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Country Commercial Guides for
Report prepared by U.S. Embassy Lusaka, released July 1999 |
CHAPTER VIII: Trade and Project FinancingThe Banking System: Zambia has a commercial banking sector composed of private international banks, private domestic banks, and parastatal banks. Full service international banks include Barclays, Standard Chartered, First Alliance and Stanbic. In addition, Citibank and Equator Bank do corporate banking in Zambia. Following legislation to legalize merchant banking, several commercial banks have since added merchant banking to their banking activities, while a new bank, Cavmont Merchant Bank, was established in late 1994. The banking sector is supervised by the Bank of Zambia which is also the central bank. The Bank of Zambia reports to the Ministry of Finance. Industry observers generally credit the Bank of Zambia with making large strides in improving bank oversight over the past several years. Under review by Parliament is legislation for deposit insurance scheme and for controlling money-laundering activities.
Foreign Exchange Controls Affecting Trade: Following repeal of the Exchange Control Act in February 1994, Zambia established full convertibility in both the current and capital accounts. There are no controls on the movement of capital in or out of Zambia. Bank accounts may be held in local or foreign currency, and funds are easily transferred out of the country or held offshore. Amounts over 5,000 U.S. dollars, carried in or out in cash or travelers checks, must be declared. In March 1999, the Central Bank (Bank of Zambia) instructed commercial banks and Bureau de Change operators to restrict issuance of over-the-counter cash to $5,000 per transaction.
General Financing Availability And Terms Of Payment: Domestic financing is in short supply except for export-oriented production. Although interest rates have declined since January 1997, rates are still high enough to make medium or long term borrowing unfeasible. Short term borrowing is available, but expensive. Many businesses either self finance or seek finance outside the country, in hard currency.
Financing Exports And Insurance For U.S. Exporters: The letter of credit is the most common method of payment used for Zambian imports. In general, companies find it very difficult to finance their own imports and seek credit arrangements, but businesses considering offering their exports on credit should make a very careful check of the bona fides and finances of Zambian companies before doing so. Delinquent payments to suppliers are a common problem in Zambia.
The Overseas Private Investment Corporation (OPIC), a U.S. government agency, offers project financing, political risk insurance, and investor services in Zambia. The U.S. Export-Import Bank (ExImBank) is not currently open in Zambia. Domestic finance for imports is available from commercial banks only on a short term basis.
Project Financing Available: The availability of project financing, particularly for export-oriented projects, is improving. Besides bilateral and multilateral government agencies, commercial banks and venture capital funds are playing an increasing role. Both the U.S. and European Union (EU) have established enterprise development funds which encompass Zambia. The International Finance Corporation (IFC) and Commonwealth Development Corporation (CDC) both offer financing for projects in Zambia.
Banks With Correspondent U.S. Banking Arrangements:
Barclays Bank
Citibank
Stanbic
Standard Chartered
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[end of document] Note* International Copyright, United States Government, 1999. All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U.S. copyright is not asserted under the U.S. Copyright Law, Title 17, United States Code.
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