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Lenders in Zambia will now be required to fully disclose all interest rates and charges, remove hidden fees, and comply with fair debt collection standards under the Banking and Financial Services Act of 2026.
The new law, which repeals the Money Lenders Act (Cap. 398), represents a significant overhaul of the lending industry by tightening regulation, curbing abusive practices, and strengthening consumer protection.
Commenting on the new act, economist Lubinda Haabazoka described the reform as a major turning point that brings lenders under stricter supervision and fully integrates them into the formal financial system.
In a statement on the development, Haabazoka noted that: “money lenders will no longer operate under a standalone legal framework but will instead fall under the supervision of the Bank of Zambia (BoZ) as part of the wider financial sector.”
Under the new arrangement, the term “money lender” has effectively been abolished.
Such entities would now be classified as financial service providers, specifically financial businesses that offer credit services without taking deposits.
The Act introduces a more stringent licensing regime, making it illegal to operate without approval from regulators.
Offenders face penalties of up to three million penalty units or imprisonment of up to 30 years.
Haabazoka said the reforms were aimed at eliminating informal lending practices and enforcing greater discipline within the sector.
The law also strengthens regulatory oversight by introducing minimum capital requirements, governance standards, and mandatory reporting obligations to the central bank.
In addition, authorities have been granted powers to regulate lending interest rates, a move expected to significantly alter existing business models.
Lenders will also be required to comply with anti-money laundering and counter-terrorism financing regulations, including customer verification processes and the reporting of suspicious transactions.
Haabazoka observed that while the new compliance requirements may increase operational costs—potentially pushing smaller informal lenders out of the market—larger and more structured institutions are likely to benefit from improved credibility and expansion opportunities.
He added that the reforms were expected to improve transparency, enhance consumer protection, and strengthen overall stability in Zambia’s financial sector.
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