North western Chamber of Commerce and Industry president Mukumbi Kafuta has observed that the high demand and shortage of the Zambian kwacha is as a result of the creation of many savings groups called ‘village banks’ across the country.
Mr Kafuta states that the savings groups which are not formal, have however been created for both formal and informal employees, cooperatives and many other small groupings.
“To make the matters worse, all these village banks do not keep their money in banks instead they keep it in cash boxes which are kept in homes by those that have been appointed to become treasurers. So that could be one of the reasons why we experiencing the shortage of kwacha on the market,” he said.
He has however proposed that government through the bank of Zambia to encourage village banks groups to formalize them and give them an incentive that is going to be attractive if the situation is to be curbed.
He said government can up with a deliberate policy of giving certain incentives where the money could be allowed to grow in those bank accounts.
“In that way, we are going to see a lot of money coming back into circulation, “he said.
He also mentioned that in as much members of the public are being encouraged to use electronic means to make transactions, it is important that government looks at the aspect of bringing back the money that has been kept in homes in order to increase the cash flow.
As a long term measure, Mr. Kafuta said there is need for government to compel commercial banks to reduce rending rates.
He said this will not just create a conducive environment for the clients but also for banks themselves.
“And that is going to be attractive even to those that have savings groups to begin to open bank accounts and also to try and borrow money as groups from the banks, “he said.
