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 Periodical article |
 Leiden University catalogue |
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| Title: | Zambia's credit guarantee scheme: another attempt at alternative securities |
| Author: | Ailola, D.A. |
| Year: | 1992 |
| Periodical: | Lesotho Law Journal: A Journal of Law and Development (ISSN 0255-6472) |
| Volume: | 8 |
| Issue: | 1 |
| Pages: | 145-173 |
| Language: | English |
| Notes: | biblio. refs. |
| Geographic terms: | Zambia Central Africa |
| Subjects: | credit small-scale industry Economics, Commerce Small business Credit policy Zambia's credit guarantee scheme |
| Abstract: | The introduction of the Credit Guarantee Scheme in 1985 under the auspices of the Bank of Zambia was yet another attempt by the government to provide a form of security to entice bankers and other approved lending institutions to adopt a more liberal lending policy. However the scheme, designed to increase the flow of institutional credit to small-scale enterprises, has not performed according to expectations in the first four years of its existence. Trends in lending have not differed much from those in previous years, as tables for the years 1971-1988 indicate. Reasons for the scheme's apparently dismal performance include its restriction to one kind of entrepreneurial activity (manufacturing), the fact that the prescription is limited, flaws in the security of the guarantee itself, which make it unattractive to most lenders, the conditional nature of the guarantee, and administrative deficiencies. It is clear that this particular scheme forces bankers into a nonpersonal relationship with customers, while expecting them to provide other services to such strangers. There is also a fear that the Bank of Zambia, as guarantor, enjoys certain residual powers which, lenders suspect, could be used against their interests. At the same time the Bank of Zambia's operations under the scheme are subjected to ministerial directives and this apparent lack of autonomy is an additional cause for concern. Notes, ref. |