The Bank of Zambia (BOZ) recently announced that the maximum transactions for both local and foreign currency cheques should be at K25, 000 and $5,000 respectively, with effect from 5th July 2017 to significantly reduce the value limits in Zambia.
Speaking during a media briefing at Lusaka’s Stay Easy Hotel, Tembo said as much as he appreciates Bank of Zambia’s intention to address money laundering and cheques fraud in the country, the decision by central Bank is misdirected because in the context of the Zambian economy, the informal sector is already significantly larger than the formal sector.
Tembo observed that limiting the values for cheques transactions and over-the-counter bank withdrawals, Bank of Zambia will effectively drive most Zambians away from commercial banks and into the grey informal economy which is cash-based.
The Opposition PeP President said the Bank of Zambia would have done was to work on helping Zambians who are in the informal sector of the economy which is cash-based, to transform to the formal sector which is banked.
“Already, the recent bank failures like Inter-Market Banking Corporation, Cetzam, etc where Zambians have lost their deposits, have made most citizens jittery about utilizing the banking sector, and the added inconvenience of the soon to be introduced Item-Value-Limits by BOZ will just make it even less attractive to keep money in a bank vis-a-vis hoarding the money at home”
“Other disadvantages of promoting an informal cash-based sector include the increased cost of printing currency as a greater amount of currency has to be in circulation as well as faster wear and tear of currency due to more frequent use. A cash-based economy also results in more crime and a greater cost of doing business as well as reduced economic efficiency plus a limited responsiveness to monetary policy. An informal economy also significantly reduces tax efficiency as it is more cumbersome to collect direct tax from the informal sector than it is from the formal sector”
“Our expectation as PeP is that at this stage of our country when the informal sector of our economy is larger than the formal sector, BOZ and other Government agencies must be concentrating on encouraging our citizens to formalize their business operations by utilizing the banking system, instead of discouraging them from doing so by putting in place unnecessary restrictions”
And Tembo has since appeal to Bank of Zambia (BOZ) in particular and the Government in general to reconsider the planned introduction of Item-Value-Limits for cheques transactions and over-the-counter withdrawals which are planned to take effect on 5th July 2017.
“We strongly believe that the disadvantages of this decision to introduce value limits far outweigh any advantages and the inherent consequences on our economy will be dared” Tembo said
You’re right PeP. Most of Zambians are in the informal sector and trying to grow. This kind of business is mostly cash based. How do i pay for goods to a Congolese or Tanzanian SME business owner if this law comes into effect bcoz he doesn’t bank. May we be educated on this
That building smells, no proper sanitation. You think they can come up with proper decisions in there!
@Nubian, truly PF directors work in such smelling buildings? ZRA also looks like all ghosts urite on its brown walls.
The biggest Zambian building I entered is Lusaka Airport. No not true, Mansa hotel.
This is what nepotism does to important institutions. Imagine you’ve got an uncle working for BOZ and due to his high position in the organisation, he manages to use his influence to have you employed in his department and not only you but your cousin, two of his inlaws e.t.c. Imagine he comes up with a silly policy like the one we’re talking about, how possible is it that he will be opposed considering that majority of people in the department are his relatives and without him they wouldn’t have been employed at BOZ?
the worst policy is that of allowing cash transactions of over K2000. this promotes tax evasion and other crimes. in normal contries you cant buy tv, cooker etc on cash. only groceries should be paid for in cash!
Can you mention just five of “normal countries” (LOL) where you can buy “only groceries” for cash?
Okay the pf have failed lamentably! Lol. They are the worst in the history of this great country. Lungu is the first president in the history of this country to have people not recognize him. Forged president
I thank the bank of Zambia for this crazy policy.Atleast they have now empwrdd money changers.Banks were robbing their business.I will not be restricted buying 5000 USD from bank at high rate .at katondo street even in Living stone street can buy 100,000 USD at the negotiated rate and I will keep my k wacha at home like Indians do.
Do people still use cheques? I last used a cheque more than 15 years ago. Most of the times I use electronic fund transfer(EFT). I have several “cheque” accounts but over the past 15 years have never received a cheque book. So what is the fuss all about?
How many people in Zambia have access to EFT? Be logical instead of show-off without cent in C/A
@Nemo; As long as you & the payee have bank accounts you have access to electronic transfer of funds from your account to the other chap’s account. I think this is what is being encouraged.
You just need to issue more cheques. Say 25000 by 4 for 100000. Better still do a money transfer. Unless you are bidding something like tax or dubious sources of money.