High cost of living to push personal loans demand – BoZ
Written by MRadio on June 3, 2022
By NATION REPORTER
DEMAND for personal loans is expected to remain high during the second quarter of this year in view of the need by households to supplement incomes in the wake of the high cost of living.
This is after demand for personal loans increased in the first quarter of this year as households sought liquidity to pay for tuition fees following the re-opening of schools, according to the Bank of Zambia (BoZ) in its Quarterly Credit Conditions Survey.
“In the next quarter [second quarter], demand for personal loans is expected to remain high in view of the need by households to supplement incomes in the wake of the high cost of living,” the Central bank stated.
The bank also indicated that demand for long-term financing was expected to increase in the second quarter of this year as Small and Medium Enterprises (SMEs) actualise their business plans on account of improved economic outlook.
This will also be driven by firms taking advantage of new Government policy on small and medium enterprise development.
According to the BoZ, commercial banks reported a further increase in the demand for working capital for the third consecutive quarter.
Commercial banks expected demand for working capital by SMEs and large corporations to remain high in the second of quarter as they seek liquidity to boost and keep their businesses afloat amid high operating costs.
In addition, high demand for working capital is premised on positive economic outlook
“The depreciation of the Kwacha and the subsequent high cost of imported raw materials was cited as one of the reasons that led to the increase in the demand for working capital. SMEs needed more resources to meet rising operating costs,” BoZ stated.
Further, the bank indicated, the rising production costs following an increase in fuel pump prices led SMEs to seek additional working capital to support business operations.
It stated that most commercial banks expected demand for working capital to remain strong in the second quarter as firms continued to seek liquidity to sustain business operations amid high production costs.
