p t - bank of zambia · experiencein resou rcesandpeoplemanagemen t.hehasb road internationalexposu...
TRANSCRIPT
A N N U A L R E P O R T 2 0 1 8BANKOFZAMBIA
ANNUALREPORT2018
Percent
Vision iiMission Statement iiBoard of Directors iiiSenior Management as at 31 December 2018 viiGovernor's Overview xiStatement on Corporate Governance xv
1.0 Developments in theGlobal Economy 1
2.0 DomesticMacroeconomicDevelopments 42.1 Monetary Developments and In�lation 42.2 Financial Markets 102.3 Balance of Payments 132.4 External Debt 182.5 Fiscal Sector Developments 192.6 Real Sector Developments 22
3.0 Financial System Regulation and Supervision 273.1 Banking Sector 273.2 Non-Bank Financial Institutions Sector 35
4.0 Banking, Currency and Payment Systems 484.1 Banking 484.2 Currency 484.3 Payment Systems 51
5.0 Regulatory and Other Financial Sector Developments 576.0 Strategy and Risk Management 607.0 Human ResourceManagement 628.0 Bank of Zambia Financial Statementsfor the Year Ended 31 December 2018 659.0 2018 Annual Statistical Annexures 118
TABLEOFCONTENTS
i
Head Of f iceBank of Zambia, Bank Square, Cairo RoadP. O. Box 30080, Lusaka, 10101, ZambiaTel: + 260 211 399300Fax: + 260 971 270090/0963884820E-mail: [email protected]: www.boz.zm
Regional Of f iceBank of Zambia, Buteko Avenue,P. O. Box 71511, Ndola, ZambiaTel: + 260 212 399600Fax: + 260 971 270120/0963 885580E-mail: [email protected]: www.boz.zm
REGISTERED OFFICES
To be a dynamic and crediblecentral bank that contributesto the economic developmentof Zambia
To achieve and maintain priceand financial system stability tofoster sustainable economicdevelopment
VISION MISSION STATEMENT
ii
Dr.DennyH.KalyalyahasbeenGovernorof theBankof ZambiaandChairperson of the Board of Directors since February 2015. Prior tothis appointment, he served asExecutiveDirector at theWorldBankGroup (WBG) from 2012 to 2014 and as Alternate ExecutiveDirector from 2010 to 2012, representing Africa Group 1Constituency comprising 22 countries. Dr. Kalyalya also served asDeputy Governor – Operations at the Bank of Zambia from 2002 to2010andasDirector–Economics from1998to2002.
He holds a PhD in Economics from the University ofMassachusetts/Amherst, USA (UMASS) which he obtained in 1993on a Fulbright Hays Scholarship. He also holds a Master of Artsdegree in Economics from UMASS. In addition, he holds a Master ofArts in Economics and a Bachelor of Arts in Economics from theUniversityofZambia (UNZA).
Prof. Hellicy C. Ng'ambi is a full professor of business leadership.She is currently the Vice Chancellor at Mulungushi University andKwameNkrumahUniversity.
She has worked in various management positions in institutions ofhigher learning such as the University of Botswana, University ofSouth Florida and University of South Africa. She was previouslyPrincipal and Managing Director of the Academy of BusinessManagement in Botswana, a private university college she founded.She is also one of the pioneers of the Thabo Mbeki AfricanLeadership Institute.
Shewas thewinnerof theCEOAfrica'smost in�luentialwomenof theyear in government and business Awards for two consecutive yearsand the 2017 Continental Lifetime Achiever Award. She hasauthored, edited and published several articles in journals and bookchaptersandbooks.
Prof. Ng'ambi holds a Doctorate in Business Leadership, a Master of Science in Management, a Master ofBusiness Administration, a Bachelor of Arts Degree in Economics, Chartered Institute ofMarketing Certi�icate,International Teachers' Programme Certi�icate, and an American Council on Education certi�icate. She is acerti�iedchangemanagementexpert.
iii 1All members of the Board are non-executive with the exception of the Chairperson
BOARDOFDIRECTORS1
Mr. Bryson Mumba is a corporate governance, �inancial andbusiness management expert. He is currently the Executive Dean –School of Business, Economics and Management at the University ofLusaka.Mr.Mumbastartedhis careeratZambiaConsolidatedCopperMines (ZCCM) in 1985. Other institutions he has worked for includeDeloitte & Touche (UK and Zambia), University of Abertay (Dundee,Scotland), Institute ofDevelopmentManagement (Botswana), PublicEnterprise Evaluation Agency (Botswana), National Road FundAgency(Zambia)andZambiaDailyMailLimited.
He served as an external member of the Bank of Zambia's Audit andFinance Board Committee from 2016 to 2018 and has served onseveralotherboardsandcommittees.
Mr. Mumba is a Fellow of the Association of Chartered Certi�iedAccountants (ACCA), the Zambia Institute of Chartered Accountants(ZICA)and the InstituteofDirectors (IoD),Zambia.
He holds a Master of Business Administration from Edinburgh Business School at Heriot Watt University, aMaster of Accountancy from the University of Dundee, a Bachelor of Science in Computer Studies fromLoughborough University of Technology, a post graduate diploma in Teaching/Lecturing Methodology fromUniversity of Lusaka, aDiploma in CorporateGovernance fromACCAand aPostgraduateCerti�icate in BusinessResearchMethods fromHeriotWatt University. He is currently pursuing a PhD in Accounting and Finance fromUniversityofLusaka.
Mr. Mwila Lumbwe is a director at Investment and ManagementSolutions Limited, a consultancy �irm offering investment advisoryservices to clients considering inward investment in Zambia and theSADCregion.
His expertise has been applied in different sectors at various boardand management positions in organisations including ZambiaRevenue Authority, Zambia National Commercial Bank, StandardChartered Bank and the Commission of Enquiry on the ZambiaNational Building Society. He has carried out forensic investigations,served as LiquidationManager of Credit Africa Bank Zambia Limitedand National Home Stores, and was the Receiver of Kapiri GlassProductsLimited.
Mr. Lumbwe was one of the team leaders on the ZCCM/GRZnegotiating team that presided over the privatisation of the miningindustry in Zambia and led the privatisation of the trade sector. Heserved as �inancial advisor to the Attorney General in the dissolution of the Central African Power Corporation.He further servedas theManagingPartnerofErnst&YoungZambia,whichheestablished. Prior to this, hewasaPartneratKPMGZambiaandUK.
He is a Fellow of the Association of the Chartered Certi�ied Accountants and the Zambia Institute of CharteredAccountants.
iv
BOARDOFDIRECTORS
v
Dr. Andrew Mwaba is an economist in International Developmentand Finance. He is an expert in policy review and strategy and hasexperience in resources and people management. He has broadinternationalexposure inbusiness inAfricaandbeyond.
Dr. Mwaba worked at the African Development Bank for over 30years where he held various management portfolios. He began as ayoung professional and rose through the ranks to PrincipalEconomist, Advisor to the Vice-President, Head Economist, DivisionManagerand �inally asCountryManager inMalawi.Hehasauthored,supervised and published several research papers and articles injournals.
He holds a Doctorate Degree in Development Studies from theUniversity ofManchester, aMaster of Science Degree in AgriculturalEconomics and Agribusiness Management from Ohio StateUniversity, a Master of Public Administration (Economic PolicyManagement) from Columbia University and a Bachelor of ArtsDegree inEconomics fromtheUniversityofZambia.
Ms. Namucana C. Musiwa is a Human Resource ManagementPractitioner and is the founder and Chief Executive Of�icer of CareerProspects Limited, a Human Resources Development Practice andManagement �irm. She is Chairperson of the ZIHRM Women'sNetwork and is serving as Chairperson of the University of ZambiaCaretakerCommitteeofCouncil.
Ms. Musiwa's career spans over 30 years, having worked in variouscapacities in organisations such as Boart Longyear Zambia Limited,Prince Construction CompanyLimited and the International LabourOrganization.
In May 2009, she was elected President of the Zambia Institute ofHumanResourceManagement (ZIHRM), the �irstwoman tohold theposition. She served as external member of the Bank of Zambia'sAppointment and Remuneration Board Committee from 2016 to2018. She was the �irst Board Chairperson of the ZambiaQuali�icationsAuthority.
Ms. Musiwa holds a Bachelor of Arts Degree in Public Administration from the University of Zambia and is aFellowof ZIHRM. She holds several national and international awards including twoGlobal HRLeadership andAchiever Awards conferred on her by the Africa-India Summit under the auspices of the World HumanResourceDevelopmentCongress.
BOARDOFDIRECTORS
vi
Ms. Roseta Mwape Chabala is a business strategy expert. She iscurrently theManagingDirectoratMetalFabricatorsofZambia.
Her career spans over 12 years, having served as a businessconsultant at Independent Management Consulting Services. Shelater moved to take up the position of Chief Executive Of�icer atZambia Association of Manufacturers. She played a leading role inimproving the image, multiplying the membership and revenues ofthe Zambia Association ofManufacturers. In 2013, shewas awardedfor her distinguished contribution to private sector development bythe Ministry of Commerce, Trade and Industry through the PrivateSectorReformProgram.
Ms. Chabala holds a Master of Science in International Trade Policyand Trade Law from Lund University and a Bachelor's Degree inEducation from theUniversity of Zambia. She is currently pursuing aMaster of Business Administration from the Eastern and SouthernManagement Institute.
Mr.FredsonK.Yambahas been the Secretary to theTreasury andanex-of�icio on the Bank of Zambia Board since 2011. Before beingappointed Secretary to the Treasury, Mr. Yamba served as Director -Research, Consultancy and Development Division at the NationalInstitute of Public Administration (NIPA). He also served as Directorand Chief Economist at the Ministry of Commerce, Trade andIndustry. Earlier, Mr. Yamba held several senior positions at theMinistryofFinanceandNationalPlanning including:ActingDirector-Budget Of�ice, Chief Budget Analyst, Principal Budget Analyst andSenior Budget Analyst. He was also a secondary school teacher forvariouscommercial subjects.
He holds a Master of Science Degree in Development Finance fromthe University of Reading in the United Kingdom, Bachelor of Arts inEconomics and Public Administration from the University of Zambiaaswell as aDiploma inSecondarySchoolTeaching fromtheTechnicalVocationalTeachersCollege inLuanshya.
BOARDOFDIRECTORS
vii
SENIORMANAGEMENT ASAT 31 DECEMBER2018
DR.DENNYH.KALYALYA,
GOVERNOR
DR.BWALYAK. E.NG'ANDU
DEPUTY GOVERNOR -OPERATIONS
DR. TUKIYAKANKASA-MABULA
DEPUTY GOVERNOR -ADMINISTRATION
viii
SENIORMANAGEMENT ASAT 31 DECEMBER2018
DR. FRANCISCHIPIMO
DIRECTOR -ECONOMICS
DR. JONATHANCHIPILI
DIRECTOR -FINANCIAL MARKETS
MS.GLADYSMPOSHA
DIRECTOR -BANK SUPERVISION
MS. FREDATAMBA
DIRECTOR - NON-BANKFINANCIAL
INSTITUTIONSSUPERVISION
MR.VISSCHERBBUKU
DIRECTOR -REGIONAL OFFICE
MR. LAZAROUSKAMANGA
DIRECTOR - BANKING,CURRENCY AND
PAYMENT SYSTEMS
SENIORMANAGEMENT ASAT 31 DECEMBER2018
MS.NAMWANDINDHLOVU
DIRECTOR BOARDSERVICES
DR. LEONARDN.KALINDE
DIRECTOR -LEGAL SERVICES
MR.DAVID C.MWAPE
DIRECTOR -RISK AND STRATEGY
MS. PRUDENCEMALILWE
DIRECTOR - FINANCE
MR. FABIANHARA
DIRECTOR -INTERNAL AUDIT
MS.REKHAC.MHANGO
DIRECTOR -HUMAN RESOURCES
ix
x
SENIORMANAGEMENT ASAT 31 DECEMBER2018
MS.MWABAKASESE
ACTING DIRECTOR -INFORMATION ANDCOMMUNICATIONSTECHNOLOGY
MR.EVANSLUNETA
DIRECTOR -PROCUREMENT AND
MAINTENANCE SERVICES
Governor 's Overview
xii
This report reviews global and domestic macroeconomic developments in2018 and the role the Bank of Zambia played in ful�illing its primarymandate of price and �inancial system stability. In addition, the reportpresents audited �inancial statements of the Bank for the year ended 31stDecember2018andprovidesstatistical annexures.
Monetary policy in 2018 continued to focus onmaintaining price stability,by ensuring that in�lation remained within the target range of 6-8%. TheBank relied on the Policy Rate as a key signal for itsmonetary policy stance.Decisions on themonetary policy stancewere guided by themedium-termin�lationoutlookaswell asabroadersetofmacroeconomic indicators, suchas, the outturn in in�lation, credit conditions, economic growth, �inancialsector stability, and risks to in�lation. The Bank continued to use marketbased monetary policy instruments to maintain the 5-day interbank ratewithin+/-1percentagepointaroundthePolicyRate.
In�lation on average was higher in 2018 than in 2017, but was maintained broadly within the target rangeduring theyearexcept inAugust andOctoberwhen it breached theupperboundof the target range.However, bythe end of the year, it reverted to the target range and closed 2018 at 7.9%. The build-up in in�lationarypressures was mainly on account of rising food prices, exchange rate depreciation, and upward adjustment offuel pumpprices. Afteraperiodof successive easingofmonetarypolicy that started in2017, thePolicyRatewaslowered to 9.75% in February 2018 from 10.25% and was maintained at that level for the rest of the year. Inaddition, the statutory reserve ratio was adjusted downwards to 5.0% from 8.0% andwas held at that level forthe remainder of the year. The Bank considered this policy stance appropriate in maintaining in�lation withinthe6 -8%targetbandaswell as supportingprivatesectorcreditgrowthandeconomicactivity.
Market liquidity conditions improved as monetary policy remained accommodative. Consequently, theovernight interbank rate closed the year slightly lower at 9.88% from 9.94% in December 2017. This was wellwithin thePolicyRate corridor.
Broad money grew at a slower pace in 2018 than in 2017 owing to a slowdown in domestic credit growthbrought aboutby themoderation in expansionof lending toGovernment. However, credit toprivateenterprisesand households picked up. Commercial Banks lending rates, although exhibiting a declining trend, remainedelevated in 2018, re�lecting in part, high yields on Government securities, high cost of wholesale funds, andelevatednon-performing loans.
Yield rates on Government securities increased mainly on account of low demand and a higher risk premiuminduced by sovereign credit rating downgrades during the year. However, the outstanding stock of Governmentsecurities rose by 20.7% to K58.3 billion as at end-December 2018, due to private placements of Governmentbonds toselected institutions.
Zambia's external sector performance in 2018was unfavourable,with the country recording an overall balanceof payments de�icit of US $387.8 million against a surplus of US $18.3 million in 2017. This was largely onaccount of the unfavourable performance in the �inancial account which more than outweighed theimprovements in the current and capital accounts. The �inancial account registered ade�icit against a surplus in2017 mainly on account of a marked reduction in direct investment in�lows and net portfolio investmentout�lows. The current and �inancial account de�icitsweremainly �inancedbyadrawdownof gross internationalreserves.
GOVERNOR'SOVERVIEW
Thecountry's international reserves continued todeclinedue tohighexternaldebt servicepayments.Asat end-December 2018, gross international reserves declined to US$1.6 billion, equivalent to 1.8 months of importcover, from US $2.1 billion in 2017 (2.9 months of import cover). The decline in reserves was moderated bypurchases of US$346.0 million from the market and mineral royalty payments by the mines amounting to US$134.9million in2018.
Global growth remained positive, although it slowed down to 3.7% in 2018 from 3.8% in 2017 driven bysubdued economic activities in advanced and some emerging market economies. In the Sub-Saharan Africa(SSA) region, growth remained unchanged explained by themixed performance in some of the region's largesteconomies,Nigeria, SouthAfrica, andAngola.
Domestic economic activity picked up in 2018, with preliminary data indicating higher growth in real GDP at3.7%, from 3.5% in 2017. The increase in growth was supported by strong performance in the mining,manufacturing,wholesaleandretail trade, and informationandcommunicationssectors.
On the �iscal side, preliminary estimates indicate that the �iscal de�icit at 7.6% of GDP was above the target of6.1%, largely re�lecting higher than programmed spending on capital projects and interest payments onexternal anddomestic debt. Fiscal consolidation thus remains a critical imperative formacroeconomic stabilityandhighereconomicgrowth.
Theoverall performanceof thebankingandnon-banking �inancial institutions sectors remainedstable in2018.However, the �inancial sector as awhole continued to be adversely affected by the high ratio of non-performingloans to total loans at 11.0%,whichpersistently stayed above themaximumprudential limit of 10.0%althoughitdeclinedduring theyear.
