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Bruce Dick

ZAMBIA - Finance

Banking the Unbanked

Managing Director, Zambia National Commercial Bank (Zanaco)


Bruce Dick was appointed Managing Director of Zambia National Commercial Bank (Zanaco) in January 2014. He had previously served as Chairman of the Board from 2010 until 2013, and has over 35 years of experience in retail and wholesale banking. Prior to taking up his role at Zanaco, he had been responsible for developments in retail bank investments throughout Sub-Saharan Africa and Latin America.

"Ours is a highly competitive market but with high concentration."

What are the main challenges that Zanaco is facing at the moment?

Last year was a difficult environment as a result of two things. We had some internal issues regarding a systems upgrade in January 2014, and the market experienced some trauma surrounding liquidity issues that stemmed from the Central Bank’s desire to control inflation and the exchange rate. The Central Bank changed its statutory reserves, which consequently dried up liquidity in the market; the current year is reflecting this. Additionally, now in 2015, the Central Bank has just announced an increase in the reserve rate from 14-18%, which will impact liquidity significantly. When that money is withdrawn from the economy as it moves from the banking sector to the Central Bank, it will directly impact the ability of banks to lend to customers. The government is tackling infrastructure in its policy initiatives, such as example roads. The situation today revolves around resolving the mining tax issue, which is a position that needs a solution.

How has the mining tax increase from 6 to 20% impacted the banking and finance markets?

The tax increase is putting additional costs on the mining industry, and at the moment companies are faced with two issues. One is that global demand for copper and the price for copper is down, and now with the tax regime change producers are getting hit twice. International companies run their businesses in a way that takes into account global factors, and that is not always linked to the development of a specific country. They have shareholders and must make a return on their investment. Zanaco, however, is a Zambian bank, and our roots are here. We have to live, work, and survive commercially in this environment.

“Ours is a highly competitive market but with high concentration.”

How would you describe your current market within Zambia’s concentrated banking system?

Ours is a highly competitive market but with high concentration because, effectively, there are four or five banks that control 60% of the market. In a way we are overbanked in terms of the number of players, which makes it a challenge to be profitable and sustainable. The distinction in the Zambian banking market is that there is a large number of unbanked potential customers. We are trying to grow the sector by reaching out to the unbanked. We are focused on important segments such as agricultural and SMEs as well as retail, corporate, and the government sectors. It’s about being focused on what you do, and doing it well.

How are you proceeding in terms of expansion?

Our distribution footprint has grown, and with third party distribution we now have over 250 agents. In addition, we open one or two new branches each year. We will continue to invest in branches. However, our vision and mission is to reach out to the unbanked. People living in rural areas may need to use the telephone to bank as opposed to going to a branch, effectively at their convenience both as to time and place.

How would you describe Zambia’s mobile banking adoption rate?

The penetration of phones is increasing everyday, and it amazes me how much more access even very remote areas have. The one thing most people strive to have is a phone, and the price of the technology is decreasing. The most basic banking processes can run even on the cheapest of phones. As we reach out to the more remote areas, we need to provide the fundamentals and security to people to encourage them to bank in their own environment.

What are Zanaco’s programs in terms of financial literacy?

We start by teaching financial literacy basics in schools because if we start with the younger generation we can develop better customers for the future. We work with businesses, SMEs, and farmers to help them budget, plan, and control their finances better. Providing financial literacy is a commitment at the heart of our organization. We have a long-term responsibility to the community to contribute to a better society and the broader Zambian economy that this activity supports.

How does Zanaco facilitate credit to SMEs?

Entrepreneurs are still struggling to find finances, and this is where we as bank and a sector need to do more. Since entrepreneurs do not have many assets or collateral, providing credit is an investment in the person and their activities, and how successful you think they will be moving forward. Now though, we are seeing more and more businesses that started from nothing but have gained a solid base and even international reputations.

How would you describe the business environment, and how does Zanaco make Zambia a more attractive investment destination?

Investors are looking at the stability of a country as well as commercial opportunity before investing. It is important for investors to find a safe environment for workers, in which government policies are clear and processes are supportive for investments. Providing an enabling environment is something that Zambia does very well; this country provides opportunities for successful business ventures. The role of a bank like Zanaco is to lend capital and support people investing in Zambia. We can help provide successful outcomes because we have been here for a long time, we know how the marketplace works, and we have an extensive network to share; we can help in providing the financial assistance to help build a successful outcome.

What are your expectations for the year ahead?

We anticipate this being a challenging year with many of last year’s characteristics present at the macro level. Profitability will be challenging in the short term, but in the long term we see a more solid picture emerging. Meanwhile, 2016 will be an election year for Zambia, and therefore may be a bit of a wild card with its own set of circumstances. However, over the next three to five years we have a positive outlook.

© The Business Year – May 2015



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