Note: The data are provided for informational purposes only and in some cases, the information may be incomplete, not fully accurate or out of date. For more information on how data are compiled, see "A Note About Sources." The date of the last update for each country is marked in the section "Country Indicators." We welcome updates and comments. Click here to write to us.
Zambia
Country Indicators
Information Last Updated
September 2006
Information Compiled by
Jeremiah Grossman, IRIS Center
Population (Millions)
11.7 [2005]
Population Density (per sq km)
16 [2005]
GNI per capita (US$)
490 [2005]
GNI per capita (PPP US$)
950 [2005]
Total Unemployment (% of labor force)
12 [1998]
Employment in Agriculture (% of total employment)
70 [1998]
Gross domestic saving (% of GDP)
17 [2005]
% Population under $2/day (PPP)
94 [2003]
Depth of Financial Sector (M2/GDP)
18 [2005]
Exchange rate
1 USD : 3925 ZMK, as of September 6, 2006.
Percentage of population with access to banking services
Approx. 4% of the demand for microfinance services is being met (as of 2003) (Chiumya 2004).
Ownership structure of banks (and financial institutions if available)
Of the 13 commercial banks as of 2004, 7 were foreign, 4 were local, 1 was government-owned, and 1 was a joint venture between the governments of Zambia and India. As of 2004, foreign-owned banks controlled 53% of total sector assets (Chiumya 2004).
Formal and Semi-Formal Sources of Microfinance
Banks, microfinance institutions, credit unions.
NGOs (societies) are subject to very limited regulation.
Definitions of microfinance or microcredit
"Micro finance services" are defined as "the provision of services primarily to small and micro enterprises and low income customers, to include […] the provision of credit facilities usually characterized by frequent repayments; and the acceptance of remittances […]." A "micro credit" is defined as an advance or loan that does not exceed five per cent of the MFI's primary capital. (MF Regs, 2006, Art. 2)
NGO microfinance provider formalization or transformation issues
Microfinance Regulations were passed in January 2006. All MFIs currently operating must now apply for a license under these regulations; they have six months to comply with regulations (except for ownership and capital requirements, which have a longer grace period). (MF Regs, Art. 50)
Ongoing microfinance policy development status
Microfinance Regulations were passed in January 2006. All MFIs currently operating must have applied for a license under these regulations, and they have must have come into compliance with these regulations as of July 2006 (except for ownership and capital requirements, which have a longer grace period) (MF Regs, Art. 50).
Safety net availability: insurance, pension, etc.
Certain employees may collect old-age, disability, or survivor pensions; and funeral grants. All citizens can access subsidized health care services. Employer-paid worker's compensation benefits also available (Social Security -- Zambia, SSA).
» Banking Sector Reform and Financial Regulation: Its Effects on Access to Financial Services by Low Income Households in Zambia
Chiumya, C. (2004).
Institute for Development Policy, University of Manchester.
» Banking and Micro-finance Regulation and Supervision: Lessons from Zambia S. Maimbo (2002)
Brown Walker Press
Commercial banks licensed to provide full banking services including deposits, credit and numerous other financial services.
The Bank of Zambia: publication of guidelines, bulletins, and other regulatory statements, issuance and withdrawal of financial licenses, implementation of supervision and enforcement actions.
Deposit taking, monetary transfer services, operation of credit card and debit system.
Financial intermediaries offering limited services to specific target groups, primarily to small or micro-enterprises and low-income customers.
The Bank of Zambia: publication of guidelines, bulletins, and other regulatory statements, issuance and withdrawal of financial licenses, implementation of supervision and enforcement actions(MF Regs, Art. 4-5)
Providing credit to microenterprises; the act of deposit-taking will determine how the MFI is registered and regulated.
Financial intermediaries offering limited services to specific target groups, primarily to small or micro-enterprises and low-income customers.
The Bank of Zambia: publication of guidelines, bulletins, and other regulatory statements, issuance and withdrawal of financial licenses, implementation of supervision and enforcement actions (MF Regs, Art. 4-5)
Providing credit to microenterprises; the act of deposit-taking will determine how the MFI is registered and regulated.