The Bank continued to undertake legal and regulatory reforms aimed at aligning its supervisory frameworkwith international best practice. Oneof the keydevelopments that tookplace in 2018was the coming into effectof the revisedBanking andFinancial ServicesAct, No. 7 of 2017,which enhanced theBank's capacity to addresschallenges in the �inancial sector, particularly in areas, such as, consumerprotectionand corporate governance.The Bank launched banknotes with enhanced security features during the year with the aim of protecting theZambian currency from counterfeiting and safeguarding the integrity of the currency. TheBank also undertookvarious initiatives to increase formal �inancial inclusion aimed at improving living standards of the peoplegenerally. Advances in the use of �inancial technology continued to enhance access to �inancial services, asre�lected in the rising volume of transactions onmobilemoneyplatforms. In this regard, the Bankwill continueto implement policies and interventions that promote the use of digital �inancial services to enhance �inancialinclusion.
In the comingyear, theBankwill continue to implement the2016-2019StrategicPlananddeliveron itsprimarymandateofmaintainingpriceand �inancial systemstability.
DRDENNYH.KALYALYAGOVERNOR
xiii
Statement on Corporate Governance
xv
TheBankof ZambiaBoardofDirectors is fully committed toupholding the tenets of good corporate governancein itsprocessesandprocedures,which includeaccountability, transparencyand integrity.TheBoardofDirectorsof theBankofZambia is establishedunder theConstitutionofZambia (Amendment)Act2
number 2 of 2016. The Board is vested with all the powers of the Bank under the Bank of Zambia Act3 and isresponsible for formulating its policies. TheActprovides for eightBoardmembers comprising theGovernor, sixNon-Executive Directors (NEDs) and the Secretary to the Treasury, who is an ex-of�icio. The Governor is theChiefExecutiveOf�icerof theBankandChairpersonof theBoard.
After the expiry of the tenure of the previous Board members in June 2018, the following were appointed asNEDs to theBoard inSeptember2018:
i. Prof.HellicyC.Ng'ambi (ViceChairperson);ii. Ms.NamucanaC.Musiwa;iii. Ms.RosetaM.Chabala;iv. Dr.AndrewMwaba;v. Mr.BrysonMumba;andvi. Mr.MwilaLumbwe
In 2018, the Board held three statutory and three special meetings during which a number of issues werediscussed. In addition, the following policies were approved: The Green Policy, Sexual Harassment Policy,NepotismPolicy,RevisedLenderofLastResortPolicy, andEmployeeResourcingandRetentionPolicy.The Board has three standing committees namely; Audit and Finance; Appointments and Remuneration; andGovernanceandRiskwhoserolesand functionsarede�ined in theCommitteeCharters. Thecommitteesmeetatleastonceaquarter.Themembersof theCommitteesare:
Audit andFinanceCommitteeMr.BrysonMumba ChairpersonMr.MwilaLumbwe NEDDr.AndrewMwaba NEDMs.RosetaM.Chabala NEDMr.FredsonK. Yamba Ex-Of�icio
GovernanceandRiskCommitteeMr.MwilaLumbwe ChairpersonProf.HellicyNg'ambi NEDMs.NamucanaMusiwa NEDMr.BenNgenda ExternalMember
AppointmentsandRemunerationCommitteeMs.NamucanaMusiwa ChairpersonProf.HellicyNg'ambi NEDMs.RosetaM.Chabala NEDMr.BrysonMumba NED
STATEMENT ONCORPORATEGOVERNANCE
2Article 213 (3) of Act No. 2 of 20163Bank of Zambia Act Chapter 360 of the Laws of Zambia
To facilitate consultation, promote transparency and provide advice to the Bank onmonetary policy, the Boardhas also established theMonetary Policy Advisory Committee. This Committee approves the Bank's bi-annualMonetaryPolicyStatement.
The Bank continues to support various humanitarian, community, educational, environmental, sporting andhealth-related activities as part of its corporate social responsibility. In 2018, the Bank disbursed a total ofK792,277.10 to provide support to the health sector, educational institutions, heritage and conservation,orphanagecareandsupport toHabitat forHumanityZambia.
xvi
Assistant Director - Communications, Mr Kanguya Mayondi at the handover ceremony for computers donated by the Bank to BulunguSchool in Mumbwa
Developments in the Global Economy1.0
1
1.0 DEVELOPMENTSINTHEGLOBALECONOMYWorldEconomy
Preliminary data indicate that global growth remained positive, although it slowed down to 3.7% in2018 from 3.8% in 2017 (Table 1.1). The decline was mainly on account of subdued economicactivities in advanced economies and some emerging market and developing economies.Uncertainties surrounding Brexit negotiations, coupled with the anticipated negative effects of theUS China trade war and tightening global �inancial conditions, contributed to the slowdown ingrowth.However, growth in theSub-SaharanAfrica (SSA)regionremainedunchanged in2018.
AdvancedEconomies
Economic growth in advanced economies declined to 2.3% in 2018 from 2.4% in 2017 mainly onaccount ofweakening growth in the euro area and theUnitedKingdom(UK). Growth in the euroareawas weighed down mainly by faster-than-expected slowdown in Germany, France and Italy. Newautomobile emission standards4 and softer external demand weighed on industrial production andprivate consumption in Germany, while street protests and industrial action by labour unions hurteconomic growth in France. In Italy, sovereign and �inancial concerns negatively affected domesticconsumption.
The slowdown of growth in the UK was largely due to the continued uncertainties surroundingBrexit. However, the United States (US) registered higher growth in 2018, mainly supported byexpansionary �iscal policy, increased private investment and continued strong consumer andbusinesscon�idence.
EmergingMarketsandDevelopingEconomies
Growth in Emerging Markets and Developing Economies (EMDEs) declined to 4.6% in 2018, from4.7% in2017,mainly on account ofweakening growth inChina. Growth in Chinadeclined to6.6% in2018, from6.9%in2017 largelydue toeffectsof theUS-China tradedisputesanddomesticmeasurestoaddressexcessivecorporatedebt implementedby theChineseauthorities.
4The new standards led to some car makers to either suspend or ultimately stop manufacturing some car models which were previouslyconsidered tohave lowemissionsand fuelef�icient
WorldAdvancedEconomiesUnited States
EuroArea
United Kingdom
EmergingMarketsandDevelopingCountriesChina
Sub-SaharanAfrica (SSA)SouthAfrica
Angola
Nigeria
Zambia
20163.21.71.5
1.8
2.4
4.46.7
1.40.3
-0.7
-1.6
3.8
RealGDP InflationTable1.1:WorldRealGDPand Inflation, 2016-2018 (Annual%changeunlessotherwise stated)
Source: Focus Economics,Trading Economics,World Bank, IMFWEOOctober 2018 and January 2019WEO update, Central StatisticalOffice (CSO)* Preliminary
20173.82.42.2
2.4
1.8
4.76.9
2.91.3
-0.1
0.8
3.5
2018*3.72.32.9
1.8
1.4
4.66.6
2.90.8
-2.9
1.9
3.7
2016n/a0.82.1
1.1
1.6
4.32.0
11.36.3
32.4
15.7
7.5
2017n/a1.72.1
1.4
3.0
4.31.6
11.05.3
31.7
16.5
6.1
2018*n/a2.02.4
1.8
2.1
4.91.9
8.64.5
20.3
12.1
7.9
2
Sub-SaharanAfrica
Growth in the SSAregion remainedunchanged at 2.9% in2018as global growth, trade and industrialactivity lostmomentum. Further, the 2018outturnwas explainedby themixedperformance in someof the region's largest economies, Nigeria, South Africa, and Angola. Growth in Nigeria picked up onaccount of favourable performance in the non-oil and services sectors. In South Africa, growth isestimated to have slowed down due to weak consumer and business con�idence as well as delays inimplementing themuch anticipated structural policy reforms,while Angola recorded a recession onaccountof loweroilprices.
MonetaryPolicyandInflation
Monetary policy continued to be broadly accommodative in major central banks and in�lationdynamics were mixed across regions in 2018. In advanced economies, and emerging markets anddeveloping economies, in�lation continued to trend upwardsmainly due to stronger performance inthe labourmarkets that resulted in higherwages and increases in oil prices. The US Federal Reserveraised the federal funds rate for the fourth time in2018by25basispoints to2.25-2.5%on thebackofsolid economic growth and strong labour market. In�lation in the US ended the year at 2.4% from2.1% in 2017. In the Eurozone, the European Central Bank (ECB) maintained the main re�inancingrateat0.00%,despite in�lationclosinghigher in2018at1.8%compared to1.4%in2017.
In the SSA, in�lation declined largely due to continued strengthening of domestic currencies andcontinued recovery in some commodity prices. The South African Reserve Bank increased itsbenchmark repo rate by 25 basis points to 6.75% in the last quarter of 2018, to counter in�lationarypressuresandexpectations. In�lationended theyearat4.5%,downfrom5.3%in2017.
CommodityPrices
The average price of copper rose by 6.4% to US$6,565.3/metric tonne (mt) in 2018 fromUS$6,170.0/mt recorded in 2017, mainly on account of improved global demand. Crude oil pricesalso increased to US$68.8/barrel on average from US$53.1/barrel in 2017. This was mainlyattributed to sustained supply cuts by OPEC and non-OPECmembers, renewedUS sanctions againstIran and continued positive global economic growth. Generally, agricultural commodity pricesincreased in2018due todroughts inEuropeandCentralAsia, coupledwith an increase in fuel prices.In particular, maize prices, at an average of US$164.4/mt in 2018, were higher than US$154.5/mtrecorded in 2017. Similarly, wheat prices, at an annual average of US$203.9/mtwere higher than US$178.2/mtrecordedover thesameperiod.
ImplicationsofGlobalDevelopmentsontheZambianEconomy
The slowdown in growth in Zambia's major trading partners5 is likely to dampen demand forZambia's export commodities. In particular, lower growth in China is likely to depress copper pricesandmoderategrowthof exportearnings forZambia.
5Zambia' major trading partner countries with their respective trade weights are South Africa (0.426), Switzerland (0.319), EU (0.093), China(0.077), andUK(0.069).
MacroeconomicDevelopments in Zambia
2.0
4
2.0 DOMESTICMACROECONOMICDEVELOPMENTSIn 2018, Government's macroeconomic objectives as outlined in the National Budget were, amongothers, to:
i. AchieverealGDPgrowthofat least5.0%;ii. Maintainsingledigit in�lationwithin therangeof6.0%to8.0%;iii. Maintain international reservesofat least3monthsof import cover;iv. Limit the �iscalde�icit, onacashbasis, to6.1%ofGDPandv. Limitdomestic �inancing tonomore than4.0%ofGDP.
Preliminary estimates indicate that the economy grew by 3.7% in 2018 compared to 3.5% in 2017,butwas lower than the targetof 5.0%.Thegrowth in realGDPwasdrivenby favourable performancein thewholesale and retail trade,manufacturing,mining aswell as information and communicationssectors. In�lation remained broadly within the target range, although it was on average higher in2018 than in2017, due topass-througheffects of exchange ratedepreciation, coupledwith fuel priceincrements. International reserves remainedbelow the target of 3-months' import covermainly dueto external debt service payments. With regard to the �iscal performance, preliminary estimatesindicate that the �iscal de�icitwas above target, largely re�lecting higher spending on capital projectsand interestpaymentsondomesticandexternaldebt.
2.1 MONETARYDEVELOPMENTSANDINFLATION
MonetaryPolicyStance
In 2018, monetary policy was aimed at maintaining in�lation within the target range of 6-8%. Theformulation of monetary policy continued to be guided by the medium term in�lation outlook andin�lation outcomes as well as a broader set of macroeconomic indicators such as credit conditions,economic growth, the stance of �iscal policy, �inancial sector stability and risks to in�lation. Within�lation remaining broadly within the target range, monetary policy remained accommodativeduring theyear.
After a period of successive easing of monetary policy that started in 2017, the Policy Rate waslowered to 9.75% in February 2018 from 10.25%, and was maintained at 9.75% for the rest of theyear. With in�lation remaining within the 6 - 8% target range, the monetary policy stance remainedunchanged for the rest of the year to boost private sector credit, and support economic activity andstability of the �inancial sector. Thiswas despite a build-up in in�lationary pressures emanating fromexchangeratedepreciation, fuelprice increasesandarelatively lowermaizeharvest.
The statutory reserve ratiowas also reduced from8.0% to5.0% andwasmaintained at that level forthe rest of the year. This was in an effort to strengthen the current monetary policy framework thatfocuseson thePolicyRateas theanchor for signalling thepolicy stance.
Further, the Bank continued to conduct openmarket operations aimed atmaintaining the interbankrate within +/-1 percentage point of the Policy Rate in order to align market interest rates to thePolicyRate.
ChallengestoMonetaryPolicyImplementation
The effectiveness of monetary policy continued to be constrained by a number of factors. Thecontinued �iscal de�icits and consequent high Government borrowing from the domestic �inancialmarket have had a crowding out effect on private sector credit. As a result, economic activity hasremained subdued as the productive sectors of the economy could not access affordable credit. Inaddition, the continued high lending to Government kept yield rates on Government securitieselevated, resulting in lending interest ratesremaininghigh.
Vulnerabilities in the �inancial sector associated with high non-performing loans continued tohamper theeffectivenessofmonetarypolicy. Further, thedecline in international reservesdue tohighexternal debt service payments remained a threat to the stability of the exchange rate, of the Kwachaagainst theUSdollar withpotential adverseeffectson in�lation.
MoneyMarket LiquidityandInterbankRate
Interbank money market liquidity, as measured by the aggregate current account balance ofcommercial banks slightly improved in 2018, closing the year at K1.42 billion from K1.37 billion theprevious year (Table 2.1). Market liquidity was mainly supported by net maturities of Governmentsecurities, BoZ foreign exchange purchases6 for international reserves accumulation and netGovernment spending. These in�luences were, however, countered by statutory reserves transfersandOvernightLendingFacility (OLF) repayments.
Given the increase in market liquidity, the overnight interbank rate closed the year lower at 9.88%compared to9.94%at end-December2017, andwas containedwithin thePolicyRate corridor (Chart2.1).
The volume of funds traded in the interbank money market increased to K82.2 billion from K51.5billion in2017, despite the increase inmarket liquidity (Chart 2.2). Amounts accessedby commercialbanks using the OLFwindow rose toK20.9 billion fromK16.6 billion in 2017. Thiswasmainly on theback of sustained concentration of funds amongst a few banks with limited credit lines. However,commercial banks' access of foreign exchange swap contracts marginally fell, with the outstandingswapsclosingatK2.3billion fromK2.4billion in2017.
OpeningbalanceNetGovt spending
BoZ FX Purchases/sales
CIC
SR deposits
OLF
NetGovt Sec Maturities/sales
Openmarket operations
Other*
Closingbalance
20162.456.01
7.65
-0.39
-4.31
-7.54
1.74
0.25
-4.72
1.14
Table2.1Liquidity Influences(K' Billion), 2016 - 2018
Source: Bank of ZambiaNote: FX=foreign exchange; CIC=currency in circulation, SR=statutory reserves, OLF=Overnight Lending Facility*Other includes miscellaneous transactions and net inter-bank fund transfers
20171.144.10
3.44
0.10
-3.95
-0.34
-2.62
0.04
-0.54
1.37
20181.371.58
3.85
-0.70
-7.96
-4.10
5.66
0.54
1.18
1.42
CHART 2.1:MarketLiquidity andInterbank rate,Dec 2015 –Dec 2018
Source:Bank of Zambia
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
-
5.00
10.00
15.00
20.00
25.00
30.00
31-Dec-15
31-Mar-16
30-Jun-16
30-Sep-16
31-Dec-16
31-Mar-17
30-Jun-17
30-Sep-17
31-Dec-17
31-Mar-18
30-Jun-18
30-Sep-18
31-Dec-18
Percent
K’billion
Excess Reserves(K'bn)(RHS) 5-day Moving-Ave (LHS) BOZ Policy Rate (LHS)Lower Bound (LHS) Upper-Bound (LHS) Interbank Rate (LHS)OLF Rate(LHS)
6TheBankof ZambiapurchasedUS$346million from themarket forpurposesof international reservesaccumulation andno salesweremade formarket support.
5
BroadMoney
The annual growth in broad money (M3)7 slowed down to 16.5% in 2018 compared to 21.4% in2017, mainly on account of slower growth in domestic credit following a slowdown in credit toGovernmentandpublicenterprises (Chart2.3andTable2.2).
DomesticCredit
Growth in domestic credit9 was lower at 15.0% in 2018 compared to 26.3% in 2017. The slowdownincredit toGovernmentandpublic enterprisesaccounted for thisoutturn (Chart2.4).
