Bankers express worries, as multiple loans heighten household debt concerns

The Bankers Association of Zambia (BAZ) has raised concern over the growing number of employees taking loans from multiple lenders, warning that unchecked borrowing could push more households into financial distress despite the country’s improving financial sector.

BAZ Chief Executive Officer, Leonard Mwanza, said some borrowers were obtaining loans simultaneously from commercial banks, microfinance institutions and informal moneylenders, making it difficult to accurately track their total debt obligations.

Speaking in an interview with journalists on Thursday in Lusaka at Golden Peacock hotel, Mwanza said recent amendments to the Banking and Financial Services Act, which placed moneylenders under the supervision of the Bank of Zambia, would strengthen oversight of household borrowing and encourage responsible lending.

He said the reforms would create a more comprehensive system for monitoring borrowers’ debt across the financial sector while ensuring lenders comply with prescribed debt-to-income limits.

“The reforms will help monitor borrowers’ debt obligations across the financial sector and ensure compliance with debt-to-income thresholds, thereby reducing excessive borrowing and protecting consumers from financial distress,” Mwanza said.

Meanwhile, Mwanza said the Financial Inclusion for Resilience and Innovation Project (FIRIP) would improve access to affordable credit for small-scale farmers through blended financing and risk-sharing mechanisms aimed at lowering borrowing costs.

He said the initiative targeted farmers cultivating between five and twenty hectares and was expected to boost agricultural productivity while supporting Government’s goal of increasing maize, soya bean and wheat production.

“Agriculture remains one of Zambia’s most important economic sectors and requires greater investment if the country is to achieve Government’s target of producing 10 million metric tonnes of maize while increasing soya bean and wheat production,” he said.

Mwanza also said Zambia’s banking sector remained resilient, with non-performing loans standing at about 2.8 percent at the end of April, well below the prudential threshold of 10 percent, reflecting improved asset quality across the industry.

He added that the country’s transition from cheque payments to digital payment systems had been smooth, with both government institutions and the private sector successfully adopting electronic transactions without disrupting the financial system.

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