Moneylenders
Money-Lenders Act & Regs 1938
Ministry of Finance. Ministry sets regulations regarding applications for licenses (Money-Lenders Act 1938, Section 3(2)).
Carrying out the business of lending money in an entity not otherwise regulated through another Act (Money-Lenders Act 1938, Section 2).
Cooperative Society: Credit union (savings and credit society, or thrift and credit society); cooperative union (society consisting of regional societies); or federation (society consisting of credit unions, cooperative unions, and/or federations). Such societies belong to and are controlled equally by their members, who gain from the society in proportion to their use of the society's financial services or interest in the society (Cooperative Societies Act 1972, Preamble) (Cooperative Societies Rules 1972, Section 2).
Registrar of Cooperative Societies. Registrar responsible for registration, supervision, dispute resolution, and dissolution of cooperative societies (Cooperative Societies Act 1972)
Provision of member-based financial services in a cooperative form.
Non-profit institutions
NGOs
Societies Act 1958; Societies Rules 1958.
A Zambian company, partnership or other association of 10 or more persons that is not a building society, and is not registered under the Companies Act or Cooperative Societies Act (Societies Act, 1958, Section 2) (Societies [Non-Application to Clubs] Order, Section 2).
Registrar of Societies. Registrar registers societies and can cancel their registration (Societies Act, 1958, Sections 6-16).
Provision of financial services in a nonprofit, non-cooperative society form.
Registrar of Banks and Financial Institutions, whose office is based at the Bank of Zambia (Setting up a Bank, BoZ).
Incorporated company.
1. Ownership and control of banks limited to 25% of total voting shares (except with BoZ permission). 2. A person who has de jure or de facto control of a bank may not own or acquire shares in any other bank (except for purposes of merger/amalgamation. 3. Trusts cannot own shares in banks (BFSA, 1994, Sections 23-24).
Application Fee: US $1920 (50,000 fee units, currently 9 million ZMK). Time: Decision whether to grant license is made within 180 days (Setting up a Bank, BoZ).
Registrars of Companies, Societies, or Co-operatives depending on the organizational registration of the MFI. (MF Regs, Art. 35)
Non deposit-taking MFIs must be companies, NGOs, or cooperatives (MF Regs 2006, Art. 35)
Ownership and control of non-deposit-taking MFIs limited to 50% of total voting shares (except with BoZ permission) (MF Regs 2006, Art. 35)
The BoZ has 180 days to consider a license application. (MF Regs 2006, Art. 8)
Moneylenders
Money-Lenders Act & Regs 1938
Ministry of Finance (grants license) & court of local jurisdiction (issues certificate authorizing grant of license) (Money-Lenders Act 1938, Sections 3(2), 4(2)) (Money-Lenders [Application for License] Regulations, Section 3, 4).
None required. However, corporate bodies whose moneylending operations are covered by other Acts are not subject to the Money-Lenders Act (Money-Lenders Act 1938, Section 2).
If licensed from Jan. 1 - June 30 of the year in question: US $ 21 (450 fee units, currently ZMK 81,000). If licensed from July 1 - Dec. 31 of the year in question: US $14 (300 fee units, currently ZMK 54,000). Thereafter, license must be renewed annually for US $ 21 (450 fee units, currently ZMK 81,000) (Money-Lenders Act 1938, Section 3(1)).
Except for a society, no member may hold more than 1/5 of shares of credit union; each member or delegate is limited to one vote, though societies that are members of a society may be assigned more than one delegate (Cooperative Societies Act 1972, Sections 2, 76, 101).
Cost: Regular society: US $ 2.5 (55 fee units, currently ZMK 9,900). Cooperative Union: US $ 5 (111 fee units, currently ZMK 19,980). Federation: US $ 13 (278 fee units, currently ZMK 50,040). Time: 30 days from receipt of application (Cooperative Societies Rules 1972, Second Schedule & Section 4).