63.1
77.1 76.0
51.5
82.2
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
2014 2015 2016 2017 2018
K'billion
CHART 2.2:InterbankMoney MarketTradingActivity(K’billion),2013 - 2018
Source:Bank of Zambia
CHART 2.3:Annual BroadMoneyGrowth(Percent),Dec 2015 -Dec 2018
Source:Bank of Zambia
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
K,million
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Broad Money (M3) Annual Growth Rate
-20
-10
0
10
20
30
40
Sep-18
Oct-18
Nov-18
Dec-18
Percent
Description
BroadMoney (M3)
Of whichNet ForeignAssets
Net Domestic Assets
Gross Domestic Credit
Gross Claims onGov't
Public Enterprises
Private Enterprises
Households
NBFIs8
2016
-5.7
-24.3
23.5
2.8
22.6
-22.0
-7.7
-12.0
3.1
Table2.2:SourcesofGrowth inBroadMoney (Percent), 2016 –2018
Source: Bank of Zambia
2017
21.4
0.3
41.7
26.3
50.7
85.3
2.2
10.2
1.9
2018
16.5
13.0
18.9
15.0
12.9
18.4
14.9
19.4
89.8
Contribution tochange inM3(2018)
16.5
5.3
11.2
17.1
8.0
0.1
4.6
3.9
0.5
7Broad money includes foreign currency deposits8Non-Bank Financial Institutions9Total domestic credit includes lending by the Bank of Zambia, Commercial banks, and other Depository corporations in both Kwacha andforeign currency.6
Credit to the non-government sector, particularly to private enterprises and households, picked updue to increased demand following improved liquidity in the market, supported by theaccommodativemonetarypolicyby theBankofZambia.
Commercial banks' total loans and advances continued to register growth in 2018, drivenmainly byan expansion in both Kwacha and foreign currency denominated loans. Kwacha denominated creditexpanded by 12.3% driven by increased lending to households, �inancial services, community andsocial services, and wholesale and retail trade sectors. Foreign currency denominated creditincreased by 8.3% on the back of expansion in lending to manufacturing, mining, �inancial services,andelectricitygas,waterandenergysectors(Charts2.5and2.6).
CHART 2.4:Contributionto Annual GrossCredit Growth(Percentage),Dec 2015 –Dec 2018
Source:Bank of Zambia
-12.0
-6.0
0.0
6.0
12.0
18.0
24.0
30.0
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
GrossClaims onC. Govt Public enterprises Private enterprisesHouseholds NBFIs Gross Domestic Credit
CHART 2.5:Distribution ofCommercialBank KwachaDenominatedLoans(K'million),2017-2018
Source:Bank of Zambia
0 2,000 4,000 6,000
Credit/debit cardsRestaurants and hotelsMining and quarying
Electricity, gas, water and energyConstructionReal estate
Other sectorsFinancial services
ManufacturingTransport, storage and…
Community, social and perconal…Agriculture, forestry,Fishing and…
Wholesale and retail tradePersonal Loans
Dec-18 Dec-17
8,000
CHART 2.6:Distribution ofCommercialBank ForeignCurrency Loans(US$ million),2017-2018
Source:Bank of Zambia
0 100 200 300
Credit/debit cardsCommunity, social and perconal services
Restaurants and hotelsOther sectors
Personal LoansFinancial services
ConstructionOther sectors
Electricity, gas, water and energyReal estate
Transport, storage and communicationsWholesale and retail trade
ManufacturingMining and quarying
Agriculture, forestry,Fishing and hunting
Dec-18 Dec-17 7
Percentage
K’million
US$’million
InterestRates
GovernmentSecuritiesYieldRates
Yield ratesonGovernment securities edgeduponaccount subdueddemandanda relatively high riskpremium inducedby the sovereign credit rating downgrade10. Theweighted average composite yieldrates for Treasury bills and Government bonds rose to 18.3% and 19.1% in 2018, from 16.6% and18.8%, respectively, in2017(Chart2.7andChart2.8).
CommercialBanksInterest Rates
Commercial banks' nominal average lending rate (ALR) declined to 23.6% in December 2018 from24.6% in December 2017, mainly due to the accommodative monetary policy which supportedmarket liquidity. The180-daydeposit rate for amounts exceedingK20,000 rose to9.1% inDecember2018, from 8.6% recorded in December 2017. The average savings rate (ASR) for amounts aboveK100closed theyearat3.0%from2.8%inDecember2017(Chart2.9).
CHART 2.7:Treasury BillsWeightedAverage YieldRates (Percent),2015 – 2018
Source:Bank of Zambia
CHART 2.8:GovernmentBond YieldRates (Percent),2015-2018
Source:Bank of Zambia
14.0
16.0
18.0
20.0
22.0
24.0
26.0
28.0
30.0
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
2-years 3-years 5-years 7-years 10-years 15-years Composite Bond Rate
10S&P, Fitch and Moody's downgraded Zambia's sovereign credit rating in 2018.8
5.0
10.0
15.0
20.0
25.0
30.0
31-Dec-15
31-Mar-16
30-Jun-16
30-Sep-16
31-Dec-16
31-Mar-17
30-Jun-17
30-Sep-17
31-Dec-17
31-Mar-18
30-Jun-18
30-Sep-18
31-Dec-18
percent
91-Day 182-Day 273-Day 364-Day CompositeYield
Percent
The real ALR fell to 15.7% inDecember 2018 from18.5% inDecember 2017, following a reduction innominal interest rates (Chart 2.10). The real average 30-day deposit rate for amounts aboveK20,000fell to 1.2% from 2.5% as in�lation rose, while the real ASR for amounts exceeding K100 furtherreduced to -4.9%from-3.3%over thesameperiod.
Inflation
In 2018, annual overall in�lation was maintained broadly within the target range of 6-8%. Althoughin�lation breached the upper bound of the target range in August and October, it reverted back to thetargetbandandclosed theyear at7.9%(Chart2.11).Onaverage, overall annual in�lation rose to7.5%in2018 from6.6% in2017, on account of rising foodprices, particularly,maize grain, tomatoes, rape,onions and dried Kapenta. In addition, the depreciation of the exchange rate and the rise intransportation costs, resulting fromtheupwardadjustment in fuel prices, contributed to the increasein in�lation.
CHART 2.9:NominalLending andSavingsRates (Percent),Dec 2015 –Dec 2018
Source:Bank of Zambia
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Avg Lending Rate Savings rate (> K100) Deposit rate (> K20,000, 180-day)
Sep-18
Dec-18
CHART 2.10:Real Lendingand SavingsRates (Percent),Dec 2015 –Dec. 2018
Source:Bank of Zambia
(20.0)
(15.0)
(10.0)
(5.0)
0.0
5.0
10.0
15.0
20.0
25.0
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
Real Lending Rate Savings rate (> K100) Deposit rate (> K20,000, 180-day)
CHART 2.11:In�lation,AnnualChange(Percent),Dec 2015 –Dec 2018
Source:Central StatisticalOf�ice
0
5
10
15
20
25
30
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Overall Inflation Food inflation Non-food inflation
Sep-18
Dec-18
9
Percent
Percent
Percent
2.2 FINANCIALMARKETS
GovernmentSecuritiesMarket
MarketBiddingBehaviour
In 2018, investments in Treasury bills and Government bonds were concentrated in longer datedinstruments.Most of the investorspreferred the364-dayTreasurybills and the15-yearGovernmentbondsonaccountof relativelyhigheryield rates (Table2.3).
StockofGovernmentSecurities
A total of K25.1 billionwas realised throughGovernment securities auctions against totalmaturitiesof K23.0 billion, leading to a surplus of K2.1 billion. Consequently, the outstanding stock ofGovernment securities increased to K58.3 billion at end-December 2018, fromK48.3 billion as end-December 2017, representing an annual growth of 20.5% (Chart 2.12). The rise in the outstandingstock of Government securities was on the back of a 41.3% increase in Government bonds to K39.8billion, mainly attributed to private placements of Government bonds to selected institutions.However, the growth in the stock of Government securities was moderated by the fall in stock ofTreasurybillsby8.5%toK18.5billion.
In terms of holdings by category, commercial banks continued to hold the largest stock of Treasurybills, accounting for 76.1%. Non-bank �inancial institutionswere second at 19.6%,while the Bank ofZambiaaccounted for4.3%(Chart2.13).
91-day bills
182-day bills
273-day bills
364-day bills
TOTAL2-year bond
3-year bond
5-year bond
7-year bond
10-year bond
15-year bond
TOTAL
AmountOffered(Kbn)
1.4
3.3
4.4
8.2
17.30.3
1.1
1.6
0.3
0.6
0.2
4.0
2016 2017Table2.3. Government SecuritiesTransactions, 2016-2018
BidAmount(K' bn)
1.1
2.6
3.6
8.3
15.60.3
1.1
3.8
1.5
1.6
0.9
9.1
SubscriptionRate
(Percent)83.1
80.0
82.0
100.5
90.684.2
100.8
244.7
482.5
275.6
599.9
227.5
AmountOffered(Kbn)
1.8
3.9
5.9
11.7
23.30.4
1.2
1.9
0.6
1.1
0.7
5.9
BidAmount(K' bn)
1.7
3.7
4.9
19.0
29.30.8
2.7
4.5
0.9
2.9
2.0
13.8
SubscriptionRate
(Percent)94.4
94.9
83.1
162.4
108.5200.0
225.0
236.8
150.0
263.6
285.7
210.3
2018AmountOffered(Kbn2.0
4.2
6.2
12.4
24.70.6
2.1
2.7
0.9
2.7
0.9
9.9
BidAmount(K' bn)
1.2
1.3
1.9
13.9
18.30.4
0.7
1.6
0.8
2.3
2.5
8.3
SubscriptionRate
(Percent)63.46
31.20
29.85
112.75
74.1865.10
34.72
59.90
84.71
86.64
273.06
83.80
Source: Bank of Zambia
CHART 2.12:
K'billion),
Stock ofGovernmentSecurities,(Dec 2014 -Dec 2018
Source:Bank of Zambia
10.9 12.1 13.220.2 18.5
11.6 12.619.8
28.239.8
-
10.0
20.0
30.0
40.0
50.0
60.0
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
K'billion
T-bills Bonds
10
With regard to Government bonds holdings, non-bank �inancial institutions, particularly pensionfunds, continued tohold the bulk ofGovernment bonds. Of the total outstanding stockof Governmentbonds, non-bank �inancial institutions and commercial banks held 71.8% and 19.1%, respectively,while theBankofZambiaheld9.2%of thebonds (Chart2.14).
Non-residentHoldingsofGovernmentSecurities
The holdings of Government securities by non-resident investors declined toK8.1 billion from K8.5billion in 2017 (Chart 2.15). The decline was largely on account of negative market sentimentsemanating from Zambia's credit rating downgrades, the elevated �iscal de�icit and rising externaldebt.
CHART 2.13:TreasuryBillsHoldings(K'billion),2014 - 2018
Source:Bank of Zambia
6.0 6.0 6.6
14.21.9 1.9 0.8
0.5
4.2 4.2 5.8
5.6
-
5.0
10.0
15.0
20.0
25.0
2014 2015 2016 2017
K'billion
Banks Bank of Zambia Non-bank
14.1
0.8
3.6
2018
CHART 2.14:GovernmentBond Holdings(K' billion),2014 - 2018
Source:Bank of Zambia
1.7 1.7 3.05.6 7.61.7 1.7 1.51.4
3.69.3 9.3
15.3
21.2
28.6
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
2014 2015 2016 2017 2018
K'billion
Banks Bank of Zambia Non-bank
CHART 2.15:
US$'bIllion
Non-ResidentInvestorsGovernmentSecuritiesHoldings( ),Dec 2015 -Dec 2018
Source:Bank of Zambia
-
0.50
1.00
1.50
2.00
2.50
3.00
Dec'15 Mar'16 Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 Mar'18 Jun'18 Sep'18
US$'bIllion
Percent
GIR (USD) (LHS) Non-resident (USD) (LHS) Percentage ofGIR (RHS)
0
10
20
30
40
50
60
Dec'18
11
ForeignExchangeMarket
NominalExchangeRate
In nominal terms, the Kwachaweakened against itsmajor trading partner currencies in 2018, on theback of negative market sentiments emanating from the downgrade by rating agencies11 and thestrengtheningof theUSdollar.
The Kwacha depreciated by 9.8% against the US dollar, to an annual average of K10.4739/US$ in2018 from K9.5349/US$ previously (Chart 2.16). Against the Pound Sterling and the euro, the localunit depreciated by 13.6% and 14.6% to averages of K13.9510/£ and K12.3425/€, respectively.Further, the Kwacha lost by 10.4% against the South African rand to an average of K0.7908/ZAR in2018. The depreciation of the Kwacha was despite the net supply of foreign exchange amounting toUS$995.7 million. The major suppliers of foreign exchange continued to be the mining sector,followedby theconstructionsector.
Real EffectiveExchangeRate
TheKwachadepreciatedby6.2%in real termsagainstabasketofmajor tradingpartner currencies in2018. The real effective exchange rate (REER)12 index increased to an average of 113.0 in 2018 from106.4 in 2017 (Chart 2.17). This depreciation was mainly attributed to an increase in the nominaleffective exchange rate (NEER) by 11.2%, of which the South African Rand and the Swiss francaccounted for4.5and3.3percentagepoints, respectively.
CHART 2.16:Exchange Rateof Kwachaagainst majorcurrencies,2015 - 2018
Source:Bank of Zambia
0.50
0.55
0.60
0.65
0.70
0.75
0.80
0.85
0.90
8
10
12
14
16
18
20
31-Dec-15
31-Mar-16
30-Jun-16
30-Sep-16
31-Dec-16
31-Mar-17
30-Jun-17
30-Sep-17
31-Dec-17
31-Mar-18
30-Jun-18
30-Sep-18
31-Dec-18
USD/ZMW GBP/ZMW EUR/ZMW ZAR/ZMW(RHS)
CHART 2.17Real EffectiveExchangeRate Index,Dec 2015 –Dec 2018
Source:Bank of Zambia
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
0
20
40
60
80
100
120
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
REER Index(LHS) %Change(RHS)
11Moody's in July, S&P inAugustandFitch inOctober.12An increase in theREER index indicatesdepreciationandagain in thepricecompetitivenessofacountry's exportsandan increase in therelativepriceof imports, andviceversa.
12
Index
Percent
CapitalMarkets
Trading activity at the Lusaka Securities Exchange (LuSE) slowed down in 2018, with the LuSE All-Share index (LASI) declining by 1.5% to 5,248.4 (Chart 2.18). The fall in the index was largelyattributed to a reduction in the shareprices of selected companies in themanufacturing, banking andservices sectors mainly due to reduced earnings. Market capitalisation fell by 3.0% to K60,493.0million. The securities exchange recorded a net out�low from equities amounting to US$5.4 million,compared toUS$2.5million in2017.The increase in thenet out�lowswas largely attributed to foreignportfolio investors that sold their shareson thebackof increasedriskaversion.
2.3 BALANCEOFPAYMENTS
In 2018, Zambia recorded an overall balance of payments (BoP) de�icit of US $387.8million13 againsta surplus of US $18.3 million in 2017 (Table 2.4). This outturn was mainly due to the unfavourableperformance of the �inancial account whichmore than outweighed the improvements in the currentandcapital accounts.
CurrentAccount
Thecurrent accountde�icit narrowedtoUS$341.4million in2018, representing1.3%ofGDP, fromUS$435.0million in 2017 (1.7%of GDP),mainly due to an improvement in the primary income account.The primary income account de�icit narrowed to US $407.0 million from US $1,144.7 millionfollowingareduction inout�lowsonaccountof lossesattributable to foreignownedenterprises.
However, the country's balance on goods narrowed on account of higher imports which more thanoutweighed the improvement inexport earnings. Thebalanceongoods surplusdeclined toUS$513.9million fromUS $960.2million in 2017. Merchandise imports grew by 17.4% to US $8,515.5million,while merchandise export earnings increased at a lower rate of 9.9% to US $9,029.4 million. Theincrease in imports was due to higher importation of chemicals, vehicles, mineral ores, industrialboilersandequipment,petroleumproductsandelectricalmachineryandequipment.
CHART 2.18Indicators ofLuSE Activity,2015 - 2018
Source:Lusaka SecuritiesExchange
52
54
56
58
60
62
64
66
68
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
K'billion
Market Capitalization(LHS) LASIAll Share Index(RHS)
0
1000
2000
3000
4000
5000
6000
7000
Dec-18
Index
13Preliminary13
14
BPM6ConceptA. Current Account, n.i.e.
