By Speedwell Mupuchi, Lusaka, Zambia

Excerpt from Business News Zambia, November 17th, 2003

The Development Bank of Southern Africa (DBSA) and the Nordic/ Southern Africa Development Community (NORSAD) has given the Industrial Credit Company (ICC) US $10 million loan facility to develop Zambia`s capital market.

Speaking at the signing ceremony at Hotel International in Lusaka, during the 8th African Leasing Association convention, NORSAD chief investment officer Patience Matshe said the credit line to ICC was the largest loan to any of the 11 Southern African Countries NORSAD operates in.

He said the credit line indicated the organization's commitment to play an important role in Zambia's development.

N. Justin Chinyanta                   Joyce Matlala                                      Patience Matsh of Norsad

Chairman of The Loita Group   Executive Manager at DBSA                                    

“The decision to grant ICC the loan is based on the need in Zambia for the leasing services ICC is providing and ICC's proven ability to effectively deliver its services to both larger and smaller enterprises,” Matshe said. He also said the credit line was granted on the understanding the ICC was better positioned than NORSAD to provide financial facilities to small and medium sized enterprises throughout Zambia. “NORSAD prefers to do financing together with other financial institutions. The due diligence efforts have been done in close co-operation with DBSA,” he said.

DBSA executive manager Joyce Matlala said the facility would be settled in about five years. She said DBSA through the credit facility was in a way trying to encourage development of Zambia`s capital market by assisting small and medium enterprises.

Matlala said DBSA has four projects in Zambia with two being in the energy sector.

She said the credit facility followed ICC`s request for a loan. She observed that development in the region was concentrated in small projects. And Industrial Credit Company (ICC) Loita Group Chief executive Justin Chinyanta said the money would be used to expand the organization`s operations in the country and beyond. He said the credit facility would help his organisation strengthen leasing in Zambia. He said the performance of the leasing sector in Zambia could be good. Chinyanta said Zambia's financial market was short term, which made leasing for long term difficult.

And finance minister Peter Magande opening the Convention said although leasing in Africa was in its development stage, it had made significant contributions internationally in terms of capital development. In a speech read for him by finance permanent secretary administration Leonard Nkhata, Magande said his ministry strongly supported private sector institutions “We believe private sector institutions bring economic balance to the economy through business disbursement to both rural and urban areas,” he said. “We have in realisation of this fact evolved economic policies to enhance private sector development in Zambia.” Magande noted the private sector provided a strong base for sustainable growth and that the growth of every economy was dependent on economic capability of the private sector. He said authorities in Zambia had made everything possible to promote private sector development.

Afrolease president and chief executive officer of Leaseafric Ghana Seth Dei said leasing had been successful, internationally accounting for about 40 year per cent of capital equipment in the developed world. He, however, noted the future of the industry was bright and urged practitioners to enlighten people about the benefits of leasing. “Our industry has continued to face many unfavourable legal and tax environments. There is also this perennial problem of lack of long term funding for the leasing industry,” Dei said. He thanked the DBSA for setting an example for what the industry needed.

Zambia Leasing Association (Zamlease) interim president Max Honde said leasing in the country sac on a high opportunity and had a high future with a liberalised economy. He said government's efforts to diversify the economy would only be successful if finances would be made available for investment in the identified sectors. He also said leasing operators felt taxes in the country were too high. “We feel regulators are unfairly bandling us together with some banks,” he said. Afrolease Patron Sudhir Amembal said leasing was a vibrant and dynamic industry that contributed substantially to economic development. He said governments should respect leasing contribute to Gross Domestic Product (GDP) of any country particularly in areas of Small and Medium enterprises.