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The Bankers Association of Zambia (BAZ) and Stanbic Bank convened the fourth Banking Industry Symposium in Lusaka on Friday, with stakeholders underscoring the importance of robust capital frameworks for protecting depositors and preserving confidence.
Held under the theme _“Capital Adequacy and Currency Legislation: Implications for Financial Sector Health and Macroeconomic Development,”_ the annual forum brought together regulators, financial institutions, and industry leaders to discuss issues shaping the future of banking and economic development in Zambia.
Speaking at the event, BAZ Chairperson and Stanbic Bank Chief Executive, Mwindwa Siakalima commended the government and the Bank of Zambia (BOZ) for progress in stabilizing the macroeconomic environment.
He cited inflation now within the 6-8 percent target band and a stabilized Kwacha as factors boosting confidence in the financial system.
Siakalima attributed the progress to “prudent policy, patient reform, and a determination to build a foundation for inclusive, sustainable growth.”
He noted that the economy continued to transition into a recovery and growth phase, supported by a resurgence in mining, improved agricultural output, and a shift toward more sustainable energy sources.
“Capital adequacy matters as it is the principal buffer that allows banks to absorb risk-related shocks while continuing to operate, meet obligations and support economic activity,” Siakalima said.
He added that effective currency legislation was essential in reinforcing confidence in the Kwacha, supporting its role as the primary medium of exchange, and strengthening monetary policy transmission.
According to Siakalima, sound currency frameworks also reduce exchange rate uncertainty that can amplify credit risk and undermine bank balance sheets.
The BAZ Chairperson outlined several recent reforms the Association had reviewed and provided feedback on, including new capital adequacy rules effective 1 January 2026 that moved Zambia from Basel I to Basel II with aspects of Basel III.
Siakalima also made reference to the Banking and Financial Services Liquidity Coverage Ratio Directives 2026 and new currency directives enacted on the same date.
“When capital frameworks and currency legislation are coherent and mutually reinforcing, they create an environment where banks can allocate credit efficiently, households can save confidently, employees can look forward to a pension without worrying about inflationary pressures and businesses can invest with a clearer view of costs and returns,” he said.
Siakalima stated that BAZ aimed to promote the buildup of strong regulatory capital buffers through risk-sensitive capital allocation aligned with Internal Capital Adequacy Assessment Processes to ensure banks can absorb shocks and reduce systemic risk.
He said the Association supported sustainable lending to productive sectors and enhanced investor confidence and capital inflows.
The BAZ Chairperson highlighted the Banking and Financial Services Bill, National Payment System Bill, and Zambia Deposit Insurance Act, all enacted in April 2026, as part of the legislative progress strengthening the sector.
He also noted draft National Payment System licensing regulations for 2026.
“Our collective objective must be clear: a resilient financial sector that mobilizes savings, channels credit to productive uses, and underpins a stable macroeconomic environment conducive to sustained, inclusive growth,” Siakalima said.
He pointed to the 2025 Finscope survey, which showed financial inclusion rising to 80.1 percent from 69.4 percent in 2020, driven by the expansion of mobile money, digital platforms, and agency banking.
Siakalima emphasized that a well-capitalized financial sector was needed to support MSME formalization, digital financial access, agriculture value chains, and women and youth entrepreneurship.
He stressed that financial institutions should develop products tailored to these segments while maintaining sound risk management practices.
“We commit to strengthening risk management frameworks, particularly in foreign exchange exposure, digital risks, and climate-related financial risks,” he said.
Speaking at the symposium, Ministry of Finance and National Planning Permanent Secretary Mulele Mulele assured that government would continue implementing policies aimed at sustaining robust growth and maintaining macroeconomic stability.
Mulele outlined government’s medium-term focus on fiscal discipline and financial sector strength.
“Government’s objective is to undertake a multi-year fiscal consolidation effort so as to reduce budget deficits and ensure fiscal and debt sustainability,” he said.
He stressed that achieving the targets required coordinated policy action across government and deliberate coordination between fiscal, monetary, and financial sector policies.
“Robust capital and currency frameworks will reinforce investor confidence and support the long term aspirations outlined in Zambia’s Vision 2030,” Mulele said.
On financial inclusion, the Permanent Secretary cited the 2025 Finscope survey, which found that overall financial inclusion rose by 10.7 percentage points to 80.1 percent in 2025, up from 69.4 percent in 2020.
“This progress reflects the expansion of mobile money, digital platforms, and agent banking, which have significantly improved access, particularly in rural areas and among women,” he said.
In his remarks, Bank of Zambia (BOZ) Governor Dr. Denny Kalyalya noted that sovereign securities provided regulatory relief under loan provisioning requirements for certain corporate exposures.
Kalyalya stated that collectively, these features may contribute to embedded risk and an overstatement of banks’ effective capital strength. In an environment characterized by heightened risk aversion, such incentives may also reinforce weak private sector credit intermediation.
“While this exposure supports Government financing and domestic debt market development, it also raises vulnerability issues for banks to sovereign risk,” he said.
Kalyalya said a deterioration in sovereign creditworthiness, whether through rating downgrades, fiscal stress, or debt distress such as experienced during the COVID-19 period, can transmit directly to the banking system and the broader economy.
He stated that this underscored the importance of maintaining macroeconomic stability through sound fiscal management, credible monetary policy, and effective macroprudential oversight.
“It also reinforces the need for prudent management of sovereign exposures to preserve financial sector resilience,” Kalyalya said.
He added that although the Bank had cautiously adjusted the Policy Rate over the past two quarters in response to improving inflation dynamics, it remained mindful of prevailing geopolitical and global economic uncertainties that continue to pose risks to the inflation outlook and broader financial conditions.
Kalyalya said capital adequacy rules also played a critical role in facilitating cross-border financial flows and international investment by enhancing confidence in the resilience, solvency, and credibility of banks operating across jurisdictions.
“In an increasingly integrated global financial system, investors, correspondent banks, multinational corporations, and foreign regulators require assurance that financial institutions maintain sufficient capital buffers to absorb losses and remain operational during periods of regional or global financial stress,” he said.
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