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ZAMBIA NEWS ONLINE/ZAMBIA NEWS ONLINE/ZAMBIA NEWS ONLINE
Edition: #29 31 October 1997
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ZAMBIA NEWS ONLINE is written by Zambian journalists in Zambia and brings you the news from their point of view. It is assembled and edited by Africa News Network, part of South Africa Contact, the former anti-apartheid movement in Denmark, publishers of i'Afrika, a quarterly magazine concentrating on Southern Africa.
ZAMBIA NEWS ONLINE joins our other individual newsletters from MOZAMBIQUE, ZIMBABWE, MALAWI, TANZANIA, ANGOLA and SOUTH AFRICA, providing up to date news through our established network of journalists in southern Africa. These newsletters will be followed, in the very near future, by news updates from other countries in the region.
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In this edition:
Feature:
ZAMBIA'S BANKING SECTOR AT CROSS-ROADS
Stories:
1. 'DRUNK AND DRUGGED' COUP LEADERS
2. KAUNDA DEMANDS FOR GOVERNMENT ACCOMMODATION
3. CHONGWE SUES GOVERNMENT OVER SHOOTING
4. EX-DIPLOMAT JAILED FOR THEFT
5. CATHOLIC COMMISSION CALLS FOR CUTS IN DEFENCE SPENDING
6. TEXTILE COMPANY CLOSURE THREAT
7. DOCTORS PERFORM RARE OPERATION
8. ZAMBIA GETS NEW NATIONAL SOCCER TEAM COACH
9. ZAMBIA HOSTS COMMONWEATH BOXING TITLE FIGHT
FEATURE:
ZAMBIA'S BANKING SECTOR AT CROSS-ROADS
Commercial Banks in Zambia have come under a renewed threat of extinction. Not necessarily because of poor management but because of diminishing confidence in them by potential depositors.The latest wave of scepticism on the abilities of local banks has been triggered by the closure of Prudence Bank which was established only five years ago. For many, the closure of Prudence Bank did not come as a surprise.Rather, it sent warning signals among some depositors on the capabilities of fledgling banks to withstand the stiff competition in the financial sector. It also rekindled the question of whether or not Zambia's economy was big enough to accommodate a flurry of banks that have been shooting up over the past six years.
The liberalizing of the economy in 1991 when the MMD came into power, encouraged many businessmen to establish banks.With only K20 million (about US$ 20,000), required for one to open a bank, several sprang up.But developments in the sector over the past three years have increasingly pointed to too many banks chasing too few customers resulting in the small banks failing to cope with the tough competition.
The negative effects on the local banking sector began to show in 1992 when the Meridien Bank, then Zambia's fourth largest bank, went under.The collapse of what then seemed to be Zambia's most promising Bank,caught many Zambians off-guard.Although most of the bank's branches around the world were closing not many thought that the Bank's headquarters in Zambia would also collapse. The confidence in Meridien Bank staying afloat was heightened by the government promising depositors that their money was safe.After the rumours that the Bank would close because of its huge debts, government pumped in some K300 million to keep it running.
The Bank of Zambia sent in its experts to run the institution but when government realised that the bank was too deep in financial trouble to keep it running, they were forced to close it. Depositors, however, were promised that they would be given their money after appointed liquidators collected other money owed to the bank and after its assets were sold.Three years on, however, the depositors are still struggling to get their dues. Most have now taken the matter to court.
The Meridien Bank case has taught many depositors not to take government's promises for granted nor to ignore whatever little pointers there may be on a bank headed for doom.For many, a rumour is good enough reason for them to close their accounts and transfer their money into other banks that seem safer. This, coupled by slow business and the sometimes financial indiscipline in some banks, has led to the closure of up to five banks in under four years. These included a government-run agriculture loans lending bank, the Lima Bank. In the past year, however, the Bank of Zambia has begun to monitor banks more closely.The central bank has also prepared a Bill aimed at stiffening the Banking Act, with a key section on money laundering.Despite all these steps, many banks in Zambia are still vulnerable to closure and depositors have become more alert in their own monitoring of the trends. In September, when a fire burnt down the head-office of Prudence Bank and a few days later the Bank of Zambia said it had sent its experts to help run the bank, many depositors promptly reacted by closing their accounts.Within weeks, the Bank of Zambia announced that the Prudence Bank had closed to business until further notice. To many, this has been interpreted as the end of Prudence Bank.