(100 fee units, currently ZMK 18,000) (Societies Act, 1958, Second Schedule (Rule 22)).
Licensing Requirements and Standards
Standards for ownership officers
Feasibility study/business plan
Audit of Proposed Founders, Owners, Officers
Operating Manuals
Banks
Commercial Banks
Board of Directors: Min. 5 members, majority of which must be non-executive directors and must be Zambian residents. CEO and CFO must possess relevant qualifications for the job. Directors and senior Officers must: be "fit and proper" with respect to integrity and expertise; not be bankrupt; be over 21 years of age; not have been convicted of a felony or crime involving dishonesty; not be mentally incompetent, suspended or removed from office; not have a history of bankruptcy or liquidation involving another financial institution, unless (s)he can prove lack of fault; not have an office in another bank (BFSA, 1994, Sections 30, 30A, 31) (Bank/NBFI Registration & Operation Application, BoZ).
Business plan, audited financial statement for preceding year (if applicable), and balance sheet/income statement projected for three years required (Setting up a Bank, BoZ).
Board of Directors: For Initial proposed Board members, must submit name, nationality, CV, business affiliations (of Board members and close relatives), and residency status to Bank of Zambia (BoZ). CEO and CFO: Must submit name, nationality, CV, and academic/professional qualifications. Shareholders: Must submit name, nationality, number/value/percent of total shares, and permanent residence information (for natural persons) or place of registration (for legal entities). For shareholders that are legal entities, must also submit entity's Articles of Association and audited balance sheet/income statement for most recent financial year (Bank/NBFI Registration & Operation Application, BoZ).
Must submit Articles of Association (Bank/NBFI Registration & Operation Application, BoZ)
Non-bank Financial Institutions
Deposit-Taking MFIs
Board of Directors must be minimum five people, the majority of which: must be Zambian; and may not be executive directors or executive members of the Board. Board should be capable of understanding financial institution's standing and reporting requirements and shall meet once quarterly. Chief executive officer and chief financial officer shall be separate positions. Management must be fit and proper, at least 21 years of age; must not be bankrupt, a convicted felon, or have been in charge of an insolvent financial institution. (MF Regs, Art. 20-23; First Schedule, Form MF1)
Business plan and balance sheet/income statement projected for three years required (MF Regs 2006, Art. 7; First Schedule, Form MF1).
Must supply: names of MFI's auditors and bankers; name, nationality, and residency status of proposed Board of Directors; information on shareholders' name, number and % of shares, nationality, and permanent residence; information on business interests of Directors and Directors' family members; academic/professional qualifications of CEO, CFO, and other Directors (MF Regs 2006, Art. 7; First Schedule, Forms MF1, MF2).
Must submit Articles of Association, Members' Rules, and documents designating voting rights and the subordination of claims to depositors and other creditors (MF Regs 2006, First Schedule, Form MF1).
Non-Deposit-Taking MFIs
Board of Directors must be minimum five people, the majority of which: must be Zambian; and may not be executive directors or executive members of the Board. Board should be capable of understanding financial institution's standing and reporting requirements and shall meet once quarterly. Chief executive officer and chief financial officer shall be separate positions. Management must be fit and proper, at least 21 years of age; must not be bankrupt, a convicted felon, or have been in charge of an insolvent financial institution. (MF Regs, Art. 20-23; First Schedule, Form MF1).
Business plan and balance sheet/income statement projected for three years required (MF Regs 2006, Art. 7; First Schedule, Form MF1).
Must supply: names of MFI's auditors and bankers; name, nationality, and residency status of proposed Board of Directors; information on shareholders' name, number and % of shares, nationality, and permanent residence; information on business interests of Directors and Directors' family members; academic/professional qualifications of CEO, CFO, and other Directors (MF Regs 2006, Art. 7; First Schedule, Forms MF1m=, MF2).
Must submit Articles of Association, Members' Rules, and documents designating voting rights and the subordination of claims to depositors and other creditors (MF Regs, First Schedule, Form MF1).