Balance on goods
Goods: exports (f.o.b)
ofWhich Copper
Cobalt
NTEs
Gold
Goods: imports (f.o.b)
Balance on Services
Services: credit
ofWhichTransportation
Travel
Services: debit
ofWhichTransportation
Travel
Insurance & Pension Services
Balance on Primary Income
Primary income: credit
Primary income: debit
Balance on Secondary Income
Secondary income, n.i.e.: credit
Secondary income: debit
B. CapitalAccount, n.i.e.Capital account, n.i.e.: credit
C. FinancialAccount, n.i.e.Direct investment: assets
Direct investment: liabilities, n.i.e.
Portfolio investment: assets
Equity and investment fund shares
Debt securities
Portfolio investment: liabilities, n.i.e.
Equity and investment fund shares
Debt securities
Financial derivatives: net
Financial derivatives: assets
Financial derivatives: liabilities
Other investment: assets
Other debt instruments
Central bank
Deposit-taking corporations, except the central bank
Other sectors
Non-financial corporations, households, and NPISHs
Other investment: liabilities, n.i.e.
Other debt instruments
Deposit-taking corporations, except the central bank
General government
Other sectors
Non-financial corporations, households, and NPISHs
D. Net ErrorsandOmissionsE. Overall BalanceF. ReservesandRelated Items
Reserve assets
Credit and loans from the IMF
Exceptional financing
2016-684.4
238.4
6,534.8
4,399.1
112.9
1,770.2
191.2
6,296.4
-487.5
885.2
38.3
682.6
1,372.8
750.0
247.4
111.4
-647.1
77.0
724.1
211.9
246.4
34.5
55.055.0
-347.8176.7
662.9
-27.0
-27.0
0.0
389.7
3.0
386.7
-15.3
-8.8
6.5
1,294.3
1,294.3
-284.9
235.8
1,343.4
1,343.4
723.9
723.9
171.5
161.1
391.2
391.2
24.7256.8-256.8-325.6
-68.8
0.0
Table2.4:Balanceof Payments, [US$'million], 2016-20182017r-435.0
960.2
8,215.5
6,118.6
124.8
1,752.8
156.1
7,255.4
-609.3
864.9
48.8
652.6
1,474.3
841.3
223.3
121.5
-1,144.7
73.1
1,217.9
358.8
448.5
89.7
58.458.4
-364.2-72.0
1,107.5
43.9
0.0
43.9
278.6
-2.5
281.2
-68.2
79.1
147.3
1,763.7
1,763.7
-235.0
150.0
1,848.7
1,848.7
645.3
645.3
-3.7
745.7
-96.7
-96.7
30.7-18.318.3-55.3
-73.6
0.0
2018* *-341.4
513.9
9,029.4
6,658.4
116.7
2,036.1
148.0
8,515.5
-724.3
953.3
53.8
742.2
1,677.5
957.4
279.3
117.4
-407.0
28.4
435.4
275.9
373.96
98.0
66.1866.2
99.945.3
408.4
5.4
0.0
5.4
-232.7
-5.4
-227.4
-32.0
-1.5
30.5
1,591.4
1,591.4
-56.5
236.3
1,411.6
1,411.6
1,334.5
1,334.5
105.9
1,526.2
-297.5
-297.5
-12.6387.8-387.8-449.2
-61.4
0.0
The growth in export earnings was driven by higher copper and Non-Traditional Export (NTE)earnings (Chart 2.19). Copperexport earnings roseby8.8%toUS$6,658.4million, due toan increasein both export volumes and realised prices. Copper export volumes grew by 2.6% to 1,050,336.0mtfrom 1,023,859.1 mt in 2017 and the average realized price for copper, at US $6,339.3 per mt, was6.1%higher thanUS$5,976.1permt in2017.
Cobalt earnings, at US $116.7million in 2018were, however, lower than US $124.8million recordedin 2017 on account of a reduction in export volumes to 1,663.3 mt from 2,676.4 mt. Nevertheless,average realised prices increased to US $70,162.2 per mt from US $46,616.3 per mt, therebymoderating the fall in cobalt export earnings. Gold earnings fell by 5.2% to US $148.0 million, onaccount of a reduction in export volumesdespite the average realizedprices increasingby3.5%toUS$1,173.9permt.
Non-traditional export earnings, at US $2,036.1million in 2018,were16.2%higher thanUS$1,752.8million recorded in 2017. The rise in NTEs was mainly on account of an increase in earnings fromselected products such as sulphuric acid, cane sugar, industrial boilers and equipment, cement andlime, andburley tobacco(Table2.5). 15
Chibu luma M ines - Processing
CHART 2.19ExportEarnings(US $ million),2016 - 2018
Source:Bank of Zambia
-
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
7,000.0
Copper NTEs Cobalt Gold
US$Million
2016 2017 2018
Capital andFinancialAccounts
Thecapital account surplus increased toUS$66.2million fromUS$58.4million in2017due tohigherproject in�lows. The �inancial account, however, registered a de�icit of US $99.9 million against asurplus of US $364.2 million in 2017. The unfavourable Performance in the �inancial account wasmainly explained by a marked reduction in direct investment in�lows and net portfolio investmentout�lows. The current and �inancial account de�icits were mainly �inanced by a drawdown of grossinternational reserves.
GrossInternationalReserves
At end-December 2018, gross international reserves (GIR) declined to US$1.6 billion, representing1.8months of import cover, fromUS $2.1 billion in 2017 (Chart 2.20). The reduction in reserveswaslargely attributed to higher external debt service payments. However, the decline in reserves wasmoderated by net foreign exchange purchases by the Bank of Zambia from the market and mineralroyalty receiptsamounting toUS$346.0millionandUS$134.9million, respectively.
Commodity/ ProductGemstones
Sulphuric Acid
Industrial Boilers and Equipment
Cane Sugar
Gasoil/PetroleumOils
Cement & Lime
Electricity
Raw hides, Skins & Leather
Sulphur
BurleyTobacco
Copper Wire
Scrap of precious metals
Maize &Maize Seed
Electrical Cables
Cotton Lint
Soap
Fresh Fruits &Vegetables
ManganeseOres/Concentrates
Wheat &Meslin
Fresh Flowers
201621.8
42.2
117.2
119.7
9.4
70.9
18.7
11.4
2.7
89.3
68.8
0.2
189.6
15.8
57.2
44.8
14.3
8.0
6.3
10.2
*Table2.5:MajorNon-Traditional Exports(c.i.f ) (US$million), 2016-2018
Source: Bank of Zambia(*) c.i.f = cost, insurance and freight
20176.6
72.6
79.9
137.0
7.9
74.5
69.4
9.1
0.0
88.5
85.3
0.4
97.7
20.0
38.4
45.9
14.7
31.3
0.4
10.9
201810.7
171.3
126.6
124.8
9.6
113.6
83.1
5.4
0.1
104.6
78.9
1.5
44.4
21.2
49.2
53.1
13.0
27.0
0.0
10.1
%Change62.8
135.8
58.4
-8.9
20.6
52.6
19.7
-40.5
3,182.0
18.3
-7.5
284.3
-54.5
5.8
28.2
15.6
-11.2
-13.7
-97.6
-7.1
CHART 2.20GrossInternationalReserves,2015 -2018
Source:Bank of Zambia
0
1
2
3
4
-
500
1,000
1,500
2,000
2,500
3,000
3,500
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
Monthsofimportcover
US'million
Gross International Reserves(LHS) US $millions Months of import cover forGIR (RHS)16
Directionof International Trade
Major ExportMarketsbyRegion
TheNon-EuropeanUnionOrganisation for Economic Cooperation andDevelopment (Non-EUOECD)region continued to be the largest export market for Zambia, accounting for 42.5% of total exports(Chart 2.21). The major export destination in the region was Switzerland14, with copper being themajorexportproduct.
Asia ranked second, accounting for 28.7%of total exports,with China being themajor exportmarket,particularly for copper. This was followed by dual members of the Southern African DevelopmentCommunity (SADC) and Common Market for Eastern and Southern Africa (COMESA), representing12.0% of total exports. The Democratic Republic of Congo was the major market, with inorganicchemicals, sulphur, and sugar being the major export products. SADC exclusively was fourth, andaccounted for 6.6% of total exports, with South Africa being the major export destination in theregion.Majorexportproducts to this region includedcopperwireandelectric cables.
Major Sourcesof ImportsbyRegion
Themajor source of Zambia's imports continued to be SADC exclusively, accounting for 33.4% of thecountry's total imports (Chart 2.22). Imports from the regionmainly comprisedmotor vehicles, ironand steel, and industrial boilers and equipment mainly from South Africa. Asia was second,accounting for 33.0% of Zambia's imports. Major imports from this region included motor vehicles,iron and steel, electrical machinery and equipment, and industrial boilers and equipment andpharmaceuticalproducts.
The SADCandCOMESAdual membersranked third, collectively accounting for 17.9%of Zambia's totalimports. Imports fromthisregioncomprisedmainlycopperoresandconcentrates fromtheDRC.
CHART 2.21Direction ofExports byRegion(US$ millions),2016-2018
Source:Bank of Zambia
-
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0
4,500.0
OECD NON-EU EU ASIA SADC &COMESA (DualMembers)
SADC(Exclusively)
COMESA(Exclusively)
OTHER
2016 2017 2018
CHART 2.22Direction ofImports byRegion(US$ millions),2016-2018
Source:Bank of Zambia
-
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
SADC(Exclusively)
ASIA COMESA &SADC (DualMembership)
EU OECD NON-EU
COMESA(Exclusively)
2016 2017 2018
OTHER
1714Large metal traders based in Switzerland purchase copper and cobalt from Zambia destined for other export markets, mainly China.
2.4 EXTERNALDEBT
GovernmentDebtStock
Preliminary data indicate that the external debt stock of Government increased by 12.7% to US$10,047.8million in 2018 (Table 2.6). The rise in debtwas on account of newdisbursements,mainlyfrom commercial and export creditors. Public external debt as a ratio of GDPwas recorded at 40.0%compared to34.7% in2017.Of the totalGovernmentexternaldebt stock in2018, 78.1%wasowed tocommercial, export and supplier creditors; 18.6% to multilateral creditors; and 3.3% to bilateralcreditors (Table2.6).
GovernmentExternalDebtService
Government external debt service increased by 47.5% to US $983.2 million in 2018 from US $666.7million in 2017. Debt service constituted principal maturities during the year amounting to US$413.5millionand interestandother chargesequivalent toUS$569.7million (Table2.7).
PrivateandParastatalNon-GuaranteedExternalDebt Stock
The total external debt owed by the private sector and the non-guaranteed parastatal sectorincreasedwith preliminary data showing a 10.7%rise toUS $9,144.6million at end-December 2018(Table2.8).The increasewasmainlyattributedtonewdisbursements,mostly tominingcompanies.
CreditorBilateralParis Club
Non Paris Club
MultilateralIMF
World BankGroup
African Development BankGroup
Others
Suppliers/ Export/BanksTotalGovt. Debt
US$'million459.3219.9
239.3
1,464.60182.09
695.7
376.5
210.3
4,927.16,685.9
Table2.6:Government External Debt StockbyCreditor, 2016 –2018
Source: BoZ/Ministry of Finance* Preliminary
%share6.73.2
3.5
21.42.7
10.2
5.5
3.1
71.9100
US$'million373.80127.60
246.21
1,740.13125.3
892.4
433.2
289.2
6,801.618,915.54
%share4.191.43
2.76
19.521.41
10.01
4.86
3.24
76.29100
US$'million332.63101.28
231.35
1,870.9662.32
1,011.69
498.97
-
7,844.1710,047.8
%share3.31.0
2.3
18.60.6
10.1
5.0
-
78.1100
2016 2017 2018*
CreditorBilateralParis Club
Others
MultilateralWorld BankGroup
IMF
ECU/EIB
Others
Suppliers/Bank(commercial)/ExportTotal
201639.71.0
38.7
102.9
7.669.1
0.4
25.8
442.4585.0
Table2.7:Zambia'sOfficial External Debt ServicebyCreditor 2016 –2018(US$'million),
Source: BoZ/Ministry of Finance* Preliminary
201765.16.5
58.6
100.1
14.069.2
1.5
15.4
501.5666.7
201860.46.5
58.6
108.2
17.469.2
1.9
19.7
814.6983.2
18
2.5 FISCALSECTORDEVELOPMENTS
Preliminary data indicate that the �iscal de�icit for 2018, at 7.6% of GDP or K21.1 billion (on a cashbasis), was above the target of 6.1%. This largely re�lected higher spending on capital projects andinterestpayments. Excludinggrants, the �iscalde�icitwas recordedat7.9%ofGDP(Chart2.23).
RevenueandGrants
Total revenueandgrants in2018, atK53.4billion (18.6%ofGDP),were3.7%higher than the targetofK51.5 billion. This outturn was largely attributed to higher collections on some revenue categoriesand non-tax revenue (Table 2.9). Domestic revenue accounted for 98.8% of the total revenue whilegrantsaccounted foronly1.2%.
TaxRevenue
Total tax revenues, atK44.2billion (16.0%ofGDP)were8.2%above the targetofK40.9billion (14.8%of GDP). This outturnwasmainly due to improved compliance on VAT, and higher than programmedcollectionsonPayAsYouEarn(PAYE)and fuel levy.
Non-TaxRevenue
Non-tax revenue, at K8.6 billion, was 4.3% above the target of K8.2 billion largely due to higher thanprogrammed collections from road tolls on account of the increased number of tolling gates. Inaddition, higher thanprogrammedmineral royalty supportedby relatively higher commodity priceson the internationalmarket, contributedto therise innon-taxrevenue.
CreditorPrivateMultilateral
Financial Institutions
Parent and Related Company
Other
ParastatalTotal Private andNon-GuaranteedParastatal Debt
US$'million8,548.0
0.0
1,297.8
6,871.4
378.8
660.8
9,208.8
Table2.8: Private andNon-GuaranteedParastatal External Debt Stock, 2016 - 2018
Source: Bank of Zambia* Preliminary data as at end-September 2018
%Share92.8
0.0
15.2
80.4
4.4
7.2
100.0
US$'million7,619.0
0.0
1,077.4
6,106.8
434.8
642.1
8,261.1
%Share92.2
0.0
14.1
80.2
5.7
7.8
100.0
US$'million8,525.0
0.0
762.3
6,901.5
861.2
619.6
9,144.6
%Share93.2
0.0
8.9
81.0
10.1
6.8
100.0
2016 2017 2018
19
CHART 2.23GovernmentBudget De�icit(% of GDP),2013 – 2018
Source:Bank of Zambia
7.5
4.1
9.4
5.8
5.8
7.6
9.2
4.3
9.6
6.1
6.0
7.9
0
2
4
6
8
10
12
2013 2014 2015 2016 2017 2018
PercentofGDP
Overal Balance (cash Basis) Overal Balance ExcludingGrants (cash Basis)
Grants
Total foreign grants, at K635.4 million were 73.9% lower than the target of K2,438.3 million due toslowin�lows fromcooperatingpartners.
Total Expenditure
Total expenditure including amortisation stood at K79.2 billion (26.6% of GDP), in 2018 against atarget of K71.6 billion. This was largely on account of higher than programmed expenditures oncapital projects. Excluding amortisation, total expenditure, at K73.7 billion, was above theprogrammed levelofK68.4billion (Chart2.24).
RevenueandGrantsDomesticRevenueTaxRevenueIncomeTaxOfWhichPayAsYouEarnTaxCompanyTaxOther IncomeTax
ValueAddedTax(VAT)DomesticVATImport VAT
InsurancePremiumLevyCustomsandExciseDutiesOfWhichCustomsDutiesExciseTaxes
Export DutiesNon-taxRevenueOfWhichFeesandChargesDividendsand InterestMineral Royalty
GrantsProgrammeProjects
K'bn39.438.928.014.98.2
4.0
2.7
8.00.1
7.9
0.15.11.9
3.1
0.010.92.3
4.1
3.1
0.50
0.5
Table 2.9:CentralGovernment RevenueandGrants, 2016 –2018
Source: Ministry of Finance
%ofGDP18.518.213.27.03.8
1.9
1.3
3.70
3.7
02.40.9
1.5
05.11.1
1.9
1.4
0.20
0.2
K'bn43.042.636.516.48.7
4.5
3.3
13.95.6
8.3
0.16.12.9
3.2
0.06.13.4
1.8
2.4
0.50
0.5
%ofGDP17.617.414.96.73.5
1.8
1.3
5.72.3
3.4
02.51.2
1.3
02.51.4
0.7
1.0
0.20
0.2
K'bn51.549.140.920.310.2
6.1
4.1
12.44.1
8.3
0.18.03.3
4.7
0.18.24.2
0.1
3.5
2.40
2.4
%ofGDP18.617.714.87.33.7
2.2
1.5
4.51.5
3.0
02.91.2
1.7
03
1.5
0
1.4
0.90
0.9
2016 2017
K'bn53.452.844.220.210.4
6.0
3.8
17.46.5
10.9
0.16.63.1
3.4
08.63.9
0.1
3.9
0.60
0.6
%ofGDP19.319.1167.33.8
2.2
1.4
6.32.3
3.9
02.41.1
1.2
03.11.4
0
1.4
0.20
0.2
2018Target Prel (Releases)
CHART 2.24
Percent of GDP)
TotalExpenditure(2014 - 2018
Source:Ministry of Finance
22.6
18.5
4.1
28.1
20.7
7.2
27.3
20.3
3.9
24.3
19.1
28.6
18.1
0
5
10
15
20
25
30
35
Total Expenditure Current Expenditure Assets
PercentofGDP
2014 2015 2016 2017 2018
3.5
8.4
20
Current Expenditure
In 2018, total current expenditure, at K50.1 billion, was 4.5%below the target of K52.4 billion due toconstrained �inancing (Table 2.10). The major categories of expenditure that were lower thanprogrammed includeduseofgoodsandservices,personal emolumentsandsocial bene�its.