The Bank of Zambia has announced that efforts are being made to reopen the bank for normal business and that the interests of the depositors would be "looked into".But given past experiences not many will believe this statement.Early this year, when the Cooperative Bank was closed, similar assurances were given. Eight months on the Cooperative Bank is still closed.Already, another bank, the Credit Africa Bank, is feeling the effects of speculation that it too is in problems and some depositors have began closing their accounts.
As a preventive measure against closures, the Bank of Zambia in December last year, increased the minimum capital requirement for the establishment of a bank to K2 billion (about US$ 1.7 million).But this same measure has put some small banks in difficulties as they have not quite been able to get such an amount to meet the requirement.Some economists have suggested that it would be best for the small banks to merge so that they survive the stiff competition.But Bank of Zambia spokesman Kabinga Pande said recently that the BOZ has no mandate to effect such a merger.
Government has stressed that no bank will be treated with kids gloves and each of the institutions must learn to stand on its own. Deputy Finance Minister, Godfrey Simasiku, said recently that government would maintain strict regulations and that it was up to the banks to boost waning customer confidence.The Economic Association of Zambia also believes the public confidence in banks is on the decline especially for small banks.EAZ chairman, Moses Banda, fears that this could lead to a monopoly of the sector by the big banks.
An economist, Elias Mpondela, says that the collapsing of some of the banks has been inevitable because the Zambian economy has not been strong enough to sustain it.He notes that with interest rates on borrowing high but low on savings, it has always been unlikely that the Banks would attract the kind of clientele to sustain their operations. Prudence bank, for instance, is said to be owed up to K23 billion (about US19 million), most of which has accrued in interest.Mpondela, however, foresees a revitalisation of the banking sector when the privatisation of the giant mining conglomerate, ZCCM, is completed. He says the Zambia economy is expected to pick up and with it reason for more banking facilities would arise.
For now, however, most small banks may just have to survive on the shoestring goodwill of a few faithful clients.For the large established banks, like the Zambia National Commercial Bank,Barclays Bank and the Standard Chartered Bank, the discomfort the small banks are in is just fine because it means more clients for them.
STORIES:
1. 'DRUNK AND DRUGGED' COUP LEADERS
Zambian Army officials said in an interview on 29 October that Captain Steven Lungu alias "Captain Solo" and Captain Jack Chiti, leaders in an unsuccessful coup attempt,were both drunk and had probably taken drugs before they made their attempt to 'take over' the running of the country.
One officer, who wished to remain anonymous, said that they were both more than likely 'despondent about something'. It is not known when the decision was made to stage the coup but it is believed that the two spent the whole of Monday together.
According to army sources, Capt. Lungu joined up in1987 andupon receiving his commission was attached to the Zambia Electrical and Mechanical Engineers (ZEME) corps, stationed at Project Z 428 at Kanona, north of Kabwe.He was later transferred to the Central Mechanical Workshop in Lusaka located at the corner of Freedom Way and Kalundwe Road, opposite Radian Stores. Fellow officers have described him as "a cock up" who "just liked making noise".
His accomplice, Capt. Jack Chiti,was a school teacher until 1982 when he joined the Zambia Army.He was attached to theZambia Army Corps of Education (ZACE)but until the coup had been based at the Second Battalion (2 ZR) Headquarters where he worked as an education officer. Fellow officers described as him as "atroublesome chap".
2. KAUNDA DEMANDS FOR GOVERNMENT ACCOMMODATION
Former president Kenneth Kaunda has run into an accommodation hitch and this is forcing him to pressure government into solving his problem.As former head of state, Kaunda is entitled to a home provided by government.Kaunda has since his defeat in 1991, been living in houses provided by what he calls sympathisers.The owner of the house he currently occupies is ready to sell it or put it up to rent, but government has refused to do so because of legal cobwebs surrounding it.
A government spokesman says there is no quarrel with the obligation to provide Kaunda with accommodation, but it (government) will not buy or rent the house Kaunda is currently occupying because there is a duel claim on the property. Government has, however, been paying Kaunda all his other dues including a housing allowance.