Moneylenders
Applicant and Management: Evidence of good character required (must be "fit and proper"); may not be disqualified from holding a certificate (Money-Lenders Act 1938, Section 4(6)).
Applicant, partners, management: Names; details of any convictions under the Money-lenders Act, any refusal to grant a certificate, or any suspension/forfeiture of certificate. Applicants and Partners: Addresses (Money-Lenders [Application for Certificate] Regulations, Form 1 (Regulation 2)).
Cooperatives/Credit Unions
Credit Unions
Min. 10 applicants (or min. two officers of each cooperative society if application for a cooperative union or federation). Registrar must be convinced of availability of officers who are capable of directing and managing the society, and who can keep proper records. Board of Directors (min. 5 members) must meet at least monthly. Directors may not be bankrupt, of unsound mind, convicted of an offense involving dishonesty, or imprisoned for 3 months or more. Credit committee (min. 3 members) and supervisory committee (min. 3 members) also required. Members must be "honest, industrious, self-reliant and of good habits." (Cooperative Societies Act 1972, Sections 61, 118) (Cooperative Societies Rules 1972, Sections 5(e), 9, 42; First Schedule Form 1 [Application for Registration of a Cooperative Society]).
Must provide Registrar with information re: location/approximate area in which society proposes to provide services; main purpose of society; reasons for forming society; source of membership support; attitude of projected future members toward cooperative work; membership projections; proposed leaders and management; expected financial contributions by members; office space (if applicable); and whether applicants have sought technical advice and have consulted with an officer of the Department of Cooperatives (Cooperative Societies Rules 1972, First Schedule Form 2 [Preliminary Application to Form a Cooperative Society]).
Name, address, and occupation of all applicants; (Cooperative Societies Rules 1972, First Schedule Form 1 [Application for Registration of a Cooperative Society]).
Must supply three copies of proposed, approved bylaws (Cooperative Societies Rules 1972, First Schedule Form 1 [Application for Registration of a Cooperative Society]).
Non-profit institutions
NGOs
If Registrar doubts qualifications or good faith of party applying to register a society, Registrar may require party to prove his/her qualifications and good faith. Otherwise, Registrar may reject application (Societies Act, 1958, Section 35).
Must submit information on society's objectives (Societies Rules, 1958, Schedule 1, Form SO1).
For proposed office-bearers, must submit name; date of designation; occupation; nationality; address; and appointment. Must also disclose affiliations with foreign political groups. Further, Registrar may require submission of list of office-bearers at any time at Registrar's discretion (Societies Act, 1958, Section 19) (Societies Rules, 1958, Schedule 1, Form SO1).
Must submit three copies of society's constitution and rules (Societies Rules, 1958, Section 5).
Capital and Reserves
Minimum capital
Minimum capital adequacy/gearing ratios
Forms of capital recognized
Risk-weighting of assets
Loan loss provisioning, write-off
Reserves, Liquidity requirements
Banks
Commercial Banks
US $426,817 (2 billion ZMK) minimum capital for licensing (Setting up a Bank, BoZ).
CAR: 10%, min. 5% Tier I (primary) capital. Banks with weaknesses with respect to asset quality, liquidity, earnings, or diversification of risk must maintain higher ratios (Capital Adequacy Regs 1995, Section 6).
Tier I (primary) Capital: Paid-up common shares; qualifying preferred shares; contributed surplus; retained earnings; general reserves; statutory reserves; minority interests in equity of subsidiaries. Tier II (secondary) Capital: 40% of reserves from revaluation of tangible fixed assets; qualifying subordinated term debt, loan stock, or capital; other forms as allowed by the Bank of Zambia (Capital Adequacy Regs 1995, Sections 16-17).
