Currently, the banking system is made up of the Bank of Zambia, which is the central bank, and 13 commercial banks, with a branch network of 159 as at end-December 2005 compared to 123 in 1990. •  Commercial banks have improved the range of products offered to customers, in line with global innovations. These include Automated Teller Machines (ATMs), foreign exchange accounts, Visa debit cards, mortgages, and leasing services. In 2005, 4 commercial banks launched the E-switch facility to allow their customers to share their ATMs and other payment delivery channels, like point of sale terminals. These services were unheard of before the reforms and were supported by the international community. •  Commercial banks have also embarked on other initiatives including expansion programmes based on the community banking concept. This is consistent with the rural banking concept and is intended to provide financial services to those sectors of the community that are not currently serviced by the banking sector. Ladies and Gentlemen, to meet the challenges which come with an expanded banking sector and in our desire to continue modernising the overall financial sector, it has been imperative for the prudential and supervisory mandate of the Bank of Zambia to be strengthened. In this regard, the key initiatives  2  BIS Review 72/2006  that have been effected, with an ultimate goal of promoting safe, sound and efficient operations have included: •  The enactment and amendment of the Banking and Financial Services Acts in 1994 and 2000, respectively.
Inflation and interest rates have been coming down, while the exchange rate has relatively stabilized, following a steep appreciation towards the end of 2005. Distinguished Ladies and Gentlemen, during the period 2001-2005 growth in real Gross Domestic Product (GDP) averaged 4.7 percent per annum. This growth has been broad-based - extending beyond the recovery of the mining sector. In 2005, the economy registered growth of about 5.0% in real terms, marking the seventh consecutive year of positive growth in real output. This growth was largely due to the expansion in construction, driven by a robust demand for housing as well as largescale investment, which led to a marked pick-up in mineral production, particularly of copper. Other sectors, such as, tourism and transport, storage and communications also contributed to the overall economic growth. Mr Chairman, inflation declined to 15.9% at the end of December 2005 from 17.5% at the end of December 2004 despite several setbacks. These included the partial drought that significantly reduced food supply and high prices of oil and petroleum products. Attainment of single digit inflation has been Government’s goal for a long time. It is, therefore, encouraging to see inflation coming down in recent months, reaching a single digit level of 9.4% in April 2006 and dropping further to 8.6% in May and 8.5% in June 2006. This inflation out-turn has been largely due to the conduct of appropriate monetary policy aided by prudent fiscal policy and relative strengthening of the Kwacha.