The owner of the house, Mathew Chanda, denies there is anything dubious about the ownership but he does now mourn the fact that he is now 'destitute' and unable to benefit from ownership of such property.
3. CHONGWE SUES GOVERNMENT OVER SHOOTING
Dr Rodger Chongwe, the Liberal Progress Front (LPF) leader who was shot by police in August, has reportedly sued the government for US$2.5 million for damage.Chongwe who was shot through the neck and cheek,is said to have written to the Attorney General to make his demands.
UNIP president, Kenneth Kaunda, also claims that a bullet grazed his head in the incident in which police shot into the car in which Kaunda, Chongwe and other opposition party leaders were travelling.
4. EX-DIPLOMAT JAILED FOR THEFT
A former Zambian High Commission to Zimbabwe has been jailed for 18 months for stealing household property he had been using.Rodger Sakuhuka was sent to jail after being found guilty of theft of government property which he took with him after being recalled from his posting in the Zimbabwean capital, Harare.The property has been valued at K10 million (about US$8,300).
Sakuhuka who was once a minister during the reign of UNIP and Kennth Kaunda, resigned from the MMD soon after being recalled and he joined the National Party.He contested last year's parliamentary elections but lost.
He has appealed against the sentence and has been granted bail of K1 million (about US$830) pending hearing of the appeal to the high court.
5. CATHOLIC COMMISSION CALLS FOR CUTS IN DEFENCE SPENDING
The influential Catholic Commission for Justice and Peace (CCJP), in Zambia has called for a cut in government's spending on defence.The commission says government should cut its budgetary allocation to the Ministry of Defence in the 1998 budget because they contend there is no longer a justification for a high allocation.The commission argues that there is no longer a threat of a military invasion in Zambia and so there is no need for the defence ministry receiving one of the highest allocations.
The commission has also demanded that government removes school fees for primary school education to improve levels of basic formal education.It also suggests that government increases salaries for teachers, improves teacher training programmes and offer special incentives to those who teach in rural areas.
6.TEXTILE COMPANY CLOSURE THREAT
Zambia Textiles, the country's biggest manufacturer of blankets, has threatened to close if government fails to protect the industry from unfair competition provided by companies from other countries.The company's managing director, Thomas Fonseka, says that if government does not control the flow of subsidized imports, Zambia Textiles would have to close and its 410 labour force declared redundant.
He said the company was not scared of competition provided by other companies, but said that Zambian companies stood no chance of survival if imported goods remain cheaper because of subsidies.Last month, Dunlop, a tyre making and marketing company, closed because of a similar complaint.
7.DOCTORS PERFORM RARE OPERATION
In two rare operations, doctors have removed ovarian tumors weighing over 10kgs each from two women.The operations were carried out by Chinese doctors in Kabwe, a small town 160kms north of Lusaka.In the first operation on a 68 year-old woman, a 11kg tumor was removed and in the second, on a 39 year-old woman, a 13kg growth was cut out.
Both women are said to be recovering well.
8.ZAMBIA GETS NEW NATIONAL SOCCER TEAM COACH
After six months of having to do with a local stand-in coach, Zambia has recruited an expatriate trainer to take charge of the national soccer team.
Bechard Ziese, from Germany, takes the reins with hardly three months before Zambia challenges for the Africa Cup championship in finals to be hosted by Burkina Faso.Zambia has had no expatriate coach for the past nine months and since Rould Poulsen of Denmark concluded his contract in December last year.
9.ZAMBIA HOSTS COMMONWEATH BOXING TITLE FIGHT
For the first time in about two decades, Zambia will host a Commonwealth boxing title fight when Felix Bwalya challenges Britain's Paul Berke for the junior-lightweight title.
The government has helped sponsor the title fight which comes six months after Bwalya lost on a controversial split points decision to another Briton Bernard Paul in London.Zambia currently has no Commonwealth champion.
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From: AfricaNN@inform-bbs.dk (Africa_news Network) Date: Thu, 30 Oct 1997 13:20:59 +0100 Subject: ZAMBIA NEWS ONLINE Message-ID: <1262350302.103408927@inform-bbs.dk>
Editor: Ali B. Ali-Dinar
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