Assets
Total expenditureonassets in2018, atK23.1billion,was57.8%above the targetofK14.7billion. Theelevated expenditure on assets was attributed to higher than programmed disbursements on roadsand foreign �inancedcapitalprojects.
Deficit Financing
Total net budget �inancing of K21.1 billion in 2018was 24.7%above the target of K16.9 billion (Table2.11).Thede�icitwasmainly �inanced throughexternalborrowing.
Total Expenditure (excl. amortisation)Current Expenditure
Wages and Salaries
Use of Goods and Services
Interest on Public Debt
Domestic Debt
Foreign Debt
Grants &Other Payments
Social Benefits
Other Expenses
Liabilities
Assets
Non-Financial Assets
Financial Assets
K'bn58.543.4
18.8
4.8
7.4
4.0
3.4
10.9
0.5
0.9
0.1
8.4
8.1
0.2
Table2.10:CentralGovernment Expenditures, 2016 –2018
Source: Ministry of Finance
%ofGDP27.420.3
8.8
2.2
3.5
1.9
1.6
5.1
0.2
0.4
0.1
3.9
3.8
0.1
K'bn59.547.0
20.0
4.8
9.8
5.0
4.8
9.2
1.9
1.1
2.0
8.6
8.3
0.3
%ofGDP24.319.2
8.2
2.0
4.0
2.1
2.0
3.7
0.8
0.4
0.8
3.5
3.4
0.1
K'bn68.452.4
23.1
7.4
10.9
6.8
4.2
8.0
1.8
1.2
1.3
14.7
14.2
0.4
%ofGDP24.718.9
8.3
2.7
3.9
2.4
1.5
2.9
0.6
0.4
0.5
5.3
5.1
0.2
2016 2017
K'bn73.750.1
21.9
5.7
13.6
7.4
6.2
7.4
1.0
0.6
0.4
23.1
23.1
0.0
%ofGDP26.618.1
7.9
2.1
4.9
2.7
2.2
2.7
0.3
0.2
0.2
8.4
8.3
0.0
2018Target Prel (Releases)
21
Dual carriage way -Great North Road
2.6 REALSECTORDEVELOPMENTS
NationalOutput
Preliminarynational accountsdata shows that theeconomygrewby3.7%in2018compared to3.5%in 2017 (Table 2.12), driven by a strong rebound in information and communications activities,which contributed 1.1 percentage points to overall annual economic growth. The wholesale andretail trade,miningandmanufacturingsectorsalsocontributedsigni�icantly togrowth in2018.
Agriculture,ForestryandFisheries
Theagriculture, forestryand �ishing sector recordeda13.8%decline inoutput in2018,mainlydue toinadequate rainfall and challenges in the distribution of inputs in the agriculture sub-sector.Agriculture production formostmajor crops declined during the 2017/2018 farming season due toprolonged dry weather conditions across the southern half of the country. In particular, maizeproduction suffered from additional challenges linked to sporadic outbreak of the fall army wormsand the bottlenecks in the rollout of the e-voucher system under the farmer input support
Total FinancingDomesticBridge loan
Com. Banks
Carry-over funds
Amortisation
ExternalProgramme Loans
Project Loans
Amortisation
K'bn12.56.65.8
0.4
0.0
-4.7
4.20.0
4.8
-2.0
Table2.11:Budget Deficit Financing, 2016 –2018
Source: Ministry of FinanceDash (-) means not available
%ofGDP5.93.12.7
0.2
0.0
-2.2
2.00.0
2.2
-0.9
K'bn15.011.90.0
0.2
0.0
-0.5
3.11.3
3.6
-1.8
%ofGDP6.14.90.0
0.1
0.0
-0.2
1.30.5
1.5
-0.7
K'bn16.910.90.0
0.0
0.0
0.2
6.01.4
7.6
-3.0
%ofGDP6.14.00.0
0.0
0.0
-0.1
2.20.5
2.7
-1.1
2016 2017
K'bn21.17.10.0
0.0
0.0
2.1
14.00.0
17.4
-3.4
%ofGDP7.62.60.0
0.0
0.0
-0.8
5.10.0
6.3
-1.2
2018Proj. Preliminary
Kindof EconomicActivityAgriculture, Forestry and Fishing
Mining andQuarrying
Manufacturing
Electricity, Gas, steam and air
Water supply, sewerage, waste management
Construction
Wholesale and Retail Trade
Transportation and Storage
Accommodation and food services
Information and communications
Financial Institutions & Insurance
Real Estate & Business Services
Public admin. and defence; social security
Education
Human health and social work activities
Arts, entertainment and recreation
Other service activities
Growth inRealGDP(%)
20163.7
7.3
1.9
-13.6
-4.1
10.2
-0.1
1.2
-2.2
17.4
-2.4
3.2
9.7
4.7
1.6
0.5
3.2
3.8
Table2.12: RealGDPGrowth (%), 2016 –2018
Source:Central Statistical Office/ Ministry of Finance*Preliminary estimates
20179.8
3.0
4.4
23.6
-3.1
6.4
0.7
7.8
6.1
-13.2
-5.8
2.9
2.8
6.7
17.4
-4.0
2.8
3.5
2018*-13.8
5.9
5.3
12.0
4.3
5.0
3.5
4.5
1.8
27.8
3.9
2.5
-0.6
3.6
16.0
12.2
2.5
3.7
22
programme (FISP). Consequently, maize output dropped by 33.6% to 2.4 million mt, the lowestexpectedyield since the2014/15cropseason(Table2.13).
MiningandQuarrying
The mining and quarrying sector registered positive growth in 2018, growing at 5.9% compared to3.0% in 2017 (Table 2.12). This was driven by an increase in copper production by 6.8% to 851,087mt in 2018 from 797,266mt in 2017. Stable electricity supply, favourable international prices and aramp-up in production by some mines supported the increase in copper production. However, coalproductiondeclinedby27.9%to60,000mt.
Manufacturing
Economic activity in themanufacturing sector increased in 2018, growing at 5.3%compared to4.4%in 2017 (Table 2.12). Stable power supply, coupled with stable consumer demand, helped to boostgrowth in thesector.
CropMaize
Wheat
Seed cotton
Sorghum
Rice
Millet
Groundnuts
Soya beans
Mixed Beans
Sweet Potatoes
VirginiaTobacco (kg)
BurleyTobacco (kg)
2016/173,606,549
193,713
89,293
17,337
38,423
32,566
168,699
351,416
45,938
206,676
12,079
8,416
Table2.13:ComparativeNationalCropProductionEstimates(metrictonnes) 2015–2018
Source: Ministry ofAgriculture and Livestock/ Central Statistical Office
2017/182,394,907
114,463
88,219
13,130
43,063
32,278
181,772
302,720
52,351
183,280
13,382
11,512
Growth (Percent)-33.6
-40.91
-1.2
-24.3
12.1
0.9
7.8
13.9
14.0
-11.3
10.8
36.8
2015/162,873,052
156,555
111,902
14,107
26,675
29,973
131,562
267,490
45,351
231,882
12,540
6,476
23
2018AgricExpo
AccommodationandFoodServices
Mobile Subscription
Fixed Internet Subscription
Mobile Internet Usage
DomesticOutgoingTraffic (Minutes)
Domestic IncomingTraffic (Minutes)
International IncomingTraffic (Minutes)
InternationalOutgoingTraffic (Minutes)
SMS/MMSTraffic
201713,438,539
32,842
7,723,855
9,967,432,124
1,614,112,062
61,088,178
43,146,291
7,228,443,842
Table2.15Usageof selected Informationandcommunicationservices
Source: ZICTA
201815,470,270
44,711
9,825,716
13,975,890,482
2,031,404,096
37,414,374
39,891,483
10,060,039,566
Percent change15.1%
36.1%
27.2%
40.2%
25.9%
-38.8%
-7.5%
39.2%
201612,017,034
35,919
5,156,365
1,500,328,930
1,089,330,526
72,816,296
86,757,866
7,070,191,769
24
National ParkKafue
Lower Zambezi
Mosi-o-Tunya
South Luangwa
Lusaka National Park
Total
20179,733
9,368
21,945
38,331
14,850
94,227
Table 2.14:Tourist Arrivalsat MajorNational Parks, 2016-2018
Source: ZambiaWildlife Authority
201813,721
11,161
20,378
43,469
11,769
100,498
Percent Change41.0%
19.1%
-7.1%
13.4%
-20.7%
6.7%
201611,347
12,143
20,303
46,510
17,161
107,464
25
NewKennethKaunda InternationalAirport under construction
Financial SystemRegulation and Supervision
3.0
27
3.0 FINANCIALSYSTEM REGULATION& SUPERVISION3.1 BANKINGSECTOR
Structureof theBankingSector
The number of licensed commercial banks operating as at end-December 2018 increased to 18 from17 as at end-December 2017. Of these, eightwere subsidiaries of foreign banks15, sevenwere locallyownedprivatebanks16 andthreewerepartiallyownedbyGovernment.
PerformanceandConditionof theBankingSector
The overall �inancial performance and condition of the banking sector at end-December 2018 wasrated satisfactory. This ratingwasonaccount of satisfactory capital adequacy, earningsperformanceand liquidityposition.Thesector'sassetqualitywas, however, adversely rateddue to thehigh levelofnon-performing loans (NPLs), as re�lected in the ratio of NPLs to gross loans and advances, whichpersistedabove the10.0%prudential threshold (Table3.1).
Despite the overall performance and condition of the sector being satisfactory, the performance ofsome banks remained a source of concern owing to their high NPLswhich adversely impacted theirearnings performance (Tables 3.2 and 3.3). The Bank of Zambia (BoZ) continued to monitor thesebankscloselyandrecommendedcorrectivemeasures toprevent furtherdeterioration.
Primary capital adequacy ratio
Total regulatory capital adequacy ratio
Net non-performing loans to regulatory capital
Gross non-performing loans to total loans
Net non-performing loans to total loans
Net non-performing loans to net loans
Provisions to non-performing loans
Earning assets to total assets
Net operating income to total assets
Non-interest expense to total assets
Provision for loan losses to total assets
Net interest income to total assets
Return on assets
Return on equity
Efficiency ratio
Liquid assets to total assets
Liquid assets to deposits and short-term liabilities
201623.4
26.2
7.6
9.7
2.8
3.0
69.6
69.2
10.8
7.7
0.7
6.1
2.5
12.3
81.5
39.1
49.0
Table3.1: Financial Performance Indicators(Percent), 2016 - 2018
Source: Bank of Zambia
201724.5
26.5
10.8
12.0
4.0
4.4
66.5
79.5
11.0
7.3
0.8
6.4
3.1
15.4
65.1
45.9
56.5
201820.1
22.1
4.3
11.0
1.5
1.6
83.8
86.4
12.6
8.5
1.0
7.7
2.8
15.4
73.7
45.9
57.0
PerformanceRatingSatisfactory
Fair
Marginal
Unsatisfactory
Total
201610
6
1
1
18
Table3.2:CompositeRatingsof BankingSectorFinancial PerformanceandCondition, 2016 - 2018
Source: Bank of Zambia
20179
3
3
2
17
201810
3
3
1
1717
201686.1
11.6
0.3
2.0
100.0
201782.3
3.9
8.8
5.0
100.0
201882.2%
6.8%
9.8%
1.2%
100.0
201688.4
8.6
1.0
2.0
100.0
201783.7
3.6
7.8
4.9
100.0
201884.5%
5.7%
8.5%
1.3%
100.0
Numberof Banks Percent ofTotalAssets Percent ofTotal Deposits
15Theseare locally incorporatedsubsidiariesof foreignbanks.16Banks incorporated locally which are neither subsidiaries of foreign banks nor partly owned by Government. A locally owned bank is a bankwhere at least 51% of its equity is owned by Zambian Citizens and/or entities incorporated in Zambia that have at least 51% equity owned byZambiancitizens.
17Total number of banks is 18. However analysis excludes Zambia Industrial Commercial Bank (ZICB) which only commenced submission ofreturns in January2019.
28
BALANCESHEET
AssetStructure
The asset structure of the banking sector remained largely unchanged as net loans and advancescontinued to account for the largest component of total assets at 32.0%, followed by investments inGovernment securities and balances with �inancial institutions abroad at 24.9% and 23.8%,respectively (Table3.4a)
The total assets of the banking sector grew by 14.5% to K82, 098.8 million at end-December 2018fromK71, 710.4million at end-December 2017 (Chart 3.1). The growthwasmainly in balances with�inancial institutions abroad, and net loans and advances, which went up by 39.8% and 17.5%,respectively.Thegrowth innet loansandadvanceswaspartlyattributedto theavailabilityof loanablefunds following the BoZ's monetary policy decision to lower the statutory reserve ratio to 5% from8%inFebruary2018.
LiabilitiesStructure
Deposits continued to account for the largest proportion of the liabilities of the banking sector at74.6% (Table 3.4b). Total deposits comprised of core deposits (demand and savings) whichaccounted for 71.7% of total deposits, while the remaining 28.3% were non-core deposits (timedeposits).
PerformanceRatingSatisfactory
Fair
Marginal
Unsatisfactory
Total
201611
3
1
3
18
Table3.3:Component Ratingsof theBankingSector Financial PerformanceandCondition, 2016 - 2018
Source: Bank of Zambia
201713
0
0
4
17
201810
1
0
4
17
20168
4
5
1
18
20178
5
2
2
17
20189
4
3
1
17
20167
6
3
2
18
20177
4
2
4
17
201810
3
0
3
17
CapitalAdequacy Asset Quality Earnings201614
2
1
1
18
20179
6
1
1
17
201811
5
0
1
17
Liquidity
Net Loans and advances
Balances with Foreign Financial Institutions
Balances with Bank of Zambia
Investments inGovernment Securities
Other
Total
201633.6
19.2
18.1
15.5
13.6
100.0
Table 3.4a:Asset Structure (Percent), 2016 - 2018
Source: Bank of Zambia
201731.1
19.5
9.0
26.7
13.6
100.0
201832.0
23.8
6.2
24.9
13.1
100
Deposits
Other Liabilities
Balances Due to Financial InstitutionsAbroad
Other Borrowed Funds
Balances Due to Financial Institutions in Zambia
Others
Total
201683.2
6.8
5.9
2.9
1.1
0.2
100.0
Table3.4b: LiabilityStructure (Percent), 2016 - 2018
Source: Bank of Zambia
201785.8
5.8
4.1
2.4
1.2
0.5
100.0
201874.6
5.4
5.8
2.0
0.6
11.6
100.0
29
PERFORMANCEINDICATORS
CapitalAdequacy
The regulatory capital of the banking sector was rated satisfactory. The sector's primary and totalregulatory capital increased by 9.6% and 11.6% to K9, 160.8 million and K10, 079.7 million at end-December 2018, respectively. This outturn was largely attributed to fresh capital injections in somebanks.
Risk weighted assets (RWA) grew proportionally higher than the growth in capital, resulting in theprimary and total regulatory capital adequacy ratios declining to 20.1% and 22.1% from 24.5% and26.5% at end-December 2017, respectively. The capital adequacy ratios, however, remained wellabove theminimumregulatoryrequirementsof5.0%and10.0%, respectively (Chart3.2).
The ratio of net NPLs to regulatory capital declined to 4.3% from 10.8% at end-December 2017,implying that the amount of capital at risk fromNPLs had decreased due to increased provisions forpotential loan losses.
AssetQuality
The banking sector's asset quality was rated fair18 on account of high NPLs. The NPL ratio, however,declined to 11.0% from 12.0% at end-December 2017, on account of gross loans and advancesincreasing by a highermargin relative to the rise inNPLs. GrossNPLs increased by9.2% toK3, 174.8million, while gross loans and advances increased by 19.5% to K28, 990.2 million (Table 3.5).AlthoughtheNPLratiodeclined in2018, it remainedabove theprudential thresholdof10.0%.
