. The HKMC therefore immediately launched an in-depth study and market consultation exercise. In mid-November, the HKMC announced that it will launch the SME Financing Guarantee Scheme on 1 January next year. The Scheme will offer extensive and flexible guarantee coverage to help the SMEs in Hong Kong obtain more sustainable bank financing for their daily operations or purchase of equipment etc. Also, this Scheme will help banks manage their lending risks more effectively – the banks can meet the financing needs of the SMEs without having to warehouse excessive credit risks. Undoubtedly, the Scheme will bring benefits for the SMEs, banks, economy and employment in Hong Kong. We do not expect an overwhelming demand for the new Scheme initially. However, the global market conditions change and turn all the time. There is a high degree of volatility and uncertainty in the future. The business and financing environments for the enterprises could easily come under stress and the SME Financing Guarantee Scheme will then play an important role to help banks maintain a steady and sustainable flow of financing to the SMEs. To promote the launch of this new Scheme, the HKMC will offer a special discount for applications filed on or before 30 June 2011.