World Bulletin / News Desk
The Zambian government is planning to establish an export-import bank (EXIM bank) to provide financial support for trading companies.
An EXIM bank is a government agency which provides insurance to protect exporters against losses from non-payment by foreign importers. The agency also works to promote exports, provides transport insurance, and finance for exporters.
The Zambia Development Agency (ZDA) has recommended the establishment of the EXIM bank to the government, according to ZDA Manager in Charge of Export Albert Halwampa.
In an interview Wednesday, Halwampa told Anadolu Agency that the service was much-needed to promote the country’s foreign trade.
"At the moment, in Zambia, there is no institution that subsidizes export finance to support traders, as there is in many other countries. The establishment of this specialized bank will enable Zambian traders to take advantage of international trade initiatives," Halwampa said.
"Zambia is trying to become an export-led economy, so the EXIM bank will help to boost foreign exchange earnings that will serve to grow the national economy," Halwampa explained.
Halwampa said that the EXIM bank will help the country to reduce its reliance on commodities trading, including that of copper, which accounts for 70 percent of the country’s exports.
"This strategy should be designed in such a way that it will take advantage of the purchasing power of consumers within and without the region," Halwampa said.
At the same time, the Zambian government will have to intensify its campaign to promote made-in-Zambia goods and services, he added.
The idea of introducing the EXIM bank was welcomed by Public Sector Development Association (PSDA) President Yusuf Dodia.
"This is the way to go, and this should be promoted as well through corporate tax reform and lower tariffs," Dodia told Anadolu Agency in an interview Wednesday.
"The advantage of having this bank is that the bank allows companies to compete with foreign rivals who have aggressive levels of export financial support from their respective governments."
According to Dodia, most exporters are small businesses that need a source of upfront credit, because they're usually not paid for their products until they reach the intended destination.
"The government can therefore help such companies through the introduction of the EXIM Bank, because commercial banks are more risk-averse and have tightened credit policies during the economic downturn," Dodia pointed out.
Dodia explained that the high cost of loans to businesses in Zambia also deters exporters from seeking finance from commercial banks.
"An EXIM bank would help exporters to build capacity, and also to enhance know-how and skills," he said.