CHART 3.1:Total Assetsand DepositLiabilities,(K' billion)2014 – 2018
Source:Bank of Zambia
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
K'billion
Total assets Total Deposit liabilities
CHART 3.2:RegulatoryCapital, RWAand CapitalAdequacyRatios,2014 – 2018
Source:Bank of Zambia
0
5
10
15
20
25
30
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
K'billion
Percent
Total RegulatoryCapital (LHS) RiskWeightedAssets (LHS) CaptialAdequacy Ratio (RHS)
18Fair rating means asset quality or credit administration practices are less than satisfactory.
30
On a sectoral basis, the agriculture, forestry, �ishing and hunting sector accounted for the largestproportionof grossNPLsat32.4%(Table3.6).With regard to intra-sector19 NPLs the restaurants andhotels, and construction sectors continued tobe theworst performing as evidencedby thehigh intra-sectorNPLratioof79.4%and37.9%, respectively (Table3.7).
Risk-AbsorbingCapacity
The banking sector's coverage ratio20 rose to 86.4% from 66.5% at end-December 2017, due to a41.8% increase in allowances for loan losses (ALLs) toK2,742.3million. The increase in the coverageratio implied that thesector's capacity toabsorbpotential loan losseshad increased(Chart3.3).
Gross loans (K' billion)
NPLs (K 'billion)
Substandard (K' billion)
Doubtful (K' billion)
Loss (K' billion)
NPL ratio (Percent)
Substandard
Doubtful
Loss
201623.3
2.3
0.2
0.2
1.8
9.7
1.0
0.9
7.8
Table 3.5:GrossLoansandNon-PerformingLoans, 2016 - 2018
Source: Bank of Zambia
201724.3
2.9
0.2
0.3
2.4
12.0
0.9
1.1
10.0
201829.0
3.2
0.3
0.2
2.6
11.0
1.0
0.7
9.0
SectorAgriculture, forestry, fishing and hunting
Mining and quarrying
Manufacturing
Electricity, gas, water and energy
Construction
Wholesale and retail trade
Restaurants and hotels
Transport, storage and communication
Financial services
Personal loans
Other sectors
Total
201626.7
1.9
6.6
0.5
7.1
11.7
10.6
5.4
2.9
12.3
14.4
100.0
Table3.6:Sectoral Distributionof NPLs(Percent), 2016 –2018
Source: Bank of Zambia
201732.7
3.0
5.1
0.6
9.3
11.8
9.0
5.1
1.6
9.4
12.3
100.0
201832.4
3.0
5.1
0.6
9.4
11.7
8.9
5.1
1.6
10.3
12.1
100.0
SectorAgriculture, forestry, fishing and hunting
Mining and quarrying
Manufacturing
Electricity, gas, water and energy
Construction
Wholesale and retail trade
Restaurants and hotels
Transport, storage and communication
Financial services
Personal loans
201615.2
2.9
5.0
2.3
17.7
11.1
74.1
11.4
15.5
4.4
Table3.7: Intra-SectorNPLRatios(Percent), 2016 –2018
Source: Bank of Zambia
201726.7
5.7
10.3
3.5
29.9
15.7
86.3
13.9
18.6
17.7
201828.3
4.8
20.2
2.3
37.9
15.0
79.4
13.1
16.2
11.2
19Intra-sector NPLs refer to the loans within the sector that are not performing.20NPL Coverage ratio is the proportion of the gross NPLs covered by the provisions for loan losses (PLL) [i.e., PLL/NPLs].
EarningsPerformanceandProfitability
The banking sector's earnings performance was satisfactory. The sector's pro�it before tax (PBT)increased by 8.0% to K2, 228.3 million. The increase in pro�it was mainly on account of higher netinterest income driven by earnings from Government securities and balances with �inancialinstitutions abroad. This was despite loan loss provisions increasing by 28.9% to K719.6 millionfollowing the implementationof the InternationalFinancialReportingStandard,9 (IFRS921 .
The banking sector's return on assets and the return on equity ratios decreased to 3.0% and 14.8%,from 3.1% and 15.4% at end-December 2017, respectively. This was on account of proportionatelyhigher increases in the sector's total assets and equity compared to the increase in net pro�it (Table3.8).
Non-interest expenses increased by 16.3% to K6,089.1 million, resulting in the decline in theef�iciencyratio22 deteriorating to73.7%in2018 from65.1%in2017(Chart3.4).
31
CHART 3.3:Non-PerformingLoans,Provisions andNPL CoverageRatio (Percent),2014-2018
Source:Bank of Zambia
60.0
62.0
64.0
66.0
68.0
70.0
72.0
74.0
76.0
78.0
0
0.5
1
1.5
2
2.5
3
3.5
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Gross non-performing loans (NPL) (LHS) Allowance for Loan Losses (ALL) (LHS) NPLCoverage Ratio (RHS)
ParticularsInterest Income
Interest Expenses
Net Interest Income
Non-Interest Income
NetOperating Income
Non-Interest Expenses
Pre-ProvisionOperating Profit (PPP)
Loan Loss Provisions
Profit BeforeTaxation
Taxation
Net Profit
20166.6
2.6
3.9
3.0
7.0
5.0
2.0
0.4
1.6
0.6
1.0
Table3.8:Summarised IncomeStatement (K’billion), 2016 - 2018
Source: Bank of Zambia
20177.2
2.6
4.6
3.2
7.9
5.2
2.6
0.6
2.1
0.7
1.3
20187.5
2.0
5.5
3.6
9.0
6.1
2.9
0.7
2.2
0.9
1.4
21Implementationof IFRS9changed themodel forcomputing loan lossprovisions from incurred loss toexpected loss.22This is a ratio of non-interest expenses to net operating income. An increase in the ratio means that a bank is losing a larger proportion of itsincometooverheadcosts.
Percent
Percent
32
In 2018, the principal sources of income for the banking sector continued to be interest income fromloans and advances accounting for 35.5% of total income, and interest income from securitiesaccounting for27.8%(Chart3.5).
LiquidityandFundsManagement
The sector's liquidity positionwas satisfactory23. The ratio of liquid assets to total deposits and shortterm liabilities (liquidity ratio) remainedbroadlyunchangedat 57.0%,while the ratio of liquid assetsto totalassets rose to47.0%from45.9%(Chart3.6).
CHART 3.4:Net OperatingIncome,Non-InterestExpenses andEf�iciency Ratio,2014 – 2018
Source:Bank of Zambia
0
10
20
30
40
50
60
70
80
90
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
K'billion
NetOperating Income Non-Interest Expenses Efficiency Ratio
CHART 3.5:OperatingIncome(Percent)
Source:Bank of Zambia
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Interest income from loans and advances
Interest income from securities
Other interest income
Commissions, fees and service charges
Foreign exchange income
Other noninterest income
K'Billion
Dec-18 Dec-17 Dec-16 Dec-15
4.5 5.0
CHART 3.6:Liquid AssetsRatio andLiquidityRatio(Percent),2014 – 2018
Source:Bank of Zambia
-
10.0
20.0
30.0
40.0
50.0
60.0
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Percent
Liquid Asset ratio Liquidity ratio
23Satisfactory liquidity means the institution has access to suf�icient liquid assets and sources of funds on acceptable terms to meet presentand anticipated liquidity needs.
Percent
33
Overall, customer deposits continued to constitute the largest source of funding for the sector,accounting for74.6%(Table3.9andChart3.7).
MarketShare
Subsidiaries of foreignbanks continued todominate the banking sector in termsof total assets, loansand deposits, followed by banks partly owned by the Government. With regard to pro�itability, thepattern remained largely the same, with the subsidiaries of foreign banks accounting for the largestproportionof thepro�itbefore tax (Table3.10).
BankBranches
Bank branches continued to be concentrated in Lusaka and the Copperbelt Provinces, whichcollectively accounted for 64.1%, followed by Southern Provincewhich accounted for 12.5%of totalbranches. Luapula Province had the lowest branch coveragewith only 1.9%of total branches (Table3.11). Following themerger of African Banking Corporation (Z) Limited (trading as Atlas Mara) andFinance Bank Zambia Plc, the Bank of Zambia granted approval for African Banking Corporation (Z)Limitedtoclose13branches in locationswherebothbankshadbranches.
Customer deposits
Borrowings
Shareholders' funds
All other liabilities
Total funding
201672.1
9.0
13.0
5.9
100.0
Table3.9: BankingSector FundingSources(Percent), 2016 –2018
Source: Bank of Zambia
201774.9
7.3
12.7
5.1
100
201874.6
8.7
11.3
5.4
100
CHART 3.7:Loans, Deposits,and Loan-to-Deposit Ratio,2014 – 2018
Source:Bank of Zambia
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Percent
K'billion
Loans Deposits Loan-to-deposit ratio
SubsidiariesofforeignbanksBanks with
Government stake
Local private banks
Total
Asset70.8
16.6
12.6
100
Table3.10:Distributionof theAssets, LoansandDepositsbyOwnershipType (Percent), 2016 - 2018
Source: Bank of Zambia
Loans68.1
19.6
12.3
100
Deposits70.4
17.7
11.9
100
PBT97.2
8.9
-6.1
100
Assets73.4
18.1
8.5
100
Loans69.2
20.1
10.7
100
Deposits73.6
18.5
7.9
100
PBT82.3
3.3
14.4
100
Assets73.0
18.2
8.7
100
2016 2017Loans67.9
21.8
10.2
100
Deposits72.2
19.7
8.1
100
PBT68.3
28.1
3.6
100
2018
Kalulushi
NationalSavings
andCreditB
ank
Zanaco
Chirundu
AtlasM
ara
6
25x14
x7
x15
x1
x2x4
4 455 107
x2 x4x4
x6
x3
Maamba
Mfuwe
x4
x3
Sinazeze
x14
2017
ZambiaIndustrialC
ommercialBa
nk
x3
Kalumbila Lu
mwana
34
3.2 NON-BANKFINANCIALINSTITUTIONSSECTOR
Structureof theNBFIsSector
As at end-December 2018, the number of NBFIs was 129, comprising leasing �inance institutions,building societies, micro�inance institutions (consumer and enterprise lending), bureaux de change,a savingsandcreditbank, adevelopmentbankandacredit referencebureau(Table3.12).
PerformanceandConditionof theNBFIsSector
The overall �inancial performance and condition of the NBFIs sector, based on the 10225 rated NBFIs,was fair. Of the rated NBFIs, 32 were satisfactory, 38 were fair, 23 were marginal, while 9 wereunsatisfactory(Table3.13).
Bank
AB Bank Zambia
Access BankZambia
BancABCZambia
Bank of China Zambia
Barclays Bank Zambia
Cavmont Bank
Citibank
Ecobank Zambia
First Alliance Bank
First Capital Bank
First National Bank
Indo Zambia Bank
Investrust Bank
Stanbic Bank Zambia
Standard Chartered Bank
United Bank for Africa
ZICB
ZNCB
Total
20167
6
20
2
56
18
2
10
5
5
24
32
25
28
21
5
0
68
408
Table 3.11:BankBranches, 2016 –2018
Source: Bank of Zambia
20177
7
76
2
45
20
2
7
5
6
4324
31
30
33
23
5
0
68
410
20187
8
63
2
44
19
2
6
6
7
23
30
27
33
17
5
2
71
372
No. of Branches
Typeof Institution
Leasing Finance Institutions
Building Societies
Bureaux deChange
Savings andCredit Institutions
Microfinance Institutions
Development Finance Institutions
Credit Reference Bureaux
Total
20168
4
73
1
34
1
1
122
Table 3.12:Structureof NBFIs, 2016 –2018
Source: Bank of Zambia
20178
3
80
1
34
1
1
128
20188
3
80
1
35
1
1
129
Numberof Institutions
24The number of bank branches was 25 as at end 2017. However, the bank included bank agents to arrive at 43.25The total number of licensedNBFIswas 129. Out of the 129, eleven bureau de change, one leasing company and threeMFIs had not submittedreturns at the time of reporting, while one MFI had its license suspended for a period of six months and another submitted a wrong return.Seven bureaux de change were not operational. The other institution is a credit reference bureau that is not required to submit prudentialreturns.
35
The sector's regulatory capital and sensitivity to market risk were rated satisfactory, while theearnings performance and liquidity management were rated fair. However, asset quality was ratedunsatisfactorydue to thehighnon-performing loans (NPL) ratiowhichat17.6%, remainedabove themaximumprudential limitof10.0%.
PerformanceandConditionof theSub-Sectors
Apart fromthe consumer-lendingMFIs sub-sectorwhoseoverall ratingwas satisfactory, all theothersubsectorshad less thansatisfactoryoverall ratings.
LeasingFinanceInstitutions
Theoverall �inancial condition andperformanceof the leasing and �inancial businesses sub-sector in2018 was rated fair. The sub-sector's regulatory capital, earnings performance and liquiditymanagementweresatisfactory,whileassetqualitywasratedunsatisfactory(Table3.14).
BalanceSheet
Assets
The sub-sector's total assets declined by 4.2% to K488.1 million at end-December 2018, mainlydriven by a decrease of 28.9% and 28.6% in the balances held with domestic institutions and otherassets respectively. The asset structure of the sub-sector as at end-December 2018 is shown in Table3.15.
PerformanceRatingStrong
Satisfactory
Fair
Marginal
Unsatisfactory
Total
20162
6
6
28
2
34
1
23
3
2
106
Table3.13:PerformanceRatingsandFinancialCondition, 2016 –2018
Source: Bank of Zambia
20170
0
5
29
5
30
0
17
3
4
93
20180
0
3
29
6
32
2
21
3
6
102
Numberof InstitutionsLicenceType
Deposit-taking
Non-Deposit-taking
Deposit-taking
Non-Deposit-taking
Deposit-taking
Non-Deposit-taking
Deposit-taking
Non-Deposit-taking
Deposit-taking
Non-Deposit-taking
Percent ofTotalAssetsfor 2018
0.0
0.0
45.0
14.2
8.7
3.4
4.5
16.3
5.9
2.1
100
PerformanceCategory
Strong
Satisfactory
Fair
Marginal
Unsatisfactory
Total
20160
2
0
3
1
6
Table3.14:CompositeRating for theLeasingFinanceSub-Sector, 2016 –2018
Source: Bank of Zambia
20170
1
3
1
1
6
20180
1
2
3
0
6
Numberof LeasingCompanies2016
0
45
0
12
43
100
20170
31
31
21
17
100
20180
16
49
35
0
100
Proportionof IndustryAssets(Percent)
36
Liabilities
Total liabilities dropped by 47.5% to K348.2 million at end-December 2018 largely driven bydecreases in balances due to domestic institutions, foreign institutions and other borrowed fundsfollowing the cancellation of the licence of one of the leasing institutions, which constituted 52.2%oftotal sub-sector liabilities.
CapitalAdequacy
The regulatory capital of the leasing sub-sector was satisfactory as at end-December 2018. The sub-sector's capital adequacy ratio was 45.3%, up from negative 24.4% as at end-December 2017. Theimprovement in the capital adequacy ratio was due to an increase in regulatory capital to K176.5million fromnegative K143.6million at end-December 2017 following the cancellation of the licenceofan insolvent leasing institution(Chart3.8).
AssetQuality
The asset quality of the leasing sub-sector remained unsatisfactory as at end-December 2018.DespiteNPL ratio declining to 23.7%at end-December 2018 from67.2%at end-December 2017, theratio still remainedabove themaximumprudential limit of10.0%.Thedecline in theNPLratiowasasa result of the cancellation of the licence of one of the leasing institutions,which accounted for 68.8%of the sub-sector's NPLs. Consequently, the NPL coverage ratio improved to 126.9% from 91.3% atend-December2017(Chart3.9)
Asset ClassLoans and advances
Investments inGovernment Securities
Balances with Domestic Institutions
Other
Total
201858.4
2.0
7.6
32.0
100.0
Table 3.15:Asset Structure (Percent), 2017- 2018
Source: Bank of Zambia
201751.2
0.0
8.2
40.6
100.0
CHART 3.8:LeasingFinanceRegulatoryCapital(K'millions),2014 – 2018
Source:Bank of Zambia
-250.0
-200.0
-150.0
-100.0
-50.0
0.0
50.0
100.0
150.0
200.0
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
Regulatory Capital MinimumCapital
37
EarningsPerformance
The earnings performance of the sub-sector was unsatisfactory in 2018. The sub-sector recorded aloss before tax of K49.9 million compared to a loss before tax of K276.6 million reported in 2017(Chart 3.10). The decrease in the loss was largely due to an increase in interest and non-interestincome.
