Zambia Banking & Financial Services Q4 2018
The financial and public services sector is set to grow 11.7% in nominal local currency terms to ZMW70bn in 2018 (adownward revision from ZMW82.6bn), translating to 4.1% growth in USD terms to USD6.8bn. By 2027, the sector is set to reachZMW217bn (USD15.4bn), revised down from ZMW254bn (USD18bn) forecast in the previous quarter. Banks will move towards theirtargets for asset quality and capitalisation, which should allow them to ease their restraint and and reduce lending rates. However,with the government resorting to domestic borrowing in order to reduce growth in external debt, private sector credit growth stillrisks being crowded out. Although asset quality has not improved in terms of bringing down the banking sector's non-performingloan ratio, reductions in interest rates should help the sector resist any build-up of bad loans. Meanwhile, insurance penetration willremain low, and the equity market will be shallow and fail to generate significant investment.
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