Cash and Equivalents (0%): Cash; balances with Bank of Zambia; investments in Treasury bills; bills of exchange secured by cash or Treasury bills; portion of loans secured by cash or T-bills Low-Risk & Highly Liquid (20%): Balances in commercial banks (domestic or foreign) with maturity of up to 12 months; other government securities; assets in transit from branches; interbank advances guaranteed by other banks with maturity of up to 12 months. Moderate Risk with greater Credit and Liquidity Risk (50%): Assets in transit from other commercial banks; loans to or guaranteed by Gov't of Zambia; installment loans secured by mortgage on owner-occupied residential property. Other Assets (100%): Balances in commercial banks (domestic or foreign) with maturity of over 12 months; securities issued by local government units; private securities; other bills of exchange; loans to or guaranteed by local government units; loans to parastatals; interbank advances guaranteed by other banks with maturity of over 12 months; bank premises; acceptances; other assets; investment in equity of other companies (Capital Adequacy Regs 1995, Section 21 & First Schedule).
Pass (Bank's Discretion): Loan is current, expected to remain current, and is fully protected by the collateral and/or financial capacity of the borrower. Sub-Standard (20%): If loan meets any of the following criteria: overdue 90-119 days; inadequately protected by the collateral and/or financial capacity of the borrower; possesses well-defined weaknesses that could jeopardize repayment. Doubtful (50%): If loan meets any of the following criteria: overdue 120-179 days; or contains all of the weakness of a "substandard" loan AND repayment is highly questionable. Loss (100%): Overdue 180 days or more (Provisioning of Loans Regulations 1995, Sections 17-18; First Schedule).
Reserve Account: Goal is for reserves to equal 100% of paid-up equity capital. If Reserves Total 0-50% of Equity Capital: 50% of distributable profits before dividend declared. If Reserves are Greater than 50% but Less than 100% of Equity Capital: 20% of distributable profits (Reserve Account Regs 1995, Section 3).
Non-bank Financial Institutions
Deposit-Taking MFIs
Approx. US $74,760 (250 million ZMK). Deposit-taking MFIs will have two years from the date of the regulations coming into effect to meet these capital requirements (MF Regs, Art. 26 and Second Schedule).
As prescribed in the bylaws, provided that Registrar is satisfied that the share capital is sufficient to commence operations. At least 1/4 of value of subscribed shares must be paid in cash (except with Registrar approval) (Cooperative Societies Rules 1972, Section 3).
Cooperative societies must classify loans according to likelihood of repayment: assured, delayed, doubtful, or poor. Loans unpaid 4 years after the date for full repayment must be written off and paid from the reserve fund (Cooperative Societies Rules 1972, Sections 94, 97).
Liquidity Reserve: Min. 10% of share capital and deposits; min. 20% of share capital and deposits if check-based withdrawals are allowed. General Reserve Fund: Min. 10% of outstanding loans repayable. Must contribute 20% of net surplus annually until this fund reaches 10%. If reserve fund is depleted, Registrar may require entire surplus to be placed in reserve fund. If reserve fund falls below 10%, lending not permitted without Registrar's approval. Max. Term Deposits : Paid-up share capital Ratio: 1:1 (Cooperative Societies Act 1972, Sections 66, 77-79) (Cooperative Societies Rules 1972, Sections 68, 100).
Risk Management Guidelines
Guidelines & restrictions on financial services
Guidelines & restrictions on operational rules
Guidelines & restrictions on interest rates
Concentration of risk
Connected/insider business
Banks
Commercial Banks
Permitted: deposit-taking, extend credit, act as agent in exchange, money transfers, issue and payment administration of credit and debit cards, provide guarantees, finance leasing, factoring, trustee/executor, financial agent, custodian, merchant banking services, principal in futures, options and exchange
Bank Premises: Bank premises must meet certain requirements, including: existence of lease agreement or title; suitable location; proper counters and offices; name prominently displayed; telephone, fax, and e-mail facilities; exchange-rate board; safes, note-counting machines, and note detectors, adequate security measures; and any other requirements stipulated by BoZ. Branch Opening: Requires prior written approval from BoZ. Branch Closing: Requires notice to BoZ. Changing Shareholders, Directors, Sr. Managers, or Name of Bank: Requires prior written approval from BoZ. Anti-Money Laundering: Must have a compliance officer responsible for compliance with Prohibition and Prevention of Money Laundering Act (Setting up a Bank, BoZ).