Liquidity
The liquidity position of the leasing sub-sector was satisfactory. The ratio of liquid assets to totaldeposits and short-term liabilities was 40.3% at end-December 2018, andwas above the prudentialminimumrequirementof15.0%(Chart3.11).
CHART 3.9:Leasing FinanceTotal Loans,GrossNon-PerformingLoans andProvision forNon-PerformingLoans,2014 – 2018
Source:Bank of Zambia
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2014 2015 2016 2017 2018
Total Loans Gross NPLs Provisions for NPLs NPL Ratio
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
CHART 3.10:LeasingFinancePro�it beforeTax (Kmillion),2014 – 2018
Source:Bank of Zambia
50.8
-5.8
-243.8-276.6
-300
-250
-200
-150
-100
-50
0
50
100
2014 2015 2016 2017
Profit (Loss) BeforeTax
-49.9
2018
CHART 3.11:Leasing FinanceLiquidityTrend(Percent),2014 – 2018
Source:Bank of Zambia
0
5
10
15
20
25
30
35
40
45
50
Dec-14 Dec-15 Dec-16 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18
Liquid Ratio Acceptable Minimum
38
K’million
K’million
Percent
Percent
ForeignExchangeExposure
The foreign exchange exposure of the leasing �inance sub-sector was unsatisfactory. The ratio ofoverall foreign exchange exposure to regulatory capital at end-December 2018 was 40.2%, and wasabove the maximum prudential limit of 25.0%. The unsatisfactory foreign exchange exposure waslargely explained by two institutions in the sub-sector, accounting for 32.0% of the sub-sector totalassets, thatobtained �inancing fromabroad.
BuildingSocieties
The overall �inancial performance and condition of the building societies sub-sector was rated fair.This was on account of satisfactory regulatory capital. However, earnings performance, asset qualityand liquidity, were rated unsatisfactory. The largest of the three building societies, accounting for79%of thesub-sector totalassets, hadasatisfactoryrating (Table3.16).
BalanceSheet
Assets
Total assets of the building societies sub-sector increased by 13.4% to K1,230.2 million at end-December 2018, mainly due to an increase in net loans and advances and other assets. Loans andadvancescontinued toaccount for the largestproportionof thesub-sector's totalassets (Table3.17).
Liabilities
Total liabilities grew by 11.6% to K860.9 million at end-December on account of an increase inbalancesdue todomestic and foreign institutions.
CapitalAdequacy
The regulatory capital position of the building societies sub-sector was rated satisfactory at end-December 2018. Despite the capital adequacy ratio declining to 15.1% at end-December 2018 from17.2%, it remained above theminimumregulatory limit of 10.0%. The decline in the ratio arose froma lossafter taxofK34.9million (Chart3.12).
PerformanceCategory
Strong
Satisfactory
Fair
Marginal
Unsatisfactory
Total
20160
2
0
0
1
3
Table3.16:CompositeRating for theBuildingSocieties, 2016 –2018
Source: Bank of Zambia
20170
2
0
0
1
3
20180
1
1
0
1
3
Numberof BuildingSocieties2016
0
75
0
0
25
100
20170
89
0
0
11
100
20180
79
10
0
11
100
Proportionof IndustryAssets(Percent)
Asset ClassLoans and advances
Balances with Domestic Institutions
Others
Total
201654.2
12.1
33.7
100.0
Table 3.17:Asset Structure (Percent), 2016 - 2018
Source: Bank of Zambia
201758.8
13.6
27.6
100.0
201857.7
10.3
32.0
100.0
39
AssetQuality
As at end-December 2018, the asset quality of the building societies sub-sector was unsatisfactory.The ratio of gross NPLs to total loans at 21.3% was above the prudential maximum limit of 10.0%.The NPL coverage ratio, at 84.6%, was adequate and showed an improvement from 76.0% at end-December2017(Chart3.13).
EarningsPerformance
The earnings performance of the building societies sub-sector was unsatisfactory. The sub-sectorrecorded a loss before tax of K32.1million compared to a pro�it before tax of K0.1million reported in2017. The loss was mainly due to a 20.9% decrease in non-interest income, coupled with a 61.2%increase in theprovision for loan losses (Chart3.14).
CHART 3.12:BuildingSocietiesRegulatoryCapital(K’million),2014 – 2018
Source:Bank of Zambia
-
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Total RegulatoryCapital Minimum RegulatoryCapital
CHART 3.13:BuildingSocieties TotalLoans, GrossNon-PerformingLoans andProvision forNon-PerformingLoans,2014 – 2018
Source:Bank of Zambia
0.0
5.0
10.0
15.0
20.0
25.0
-
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
1,000.0
2014 2015 2016 2017 2018
Total Loans Gross NPLs Provisions for NPLs NPL Ratio
CHART 3.14:BuildingSocietiesPro�it beforeTax (K’million),2014 – 2018
Source:Bank of Zambia
-11.1
42.0
51.2
-1
-40
-30
-20
-10
0
10
20
30
40
50
60
2014 2015 2016 2017
-32.1
2018
40
K’million
K’million
Percent
K’million
Liquidity
The liquidity position of the building societies sub-sector was rated unsatisfactory. This was onaccount of a decline in the ratio of liquid assets to total deposits and short-term liabilities to 14.8%atend-December 2018 from 19.2%, which was below the prudential minimum ratio of 25.0% (Chart3.15). The reduction in the ratiowas on account of a 13.9%decrease in liquid assets, coupledwith an11.6%increase inshort-termliabilities.
MicrofinanceInstitutions
Enterprise-LendingMicrofinanceInstitutions
The overall �inancial condition and performance of the enterprise-lending Micro�inance Institutions(MFIs)26 sub-sector in2018wasmarginal. The sub-sector's liquidity positionwas satisfactory, capitaladequacywas fair,whileassetqualityandearningsperformancewereunsatisfactory.
BalanceSheet
Assets
Total assets of the enterprise lending MFIs rose by 33.2% to K565.6 million at end-December 2018.The growth in assets was due to increases of 55.1% and 24.4% in balances held with domesticinstitutions, andnet loansandadvances, respectively. Loansandadvancescontinued toconstitute thelargestproportionof totalassets (Table3.18).
Total liabilities of enterprise lending MFIs increased by 41.6% to K555.5 million at end-December2018,onaccountof increases inbalancesdue to foreign institutionsand totaldeposits.
CapitalAdequacy
The regulatory capital position of the enterprise lending MFIs sub-sector was rated fair at end-December 2018. The capital adequacy ratio decreased to 16.6% from 22.1%, mainly on account of a
CHART 3.15:BuildingSocietiesLiquidity Ratio(Percent),2014 – 2018
Source:Bank of Zambia
0
5
10
15
20
25
30
35
40
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Liquidity ratio Minimum acceptable ratio
Asset ClassLoans and advances
Investments inGovernment Securities
Balances with Domestic Institutions
Other
Total
201774.1
1.2
8.9
15.8
100.0
Table 3.18:Asset Structure (Percent), 2017 - 2018
Source: Bank of Zambia
201869.2
0.2
10.2
20.4
100.0
26These are MFIs whose percentage of loans to micro and small scale enterprises constitutes not less than 80% of the total loan portfolio.41
Percent
24.4% increase in the sub-sector net loans and advances. Despite the drop in the subsector capitalratio, itwasstill above theminimumregulatory limitof15.0%(Chart3.16).
AssetQuality
The asset quality of the enterprise lending MFIs sub-sector was rated unsatisfactory at end-December 2018. The ratio of NPLs to gross loans at 11.8%was above themaximumprudential limitof 10.0%. The NPL coverage ratio at 80.3%, up from 73.9% at end-December 2017, was adequate(Chart3.17).
EarningsPerformance
Earningsperformanceof the enterprise lendingMFIswas ratedunsatisfactory. The sector recordedalossbefore taxofK13.0millioncompared toa lossbefore taxofK13.6million reported in2017(Chart3.18). The marginal decrease in the loss before tax was largely attributed to an increase in interestandnon-interest income.
CHART 3.16:RegulatoryCapital of theEnterprise-Lending MFISub-Sector(Percent),2014 – 2018
Source:Bank of Zambia
-
20
40
60
80
100
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Total Regulatory Capital MinimumCapital Required
CHART 3.17:Total Loans,GrossNon-PerformingLoans andProvision forNon- PerformingLoans,2014 - 2018
Source:Bank of Zambia
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
-50100150200250300350400450500
Dec-14 Dec-15 Dec-16 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18
Total Loans Gross NPLs Provision for NPLs NPL Ratio
CHART 3.18:Pro�it beforeTax (K' million),2014 - 2018
Source:Bank of Zambia
-2.7
-12.2
-7.3
-13.6 -13.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
2014 2015 2016 2017 201842
Percent
K’million
Percent
K’million
Consumer-LendingMicrofinanceInstitutions
The overall �inancial performance and condition of the consumer lendingMFIs sub-sector was ratedsatisfactory. The sub-sector was adequately capitalised, earnings performance and liquiditymanagementwereratedsatisfactorywhileassetqualitywasratedmarginal.
BalanceSheet
Assets
Total assets of the consumer lendingMFIs grewby33.3% toK5,187.2million at end-December2018.The growth in total assets was driven by increases in net loans and advances and balances held withdomestic �inancial institutions. Loans and advances continued to constitute the largest proportion oftotalassets (Table3.19).
Liabilities
Total liabilities of the consumer lending MFIs grew by 34.0% to K3,717.5 million at end-December2018,mainly on account of increases in deposits, balances due to domestic institutions and balancesdue to foreign institutions27.
CapitalAdequacy
The regulatory capital of the consumer lending MFIs subsector was rated satisfactory. The capitaladequacyratioat41.3%,wasabove theminimumregulatory limitof15.0%(Chart3.19).
AssetQuality
Theassetqualityof the consumer lendingMFIs sub-sectorwas ratedmarginal.NPLs, at 10.2%of totalloans, accounted for themarginal rating (Chart3.20).
Asset ClassLoans and advances
Balances with Domestic Institutions
Other
Total
201685.7
6.8
7.5
100.0
Table 3.19:Asset Structure (Percent), 2016 - 2018
Source: Bank of Zambia
201786.9
5.8
7.3
100.0
201888.3
5.0
6.7
100.0
CHART 3.19:RegulatoryCapital(K’million),2014-2018
Source:Bank of Zambia
-
500
1,000
1,500
2,000
2,500
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
RegulatoryCapital Minimum Required Capital
27The deposits, balances due to domestic institutions and balances due to foreign institutions increased to K763.0 million, K735.8 million andK351.3million, respectively fromK547.3million,K264.5millionandK230.0million, respectively.
43
K’million
EarningsPerformance
The earningsperformanceof the consumer lendingMFIs sub-sectorwas rated satisfactory. The sub-sector'spro�it before tax increasedby31.2%toK780.7million,mainlyonaccount of a rise in interestincomearising fromthegrowth in the loanportfolio (Chart3.21).
BureauxdeChange
Thebureaude change sub-sectorwas adequately capitalised at end-December2018. All the bureauxdechange, except for three (3),met therequiredminimumprimarycapital ofK250,000.
The sub-sector's aggregate capital and reserves increased by 10.7% to K69.2 million, on account ofnewcapital injectionsandretainedearnings.
The volume of foreign currency purchases decreased by 19.1% to US$531.2 million, largely due to a19.6% decrease in foreign exchange purchases from commercial banks. Consequently, foreigncurrency sales decreased by 18.5% toUS$535.0million (Chart 3.22). The average bureau de changebuying and selling rateswereK10.4024/US$andK10.5693/US$ in 2018, compared toK9.7750/US$andK9.9374/US$ in2017, respectively.
CHART 3.20Total Loans,GrossNon-PerformingLoans andProvision forNon-PerformingLoans(K’million),2014 - 2018Source:Bank of Zambia
-
1,000
2,000
3,000
4,000
5,000
6,000
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Total Loans Gross NPLs Provision for NPLs
CHART 3.21:Pro�it beforeTax of theConsumer-LendingMicro�inance(K’million),2014 - 2018
Source:Bank of Zambia
39
217247.9
594.9
780.7
-
100
200
300
400
500
600
700
800
900
2014 2015 2016 2017 2018
K'million
-
44
K’million
1.
2.
3.
1.
1.
InstitutionLicensedBureauxdeChangeBig Deal Bureau deChange Limited
MKB Bureau deChange Limited
Perfect Link Bureau deChange Limited
Microfinance InstitutionsGoodfellow Finance Limited
LeasingCompaniesAgricultural Leasing Company
Table3.20: LicencesIssued in2018
Source: Bank of Zambia
DateLicensed
9 February 2018
24April 2018
24April 2018
10 January 2018
25 September 2018
Licensing
In 2018, the Bank of Zambia issued �ive NBFIs licences and revoked another �ive (Tables 3.20 and3.21).
Operationsof theCreditReferenceBureau
In 2018, the number of credit �iles that credit providers submitted to the credit reference bureaudeclined by 36.9% to 3,510,275, while the number of credit reports searched declined by 48.4% to308,727 (Chart3.23). The reduction inbothnumberof credit �iles submittedaswell as thenumber inthe credit report searches pointed to non-compliance by credit providers with the requirement tosubmit credit information to thecredit referencebureauand tosearch its credit informationdatabaseaspartof thecreditunderwritingprocess.
CHART 3.22:Bureau deChangeVolumes ofTransactions(US$ millions),2014 – 2018
Source:Bank of Zambia
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
2014 2015 2016 2017 2018
US$
mllions
Purchases of currency Sales of currency
1.
2.
3.
1.
1.
BureauxdeChangeDips Bureau deChange Limited
Vedette Bureau deChange Limited
A & I Bureau deChange Limited
Microfinance InstitutionsBlue Financial Services Zambia Limited
Financial BusinessesFocus Financial Services Limited
Table3.21: LicencesRevoked in2018
Source: Bank of Zambia
Date revoked
19April 2018
21 May 2018
13 June 2018
19 September 2018
19 September 2018
45
Total credit account records on the database of Credit Reference Bureau Africa Limited (CRBAL)increasedby18.3% to3,294,099, indicating a positiveprogression towards reaching criticalmass incredit information. Individuals (natural persons) comprised the largest portion of customers on theCRBAL database at 73.7%. The total number of persons (both natural and corporates) on the CRBALdatabase increasedby4.1%to1,566,287.
CHART 3.23:Trend of use ofCreditReferenceSystem byFinancialServiceProviders
Source:Credit ReferenceBureauAfrica/TransUnion
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2014 2015 2016 2017 2018
Num
berinmillions
Credit Data Searches Credit Data Submitted
46
Banking, Cur rencyand Payment Systems
4.0
4.0 BANKING,CURRENCYANDPAYMENTSYSTEMSThe Bank of Zambia continued to provide banking services to the Government and oversight to thenationalpayment system. Inaddition, theBankcontinued to implement theCleanNotePolicy.
4.1 BANKING
BankingServicestoCommercialBanks
The Bank continued to closely monitor commercial banks' current accounts to ensure that allprocessed transactions settled on time. A total of 14 commercial banks accessed Intraday Loanfacility (ILF) compared to10 in2017,while 11 commercial banksutilised theOvernight LoanFacility(OLF)compared to14 in2017.
BankingServicestotheGovernment
TheBank, as thebanker toGovernment, continued to facilitate receiptof revenueand transmissionofpayments to Government suppliers of goods and services as well as funding of line Ministries,Provinces and Spending Agencies (MPSAs). The Bank continued to support the Ministry of Financein migrating MPSAs onto the Treasury Single Account (TSA) and migrated 14 MPSAs, bringing thetotalnumberofmigratedMPSAsto58.
4.2 CURRENCYMANAGEMENT
CurrencyinCirculation
Currency in circulation increasedby12.0%toK8.2billion in 2018 compared to13.4% in2017 (Chart4.1 and Table 4.1). The bulk of this currency was banknotes, which accounted for 97.5% (K8.0billion),whilecoinsconstituted2.5%(K0.2billion).
CHART 4.1:Currency inCirculation(K 'billion),Dec 2015 –Dec 2018
Source:Bank of Zambia
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
K'billion
48
LaunchofNewBanknotes
The Bank of Zambia launched new banknotes in 2018with enhanced security features to strengthentheir security and ease veri�ication by the general public. TheBank conducted countrywide currencysensitization campaigns to educate the public on the new security features, proper storage andhandlingofbanknotesand theneed toreturnallun�it28 currency throughthebankingsystem.
NewCurrencyIssuedintoCirculation
The Bank issued 130.9 million pieces of mint banknotes and coins valued at K3.3 billion intocirculation in 2018, compared to 137.9 million pieces valued at K4.5 billion in 2017. The highestproportion of currency issued was in high value banknotes of K100 (39.1%) and K50 (45.3%). Themiddle value (K10 and K20) and low value (K2 and K5) banknotes both accounted for 15.0%, whilecoinsaccounted for0.6%(Chart4.2andTable4.2).
