Bank of Zambia to launch K5 billion SME credit guarantee fund in 2026

The Bank of Zambia (BoZ) will in the first quarter of 2026 launch a K5 billion fund to provide credit guarantees for small and medium enterprises (SMEs), Governor Denny Kalyalya has announced.

The facility is designed to reduce financial sector risks and improve access to affordable credit for small businesses, which often face challenges securing financing.

Providing a progress update during the 2026 national budget symposium recently, Kalyalya said the central bank had already commenced the process of selecting fund managers and eligible financial service providers (FSPs).

“An Open Call for Expressions of Interest for fund managers closed on September 9, 2025. Fifteen applications were received and are currently under evaluation. The bank will issue a Request for Proposals for formal engagement,” he said.

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Meanwhile, BoZ has initiated internal processes to establish a Special Purpose Vehicle (SPV) that will serve as the legal structure for the fund’s operations.

Kalyalya also gave an update on the forthcoming currency regulations, aimed at reinforcing the use of the Kwacha in domestic transactions, which are expected to come into effect before year-end.

He explained that the regulations, developed under the Bank of Zambia Act of 2022, had undergone extensive consultations with stakeholders since 2024, with the final round scheduled for Lusaka later this year.

“The regulations will require that all domestic transactions be settled in Kwacha unless exempt. Transactions may still be quoted and invoiced in foreign currency, but settlement must be in Kwacha. However, for government transactions, quoting, invoicing and settlement will be conducted exclusively in Kwacha,” he said.

Kalyalya clarified that international transactions would not be affected and assured that detailed guidelines would accompany the new regulations to ensure clarity and compliance.

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