1. Regulations mandate disclosure with respect to cost of borrowing and to deposit account fees and interest (note, however, that the regulations re: cost of borrowing do not apply to certain loans of less than US $ 64 (ZMK 250,000). 2. Collusion with other banks regarding interest rates prohibited (Disclosure of Deposit Charges and Interest Regs 1995) (Cost of Borrowing Regs 1995) (BFSA, 1994, Section 40).
Fixed assets: Need BoZ approval to invest in fixed assets or corporations owning such assets if such investments exceed the value of the bank's regulatory capital. Large Exposures (10% or more of regulatory capital): Per Individual or Entity: Max. 25% of regulatory capital. Aggregate: 600% of regulatory capital. Foreign exchange risk: Limit foreign exchange exposure to max. 25% of regulatory capital at end of each business day (max. 40% at any other time) (20% and 30% respectively for any single currency) (Fixed Assets Investment Regs 1995, Sections 3-4) (Foreign Exchange Exposure Regs 1996, Sections 8-9) (Large Loan Exposure Regs 1996, Sections 4-6).
Loans to Directors, principal shareholders (over 10%), and other insiders may only be made on the same terms and conditions as for others. Such loans are limited to 5% of regulatory capital per person (10% in certain cases) and 100% aggregate for all such insiders, and must be approved by majority of Board of Directors. Director, CEO, CFO and manager must disclose financial interests. Conflicts of interests require them to abstain from voting. (Insider Lending Regs 1996 , Sections 4-6, 9) (BFSA, 1994).
Must notify Bank of Zambia within 14 days after opening new branch; fees apply for opening additional branches; must notify BoZ of intent to close a branch 60 days beforehand (MF Regs, Art. 8, 32-33) Must receive permission from Bank of Zambia before changing governing body, shareholders, managers (MF Regs, Art. 34)
Subject to BoZ risk concentration requirements. Also, parties with de jure or de facto control over one MFI may not acquire such control over another MFI, and any such arrangements currently in existence must be terminated no later than Jan. 2008 (MF Regs, Art. 29, 36)
Director, CEO, CFO and manager must disclose financial interests. (MF Regs, Art. 7 & First Schedule) Must conform to insider lending regulations set forth by the BoZ (MF Regs, Art. 27)
Non-Deposit-Taking MFIs
Permitted Activities: Credit facilities Prohibited: All other services, including compulsory savings and other deposit-taking (MF Regs, Art. 16).
Must notify Bank of Zambia within 14 days after opening new branch; fees apply for opening additional branches; must notify BoZ of intent to close a branch 60 days beforehand (MF Regs, Art. 8, 32-33) Must receive permission from Bank of Zambia before changing governing body, shareholders, managers (MF Regs, Art. 34)
Subject to BoZ risk concentration requirements. Also, parties with de jure or de facto control over one MFI may not acquire such control over another MFI, and any such arrangements currently in existence must be terminated no later than Jan. 2008 (MF Regs, Art. 29, 36)
Director, CEO, CFO and manager must disclose financial interests. (MF Regs, Art. 7 & First Schedule) Must conform to insider lending regulations set forth by the BoZ (MF Regs, Art. 27)
Direct advertising/solicitation prohibited, and general advertisements must meet strict requirements (Money-Lenders Act 1938, Section 7(1-2)).
Advertised interest rates must be stated in annual percentage rate terms; compound interest prohibited; interest rate may not be increased upon default; interest rate exceeding 48% per annum presumed to be unconscionable, and courts may determine that lower interest rates are excessive; money-lenders may not charge borrowers for loan-related expenses (Money-Lenders Act 1938, Sections 7(3), 10, 15(1), 17).
