Bank of Zambia (BoZ) Governor Caleb Fundanga has challenged banks in the country to give mortgages to the people on long term basis as a way of cushioning the inadequate housing units in the country.
Dr. Fundanga says financial institutions are better placed if only they play a significant role in providing mortgages to the people.
He noted that home ownership is vital in one’s wellbeing saying this can be achieved through the provision of soft loans from the commercial banks.
The BoZ Chief said this during the official launch of re-furbished Zambia National Building Society (ZNBS) Kitwe branch.
This was in a speech read for him by Copperbelt BoZ Regional Director Moses Mulomba.
He said a lot of houses were being funded from people’s personal savings which described as not an efficient and effective way of financing housing
projects.
Dr. Fundanga said ZNBS management should take this situation as an opportunity to fully utilize housing mortgages provision thereby answering
to its liquidity problems.
He stated that ZNBS has a mandate to develop and interact with its customers through the provision of mortgages and making them available to
the people.
And ZNBS Board Chairperson Mwando Mondoloka said ZNBS was in the 1990s not spared from the post liberalization of the economy where it lost tax
incentives which resulted in serious revenue loss.
Mr. Mondoloka said the institution has since managed to scale up its operations in the last two years following a successful implementation of
the strategic plan that has seen the bank expand.
He however, pointed out that the bank has mapped out a strategic plan to improve its liquidity and reputation in a bid to attract and service its
clientele base.
ZANIS
Hahahahahahaha. With what security? I challenge the man to elaborate on how he envisions this working.
Does this man have a brain?
No bank will give a morgage without security. by the way how much do average zambians get for them to be able to secure a morgage and what range of morgage without a secure job/bussiness? ..
just opening an account is not easy what more morgage.
bank’s in zambia don’t lend money long term because they can make money by purchasing govt securities which are considered more secure.
#1,2,3
Gosh! how old are you guys? Do you know what a morgage is? Security for what? When you buy a house on mortgage it doubles as security. Blo-ody hell !
Exactly number 5. And its almost a win win situation with the banks; if you pay your mortgage till the house is yours they’d have made plenty interest,if you default on your payments they sell the house for what its worth,and keep the money you’ve paid,obviously.what more security is needed?
Yes, it is possible and Barclays have a scheme for Zambians abroad under smart loans. these have been in place since 1992, yes a loan to buy property in Zambia or a finished house. Security is the farm or house you buy, easy maths.
Some of you have bought propety in the uk, right? Same deal guys, but in Zambia one needs to pay a per centage e.g. £3,000 as the loan is not 100%, and borrower must pay off that loan by the time they reaches the age of 55, as by law we retire at the age of 55.
Ba Msana mutekanye. Perhaps we should be asking you how old you are with your ridiculous reasoning. If it was that simple I’d imagine banks would be thriving on this business the way they do in countries such as the one you apparently reside in. Banks need security to cover costs that may include legal costs, the general costs that come with property switching hands, or property sitting idle when persons continue to live in a house while not making their monthly payments and so on and so forth.
Loans such as these have worked in Zambia when the employer has offered security leveraging them against your so called benefits etc.
I suppose you think you have it down in theory, but unfortunately your theory has more holes than your cranium. Haha, blo0dy h3ll indeed.
By the way Mr. I am old and can reason – Msana, I believe we spell it “MORTGAGE”, not MORGAGE. Next time you want to educate an audience on the meaning of a word, make sure you can at least spell the word correctly.
Good Evening
I can’t help but chuckle at the exposure of shallow understanding of finances on the part of some bloggers (I wont mention any names).
Fact is: every Bank has it’s own credit metrics and the ability to manage risk, so there is absolutely nothing wrong with Mr. Fundanga’s appeal. Of course the Banks will always decline your request if you don’t show any security but that’s only because they all follow the same path of business – behind the scenes, they have enough customers, big and small, to cover up for any forfeited loss.
I agree with Mr. Fundanga because I think that African Banks need to adopt a different path from that of their former colonial models since the majority of Africans do not have a solid and steady cash-flow. In Africa, loans should be given…
…on the basis of honesty and hard-workmanship. In each case, the Banks need to know the customer very well. For instance, they could start by finding out if the customer is a good trader, is he successful in whatever he does? If so, then the man or woman deserves a loan.
They could lend to him for say, 20 years, and if they can’t keep it for more than 4 years, they can give out another loan to refinance the old one. In my books, it should be able to work out well for both sides.
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Nine Chale I agree with you, though not entirely. I think that Mr. Fundanga’s appeal is one that anyone can make; only it is directed at the wrong entity. BOZ, are in a much better position, then the other banks are, to follow the ‘non-colonial’ or non-traditional model of determining one’s ‘credit-worthiness’ because they are state run and owned. Simply put, they could go as far as making the security a more affordable or achievable ‘thing’ by offering some sort of incentive to the foreign banks that Zambia has in every major town, for lending to Zambians. They are in a position to do a lot. But when he challenges, without incentivizing, we do what we do best, we criticize. Other than that my brother I, both agree with and learn from your contributions a great deal.
