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Zambia needs stronger integration between mobile money services and the formal banking system to improve small and medium-sized enterprises’ (SMEs) access to credit, First Alliance Bank Managing Director, Kuldip Paliwal said.
Paliwal said many businesses relied exclusively on mobile money, limiting banks’ ability to assess their financial performance and determine their creditworthiness.
He said businesses needed to channel more transactions through bank accounts to establish verifiable financial records that could support loan applications.
“While mobile money will be complementing businesses, they also need to come to the banking channel as well, so that the bank can review their transaction profile and turnover and they can get more finance,” Paliwal said.
Speaking in Lusaka at the launch of new bank accounts, Paliwal said SMEs played a central role in Zambia’s economic development, contributing significantly to employment and economic output.
He said expanding access to financial services beyond traditional urban centres remained important, citing figures indicating that more than 75% of registered businesses were concentrated in two provinces, while the remaining eight accounted for 25%.
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Paliwal said mobile money had expanded financial inclusion over the past decade, with integration between mobile money operators and banks allowing customers to transfer funds between mobile wallets and bank accounts.
He cited International Monetary Fund data released about a year earlier showing that financial inclusion had risen to 79%, from between 50% and 60% previously.
However, he said more than half of businesses operated without bank accounts, relying instead on mobile money, making it difficult for lenders to establish their turnover and assess their ability to repay loans.
Paliwal said improved access to financial records could help banks extend credit to businesses, including those operating in mining supply chains on the Copperbelt.
He also said Zambia’s loan-to-deposit ratio remained below 45%, meaning banks lent less than 45 Kwacha for every 100 kwacha held in deposits.
Increasing the ratio to between 50% and 55% would create room for greater lending to businesses and support economic activity, he said.
The figures on SME contributions to gross domestic product and employment, the proportion of businesses without bank accounts, and the loan-to-deposit ratio are attributed to Paliwal and have not been independently verified.
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