Cooperatives/Credit Unions
Credit Unions
Permitted Activities: Lending; accepting savings from members (and certain non-members under certain conditions and with Registrar approval); purchase, sale, or management of property; borrowing money through mortgages, issuing bonds or debentures, or pledging property as security; purchase of businesses; investments in other societies or limited-liability companies; financial arrangements with government actors; issuing and accepting promissory notes and other negotiable instruments; investing or saving in commercial banks, Post Office Savings Bank, government securities, or other approved sources; issuing shares in exchange for property or services; holding mortgages and liens. In addition, cooperative societies may include other powers in their bylaws (subject to approval by Registrar) (Cooperative Societies Act 1972, Section 19; First Schedule [Powers of Societies]) (Cooperative Societies Rules 1972, Section 60).
Cash fund for withdrawals must be kept in secure safes; credit union must have theft insurance; overdrafts prohibited; must display registered name on all offices, notices, advertisements, letters, legal or financial documents, etc.; amendments to bylaws require Registrar's approval; mergers or splits permitted with Registrar's approval (Cooperative Societies Rules 1972, Sections 68, 69) (Cooperative Societies Act 1972, Sections 16, 21, 144-145).
For Loans: Max. 1% per month (Cooperative Societies Act 1972, Section 72).
Max Loans to government organizations and to other organizations admitted to the credit union: 25% of the credit union's paid-up capital and deposits. Max. Individual Loan for Farmland and Erection of Dwellings: 8% of paid-up capital and deposits. Max. Individual Loan for Business Purposes: 8% of paid-up capital and deposits. Max. Aggregate Exposure to Loans for Farmland, Erection of Dwellings, and Business Purposes: 25% of paid-up capital and deposits. Max. Investment by Cooperative in Land and Buildings: Lesser of 3% of paid-up capital and deposits or (ZMK 5,000). Max. Investments in non-government paper: 50% of paid-up capital. Max. Borrowed Funds: 25% of combined paid-up capital, surplus, and deposits (with certain exceptions) (Cooperative Societies Rules 1972, Sections 59, 61, 62, 63, 71) (Cooperative Societies Act 1972, Sections 57-58, 65).
Officers cannot borrow more than the combined value of their shares, deposits, and government securities unless approved (in the officer's absence) by a majority of the credit committee, 2 or more directors, and at least one member of the supervisory committee. Directors who have an interest in another entity with which the society proposes to enter into a contract must disclose this interest and may not vote on the matter. Any officer or employee who engages in business or trade for profit that competes with or duplicates services available from the society to its members is subject to removal by Board of Directors or Registrar (Cooperative Societies Act 1972, Sections 69, 113) (Cooperative Societies Rules 1972, Section 57).
Non-profit institutions
NGOs
If society either changes its address, name, constitution, rules, or objectives; or affiliates with a foreign political group, it must notify Registrar within 1 month. If Director or Officer leaves, must notify Registrar within 14 days (Societies Act, 1958, Section 17) (Societies Rules, 1958, Section 15).
Reporting and Supervision
Supervision Method
Supervision costs and fees
Disclosure and reporting requirements
Depositor protection mechanisms (e.g., deposit insurance or lender of last resort)
Banks
Commercial Banks
Regular on- and off-site inspection by the BoZ (Setting up a Bank, BoZ).
Annual License Fee: US $960.35 (25,000 fee units, currently 4.5 million ZMK). Annual Supervisory Fees: 0.2% of a bank’s deposits in the preceding year (Setting up a Bank, BoZ).
Reporting: Annually: Must submit annual financial statements, Director's report, and auditor's report to Bank of Zambia. Semi-Annually: Statement regarding fixed assets and their relation to regulatory capital. Monthly: Prudential returns, including capital position, loan provisioning, classification of loan portfolio; large exposures; insider lending; public liabilities; liquid assets; assets and liabilities. Disclosure: Annually: Must submit annual financial statements, Director's report, and auditor's report to shareholders. Must publish approved annual financial statements in daily newspaper of general circulation. Quarterly: Must publish past three months of financial statements in daily newspaper of general circulation (BFSA, 1994, Sections 56, 60, 61) (Setting up a Bank, BoZ) (Capital Adequacy Regs 1995, Section 30) (Loan Provisioning Regs 1995, Section 17) (Fixed Assets Investment Regs 1995) (Large Loan Exposure Regs 1996, Section 12) (Insider Lending Regs 1996 , Section 10).