#8,9 Abena CB
Very petty indeed, anywhere read #6,7,10 and 11 above. Thank you
Dr. Fundanga is displaying the ‘free market’ mentality – let people get into debt and the market will sort things out.
This is what has gotten the US into problems. When outsourcing and other free market nonsense destroyed the US consumer, Alan Greenspan kept interest rates low for a prolonged period of time so people would go into debt, and ‘the market would sort things out’.
Most people are not gainfully employed, and to suggest that they should get loans is pure fantasy. It is shirking the state’s responsibility to tax the mines and use that money to invest in other economic sectors – creating real jobs that give people the cashflow that would allow banks to lend them money.
We need a real economy, not this libertarian utopia of ‘free markets’. All it did was enrich…
(continued…) All they did was enrich former mining companies.
The government needs to get of it’s lazy behind and start governing. This government does not believe in governing, it believes in ‘free markets’.
Msana. The irony in the words you choose to use. It is not petty to remind you that a mortgage does not simply double as security. See, I know you probably have SECURITY (as we use it in this sense) all mixed up with COLLATERAL and thus your ridiculous remarks. FYI I have read the other comments, and I think they poke more holes in your reasoning or simply make no business sense at all.
You are welcome by the way.
A few things, which the BOZ Governor is probably aware of, need to be considered. Firstly, Banks by nature are profit seeking organisations and would offer such services under circumstances where they would make a return that matches the inherent risk. They are currently able to make similar returns with less risk. The base lending rate in Zambia, which is around 20%, is simply too high for most institutions to consider long term mortgages (say, the standard 25 years). Another issue worth looking at is security of tenure. Most people would argue that a house would be used as collateral, but one factor that works to the detriment of Zambians is that land is vested in the president and given on a 99 year lease (which, by the way, does not necessarily start when one purchases their land).
#16 Abena CB
Right Mr professor, please give me defination of security and collateral. Dont bother with spellings just go straight to answering my question.
Haha. Wish I had the time. I will tell you though that financial security broadly encompasses several things and collateral is one form of security. So assuming one can borrow say K100,000 from the bank for the purchase of a ready built home and then turn around and use this as collateral, while might sound great makes for high risk lending. However, this can be cushioned by other forms of security such as your future earning power, which works great in places with great job security etc but not so well in a volatile economy. Further, credit bureaus and such offer the service of determining ones likelihood to default based on how they have managed credit (or in the person’s sense – debt) offering another form of security.
Like I said Msana, I wish I had the time to go on, but obviously I do not so I’ll assume you will use the world wide web as a resource to counter my argument or retract your earlier unappreciated comments. Didn’t want to disrespect you my friend, but I think your earlier comments were uncalled for and as shallow as they get, hence my’ taking you to school on this’. And to add salt to your wounds, I am not even a finance guy, just a regular guy with common sense. Enjoy your brand new week brother.
#19, 20 Abena CB
I know its easy to look smart nowadays especially that one can google for free. You dont even seem to understand what you talking about. Ok let me get a bit practical for you to understand my point, my wife and i have two properties one in UK and the other in Zambia both on mortgage(hope i’ve spelt correctly). We paid £15,000 and k25million deposit respectively for the two houses, no one asked for anykind security in both countries. Now tell us your experience, no more googling.
#21 Abena CB
apologies i meant to say ‘…..no asked us provide any kind of security/collateral’
Abena CB
I would like to echo my brother Nine Chale’s contribution and probably add that it’s pure foolishness to rubbish things one understands little about. Instead of congratulating Dr Fundanga for the effort he’s putting in to open up financial markets for every Zambian including illegal immigrants in the diaspora to acquire decent property, you busy sharpening your armchair critic’s skills ,abantu bamo.It’s happening in Zambia ka, lobe akashishita ngecipaso.
Wow! Hilarious! You just exposed yourself. So what do you call the 15,000 deposit you made? And what do you think the bank calls the fact that you are earning a living? Don’t you understand that if you add those things up you have multiple forms of security? I have no intention of sounding smart but I also have no problem exposing your flawed reasoning, especially when you are blatantly offensive. Mr. Fundanga’s challenge is simply that, a challenge. Anyone can make that challenge. All I asked was for the man to create an atmosphere in which his challenge is feasible. Would you challenge your children to pass an exam that you refused to pay for? And if you did what kind of man in his right mind would applaud you if you did that?
Nine Chale’s comment makes ethical sense not business sense for no successful business model will deliberately embark on making losses to cushion them with the profits earned elsewhere. That is unheard of. What bank will absorb the cost of determining credit-worthiness by looking into a person’s work ethic and how on earth would you make that objective? Quit while you are ahead, I said I am not in finance but do not take that for ignorance my friend. I agreed with Nine Chale’s comment in part only because his calls for making it possible to empower Zambians. Not because what he was talking about was practical. You are a funny man I will give you that. Mend the holes in that bucket before we can fill it with water. And remember, an arm-chair critic might just be better than a yes…
Abena CB hope you’ve sorted your future out, nice chating with you. Goodnite.
Twa tasha ba Msana. Sendamenipo bwino. Future yesu ni panono panono. Lesa umwine ewishibe. I hope yours is well set too my brother.