Distinguished clients and invited guests Private investment is a critical source of long-term capital for spurring sustained economic growth and diversification while promoting innovation by supporting the micro, small and medium sized enterprises (MSMEs). Chairperson In order for the financial sector to fully satisfy the credit demands of the productive sector in Zambia, commercial banks must not be overly conservative in terms of their risk appetite for 2  BIS central bankers’ speeches  MSMEs. Rather, Banks should seek to better understand the risks associated with lending to these enterprises. Further, it is important that banks better understand the risk associated with lending to specialized and growth sectors such as agriculture, tourism, manufacturing and mining by deliberately developing relevant human resource skills in these sectors. Ladies and gentlemen In its quest to see the financial sector take up an active role in financing the productive sector and facilitating the flow of investment into the economy, the Bank of Zambia continues to undertake a number of policy and structural reforms. Among these reforms is the new increase in the minimum capital requirement for banks to K520 million and K104 million for foreign and local banks respectively. These capital levels are expected among other things to: i. Make the banking system strong enough to withstand shocks and instability in the economy should they occur;  ii. Enable banks to underwrite big ticket transactions;  iii. Make banks contribute more to the growth of the economy; and  iv.
Improve access to loanable funds among local entrepreneurs and thereby enable them to partner with foreign investors. This should enhance their economic inclusiveness or participation in the development of the country. Ladies and gentlemen As I conclude, allow me to remind you of the plight of so many of our people living in rural districts. Despite the high economic and business potential in these areas, financial services are non-existant. This means that income earning citizens in the informal sector such as fishermen, bee-keepers, handcraft makers and farmers cannot deposit their earnings in a safe savings account due to the absence of bank branches. In addition, those with good business ideas cannot access loans to actualize their projects and create wealth. These people have to devise unconventional means of keeping their money such as hiding it in their homes, burying or indeed moving with the money where ever they go. Furthermore, civil servants and other citizens in formal employment have to travel long distances and in some instances for a number of days before they can access their salaries. A number of them end up losing their hard earned income in thefts and other calamities. This has to change, and banks working in partnership with the Government can make this happen. I therefore, wish to challenge Commercial banks including First commercial Bank (Z) Ltd to consider opening branches, in the unbanked districts.