On Tuesday, the Bank of Zambia (BoZ) raised its benchmark interest rate by three percentage points from 12.5 percent to 15.5 percent in order to reign in inflation which rose sharply last month to 14.3 percent from 7.7 percent recorded for September.

First Capital Plus' new status brings the total number of commercial banks in the country to 27.

Bank

The central bank further removed a cap on lending rates, a move that will now allow commercial banks to set interest rates independently.

But Hakainde Hichilema, the leader of the United Party for National Development (UPND), said the move is an indication of poor economic management by the current government which will negatively affect the business community.

“Our concern now is that the interest rate rise presents yet another hurdle for our small and medium-sized enterprises in growing their businesses,” he said.

“What is even more worrying is that the interest rate cap has been removed, soon, banks will start charging 50 percent interest rates and see what happens then to the loan portfolios for both companies and individuals,” he said in a statement released by his office.

“Zambia’s business environment is no longer conducive to doing business and the next thing that will happen is that new investments will not be forthcoming. Without new investments, and existing investments being constricted by loan obligations, people will lose jobs,” he added.

The opposition leader, also an economist and wealthy businessman, said small businesses are the lifeblood of any economy and needed to be supported instead of coming up with policy measures that inhibits their growth.

He further said that the government has now completely killed the middle class that was coming up from 2002 onward, adding that the middle class were people that accessed loans and created jobs for others.

The government needs to recognize these challenges and move assertively and confidently to resurrect confidence in its ability to plan and manage the economy, he said. Enditem

Source: Xinhua

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