All MFIs must pay a non-refundable supervision fee (MF Regs, Art. 41).
Disclosure: Must disclose interest rates and fees to customers. All MFIs must post a summary of MFI business, financial products offered, terms, and customers’ rights and responsibilities. Deposit-taking MFIs subject to greater disclosure requirements re: cost of borrowing (MF Regs, Art. 30-31; First Schedule, Form MF5). Deposit-taking MFIs must also display their most recent balance sheet and income statement on their premises (MF Regs, Art. 40) Reporting: Regular submission of balance sheet, income statement, computation of capital, liquidity statement, loan repayment schedules is required as well as the annual submission of the audited report (MF Regs, Art. 38, 39).
All MFIs must pay a non-refundable supervision fee (MF Regs, Art. 41).
Disclosure: Must disclose interest rates and fees to customers. All MFIs must post a summary of MFI business, financial products offered, terms, and customers’ rights and responsibilities (MF Regs, Art. 30-31). Reporting: Regular submission of balance sheet, income statement, computation of capital, liquidity statement, loan repayment schedules is required as well as the annual submission of the audited report (MF Regs, Art. 38, 39).
Cooperatives/Credit Unions
Credit Unions
Annual audit by registrar. Credit Union's Supervisory Committee also responsible for regular examination and supervision of financial affairs. Licensed auditor must be appointed if combined paid-up share capital and deposits exceed US $ 51 (ZMK 200,000) (Cooperative Societies Act 1972, Section 140) (Cooperative Societies Rules 1972, Sections 90, 96).
Cooperative Societies without appointed auditors may be required to pay an annual fee to Registrar for audit and inspection purposes (Cooperative Societies Rules 1972, Section 108).
Annually: Must submit annual financial statement to Registrar and Board of Directors, present financial statement at annual meeting, and send copy to all members who request it; must submit list of loans 90 days or more past due. Periodically: Supervisory committee must provide Registrar with details of its regular examinations of the credit union's affairs (Cooperative Societies Rules 1972, Sections 54, 99) (Cooperative Societies Act 1972, Sections 74, 143).
Non-profit institutions
NGOs
Inspection at Registrar's discretion (Societies Act, 1958, Section 19).
Annually: Must submit annual return to Registrar that lists Directors and Officers and describes any changes in the name, objectives, affiliations, membership requirements, titles of officers, immovable property owned, constitution or rules, or address of society. General: All societies must keep records of income, expenditures, and membership. Registrar may requests information on accounts or audited financials at any time, at the Registrar's discretion (Societies Rules, 1958, Sections 3-4, 16, 19, Schedule 1 (Rule 16)) (Societies Act, 1958, Sections 19-20).
Tax Treatment
Taxes on Income
Taxes on Transactions
Taxes on Payroll
Other
General Applicability
General Applicability
35% (45% for banks whose income exceeds US $ 64 thousand (ZMK 250 million) (as of 2004-05) (Zambia Tax Datacard, PWC).
For Small Businesses (Turnover less than US $ 64 thousand (ZMK 200 million)): 3% (Zambia Tax Datacard, PWC).
Small Businesses (Turnover less than US $ 64 thousand (ZMK 200 million annually)): Exempt (Zambia Tax Datacard, PWC).
Other Relevant Business Legislation
Debt Enforcement and Collection
MFI-specific
MFI-specific
1. For purposes of bankruptcy petition, money-lenders may only claim 5% per annum interest, unless all debts incurred by the estate are paid in full (in which case money-lender can claim the higher rate of interest). 2. Courts may reduce interest/fees charged if deemed excessive or unconscionable (over 48% per annum presumed unconscionable unless proven otherwise) (Money-Lenders Act 1938, Sections 12(1), 14(1)).
