The Bank of Zambia (BoZ) has reduced its lending rate by 150 basis points to 12.5% from 14%.The central bank also reduced the statutory reserve ratio by 300 basis points – to 12.5% from 15.5%.
BoZ Governor Denny Kalyalya said prevailing high lending rates and subdued economic growth necessitated the reduction in the lending rate and reserve ratio. Other factors included the decline in inflation.
“Economic activity remained subdued in the first quarter of the year, while credit to the private sector had contracted further despite an increase in money supply. These are some of the considerations that came into play when we arrived at our decisions,” Kalyalya said.
The high lending interest rates by banks have been a thorny issue among Zambian farmers. Lately, various stakeholders, including the Zambia National Farmers Union (ZNFU) were championing the reduction in bank interest rates to spur the growth of the agriculture sector.
Accounting for about 21% of GDP and absorbing 70% of the labour force, agriculture is a cornerstone of Zambia’s national economy.
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