K100
K50
K20
K10
K5
K2
K1
50N
10N
5N
Total
20164,631,055,100
1,165,800,850
278,325,730
126,280,450
77,851,669
38,666,312
73,951,556
48,358,940
7,609,240
3,618,425
6,451,518,271
Table4.1:Currency inCirculation, 2016 –2018
Source: Bank of Zambia
20175,067,826,250
1,542,082,350
292,698,310
114,708,430
89,100,491
28,171,396
103,121,024
63,570,027
10,261,272
3,800,360
7,315,339,909
20185,266,779,300
2,159,563,300
281,913,660
108,725,660
120,835,505
49,173,344
132,235,024
63,123,927
8,452,672
3,722,859
8,194,525,251
Values(ZMW)2016
46,310,551
23,316,017
13,916,287
12,628,045
15,570,334
19,333,156
73,951,556
96,717,879
76,092,405
72,368,502
450,204,730
201750,678,263
30,841,647
14,634,916
11,470,843
17,820,098
14,085,698
103,121,024
127,140,054
102,612,720
76,007,203
548,412,464
201852,667,793
43,191,266
14,095,683
10,872,566
24,167,101
24,586,672
132,235,024
126,247,854
84,526,724
74,457,189
587,047,871
Pieces
CHART 4.2:New Currencyissued intoCirculation,2017 – 2018
Source:Bank of Zambia
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
0.0
0.5
1.0
1.5
2.0
2.5
K100 K50 K20 K10 K5 K2 K1 50N 10N 5N
Pieces(millions)
ValueinK'billion
Values 2017 Values 2018 Pieces 2017 Pieces 2018
4928These are banknotes that are soiled, faded or mutilated
Withdrawal ofUnfit Banknotes
The Bank withdrew a total of 82.3 million pieces of un�it banknotes valued at K3.1 billion fromcirculation in 2018, compared to 103.9 million pieces valued at K3.6 billion in 2017. The bulk of thecurrencywithdrawnwas inhighvaluebanknotes (K100andK50),whichaccounted for85.1%(Chart4.3andTable4.3).
Counterfeit notes
A total of 33,485 pieces of counterfeit noteswere detected by the Bank, commercial banks and otherGovernment security agencies in2018compared to8,845pieces in2017. The increase in counterfeitnotes detected in 2018 was accounted for by the large single interception by the Drug Enforcement
K100
K50
K20
K10
K5
K2
K1
50N
10N
5N
Total
20162,505,800,000
1,010,500,000
354,590,000
140,300,000
64,825,000
37,154,000
16,982,000
10,415,500
905,800
384,250
4,141,856,550
Table4.2: NewCurrency Issued2016 - 2018
Source: Bank of Zambia
20172,335,400,000
1,503,500,000
418,330,000
115,100,000
71,400,000
15,222,000
14,223,000
3,404,000
631,700
140,050
4,477,350,750
20181,296,800,000
1,500,750,000
277,140,000
85,490,000
96,745,000
37,804,000
15,071,000
5,359,000
110,900
7,600
3,315,287,500
Values(ZMW)2016
25,058,000
20,210,000
17,729,500
14,030,000
12,965,000
18,577,000
16,982,000
20,831,000
9,058,000
7,685,000
163,125,500
201723,354,000
30,070,000
20,916,500
11,510,000
14,280,000
7,611,000
14,223,000
6,808,000
6,317,000
2,801,000
137,890,500
201812,968,000
30,015,000
13,857,000
8,549,000
19,349,000
18,902,000
15,071,000
10,718,000
1,109,000
352,000
130,890,000
Pieces
CHART 4.3:CurrencyWithdrawnfromCirculation,2017 – 2018
Source:Bank of Zambia
0.00
5.00
10.00
15.00
20.00
25.00
0.00
0.50
1.00
1.50
2.00
2.50
K100 K50 K20 K10 K5 K2Pieces(millions)
ValueinK'billions
Values 2017 Values 2018 Pieces 2017 Pieces 2018
K100
K50
K20
K10
K5
K2
Total
2016959,764,700
826,106,525
300,557,370
148,583,665
85,118,758
60,012,838
2,380,143,856
Table4.3:CurrencyWithdrawn fromCirculation, 2016 –2018
Source: Bank of Zambia
20172,061,198,400
962,254,300
325,185,800
140,024,050
73,303,155
38,212,164
3,600,177,869
20181,615,045,300
985,543,200
277,468,600
94,645,000
63,968,500
20,551,000
3,057,221,600
Values(ZMW)2016
9,597,647
16,522,131
15,027,869
14,858,367
17,023,752
30,006,419
103,036,183
201720,611,984
19,245,086
16,259,290
14,002,405
14,660,631
19,106,082
103,885,478
201816,150,453
19,710,864
13,873,430
9,464,500
12,793,700
10,275,500
82,268,447
Pieces
50
Commission at one of the borders in January2018 and the enhanced collaborationbetween theBankand the security agencies. TheBankand security agencies continued to sensitise thepublic onhowtoidentifygenuinebanknotesand issuedpress releases toalert thepublic (Table4.4andTable4.5).
4.3 PAYMENTSYSTEMS
The performance of the national payment systemswas generally satisfactory, as re�lected in the highsystemsavailability levels and improvements invaluesandvolumesof transactionsprocessed.
ZambiaInterbankPayment andSettlement System
The Zambia Interbank Payment and Settlement System (ZIPSS) continued to operate satisfactorily.The system's availability remained high at 99.1% compared to 98.3% reported in 2017. Thedowntime recordedwasmainly due to network connectivity and application challenges, whichwereresolvedwithinacceptable timeframes.
The volume of transactions processed on ZIPSS increased by 16.0% to 573,071 in 2018, while thevalue of transactions rose by 21.1% to K968.3 billion (Chart 4.4). The surge in both volumes andvalues of processed transactions was mainly due to increased interbank payments among theparticipatingcommercial banks.
DenominationK100
K50
K20
K10
K5
K2
Total
20161,064
357
119
6
11
2
1,559
Table4.4:Counterfeit NotesDetected, 2016 - 2018
Source: Bank of Zambia
20178,535
218
73
8
11
0
8,845
201832,778
227
461
10
9
0
33,485
Denomination
K100
K50
K20
K10
K5
K2
Total
BankofZambia
89
44
91
1
1
0
226
Table4.5: Counterfeit NotesinterceptionbyOrganisation, 2018
Source: Bank of Zambia
CommercialBanks928
171
165
2
2
0
1,268
DrugEnforcementCommission
28,633
1
0
0
0
0
28,634
ZambiaPolice3,073
5
204
7
6
0
3,295
Others55
6
1
0
0
0
62
Total32,778
227
461
10
9
0
33,485
51
ChequeImageClearingSystem(CIC)
The volume and value of cheques cleared through the Cheque Image Clearing system in 2018declined by 13.0% and 41.0% to 2,040,530 and K12.4 billion, respectively (Chart 4.5). The declinewasexplainedbythereduction in the itemvalue limitoncheques introduced in2017.
ChequesReturnedUnpaidonAccount of Insufficient Funds
The volume and value of cheques returned unpaid due to insuf�icient funds in 2018 decreased by13.0% and 26.0% to 14,285 and K0.13 billion, respectively (Chart 4.6). This was on account of thereduction in the item value limits for cheques that minimised the use of cheques as a mode ofpaymentand increasedadoptionofelectronicpaymentmethods.
CHART 4.4:ZIPSS Volumesand Values,2014 - 2018
Source:Bank of Zambia
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
0
200
400
600
800
1,000
1,200
2014 2015 2016 2017 2018
Volumes
Value(K'million)
Value Volume
CHART 4.5:ChequeImagesCleared2014 – 2018
Source:Bank of Zambia
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
2014 2015 2016 2017 2018
Volume
ValuesK'billion
Values Volumes
CHART 4.6:UnpaidCheques2014 – 2018
Source:Bank of Zambia
-
5,000
10,000
15,000
20,000
25,000
30,000
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
2014 2015 2016 2017 2018
Volume
ValuesK'billion
Values Volume52
ElectronicFundsTransfer (EFT) ClearingSystem
The volume and value of Electronic Funds Transfer (EFT) transactions processed on the paymentstreams in 2018 increased by 18.0% and 54.0% to 6,952,305 and K59.7 billion, respectively (Chart4.7). The effects of the revision of the item value limits revision signi�icantly contributed to theincrease inboth thevolumeandvalueofEFTtransactions.
TransactionsProcessedthroughtheAutomatedTeller Machines
Thevolumeof transactionsprocessedon theAutomatedTellerMachines (ATMs)decreasedby10.0%to 44,726,867 in 2018 against an increase of 5.6% in 2017. In terms of value, ATMs processedtransactions increased by 8.0% to K45.6 billion in 2018, compared to a rise of 10.6% in 2017 (Chart4.8). The increase in the value of transactions was partly due to the increase in the number of cardsissued to customersby8.0%to3,492,750 in2018. ThenumberofATMsalso rose to1,104 from1,066in2017.
TransactionsProcessedthroughPoint ofSaleTerminals
The volume of transactions processed on Point of Sale (PoS) terminals increased by 51.0% to18,409,724 in 2018, while the value of transactions increased by 68.0% to K13.5 billion (Chart 4.9).This was due to increased deployment of PoS terminals and promotion of the usage of electronicpaymentmethods. The number of PoS terminals increased to 13,090 in 2018 from12,522 in 2017. Intermsof payments processedby card type, debit cards recorded thehighest increase in both volumesandvalueof transactionsprocessedat54.0%and76.0%, respectively.
CHART 4.7:ElectronicFunds TransfersProcessed2014 – 2018
Source:Bank of Zambia
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
2014 2015 2016 2017 2018
Volumes
ValuesK'billion
Values Volumes
CHART 4.8:AutomatedTeller MachineTransactions,2014 – 2018
Source:Bank of Zambia
-
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
2014 2015 2016 2017 2018
Volumes
ValuesK'billion
Values Volumes
53
InternationalRemittances
International in-bound remittances increased by 16.0% in 2018 to 502,368 in volume terms and by25.0% to K1,144.5 million in value terms (Chart 4.10). This was largely on account of increasedremittances by Zambians living abroad. The United States of America, the United Kingdom andCanadadominatedthesourcecountries.
Out-bound international remittances increased in2018 in volume termsby14.0%to341,474andby16.0% toK1.0 billion in value terms (Chart 4.11). This wasmainly on account of an increase in traderemittances toChina,TanzaniaandSouthAfrica.
CHART 4.9:Transactionson POSTerminals2014 – 2018
Source:Bank of Zambia
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
2014 2015 2016 2017 2018
Volumes
ValuesK'billion
Values Volumes
CHART 4.10:InboundRemittances2014 – 2018
Source:Bank of Zambia
-
75,000
150,000
225,000
300,000
375,000
450,000
525,000
600,000
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2014 2015 2016 2017 2018
Volumes
ValuesK'billions
Value Volume
CHART 4.11:OutboundRemittances2014 – 2018
Source:Bank of Zambia
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
0.0
0.2
0.4
0.6
0.8
1.0
2014 2015 2016 2017 2018
Volumes
ValuesK'billion
Value (K' m) Volume
54
MobileMoneyTransactions
The volume and value of transactions processed on mobile money platforms in 2018 rose by 76.0%and187.0%to305,208,616andK22.5billion, respectively (Chart4.12).
The increase in both volume and value was partly driven by an increase in the issuance of second-generation products, such as micro loans, supported by collaborations between mobile moneyoperators and both Micro Finance Institutions and banks. The collaborations with banks allowedmobile money customers the ability to make transfers between mobile money wallets and bankaccounts, thus making mobile wallets more appealing to commercial bank customers. Theemergence of Fintech companies with solutions tailored to customer needs in both rural and urbanareasalso supportedthisgrowth.
RegionalCrossBorder PaymentSystems
In 2018, the volume of payments processed on the SADC Integrated Regional Electronic SettlementSystem (SIRESS) by Zambian commercial banks contracted by 7.9% to 20,008, while the valuemarginally increased by 0.6% to ZAR5.7 billion. The volume of receiptsmarginally declined by 0.1%to6,942 transactions in2018,while thevalue increasedby5.2%toK5.7billion.Onanetbasis, Zambiapaid out ZAR7.9million in 2018 compared to net payment of ZAR256.3 billion in 2017. For the SADCregion, a total of ZAR1,272.4 billion was processed on the SIRESS in 2018, representing a 2.6%increase fromZAR1,240.1billion recorded in2017.
Under the COMESA Regional Electronic Payments and Settlement System (REPSS), there was anincrease in the volume and value of receipts in 2018 to 110 transactions and US$11.1 million,respectively, compared to a single transaction valued at US$245,035.00 in 2017. There were nopaymentsmade fromZambiaon theplatform.
National Financial Switch
The Bank of Zambia in conjunction with the Zambia Electronic Clearing House Limited (ZECHL), theBankers Association of Zambia (BAZ) and other stakeholders continued with efforts to implementthe National Financial Switch (NFS). A total of 13 out of the 14 commercial banks offering ATM andcard services,went live on theNFS in 2018.However, progresson thePoint of Sale (PoS) functionalitywasslowwithvery fewbankscarryingoutend-to-endtesting.
The second phase of the NFS project continued to make progress in 2018. The NFS project team incollaboration with the Bank of Zambia and other stakeholders commenced the development ofparticipationrules for interoperabilityofmobilemoney.
CHART 4.12:Mobile MoneyTransactions2014 – 2018
Source:Bank of Zambia
-
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
-
5.00
10.00
15.00
20.00
25.00
2014 2015 2016 2017 2018
Volumes
Values(K'billion)
Values Volumes
55
Regulatory and Other FinancialSector Developments
5.0
5.0 REGULATORYANDOTHERFINANCIALSECTORDEVELOPMENTSThe BoZ continued to review laws, regulations and policies, as well as implement new measures tostrengthen its oversight role over institutions under its supervisory ambit. In 2018, developmentsthat tookplace in the �inancial sector in this regardareoutlinedbelow:
Legal andRegulatoryReforms
The Banking and Financial Services Act (BFSA)No. 7 of 2017 became effective in 2018. The revisionsto the BFSA include enhanced consumer protection and corporate governance provisions.Consequently, the Bank of Zambia has been empowered to adequately enforce consumer protectionmeasures inorder topromotethecon�idenceand trustof consumers in the �inancial system.
RegulationofBankChargesandFees
Following a review of commercial banks charges and fees, the Bank of Zambia issued a Directive onthe Prohibition of Unwarranted Charges and Fees in August 2018 in order to protect consumers of�inancial servicesandproducts fromunjusti�iedchargesand fees.
PaymentSystemsRegulations
The Bank of Zambia revised the National Payment SystemsDirectives on ElectronicMoney Issuance.Thekeychanges tothedirectives include the following:
a) Permitting customers to hold multiple wallets. However, prescribed transaction limits for theaggregatee-valueremainunchanged;
b) Permitting both commercial banks and approved non-bank �inancial institutions to host HoldingAccounts;
c) Inclusionof speci�icguidanceon theuseof interest earnedontheHoldingAccounts;d) Provisions for consumer protection and the need for e-money institutions to have procedures for
dealingwithcustomercomplaints;e) Requirement for an e-money institution to hold customer funds at various commercial banks or
non-bank �inancial institutions.
Lender ofLastResort PolicyFramework
The revised Bank of Zambia Lender of Last Resort Framework was approved by the Bank of ZambiaBoard of Directors inDecember 2018. The thrust of the revisionwas to strengthen the framework toallow the Bank to effectively exercise its function as lender of last resort by meeting liquidityrequirements of banksanddeposit taking �inancial institutions eligible toaccess emergency liquidityassistance fromtheBank.
CollateralRegistry
The Bank of Zambia, in partnershipwith the Patents and Companies Registration Agency, conductedsensitisationworkshops in24 rural districts across the country inorder toaccelerate theusageof theMovable PropertyRegistry System. The objective of theworkshopswas to realise the full potential ofthe movable property registry system. The workshops were funded by the Rural Finance ExpansionProgramme.
Restructuringof IntermarketBankingCorporation
The Bank of Zambia concluded the restructuring of Intermarket Banking Corporation Limitedresulting in the formation of the Zambia Industrial Commercial Bank Limited (ZICB) which 57
commenced operations on 1August 2018. All depositorswere paid except for a few large depositorswhoconvertedtheirdeposit liabilities intoequityof theZICB.
NationalPaymentSystemsVisionandStrategy2022
The Bank of Zambia issued the new National Payment System Vision and Strategy document,covering the period 2018 to 2022. The strategy is intended to build on the progressmade under theNational Payment System Vision 2017. A number of key issues were included in the vision andstrategydocument.Thenewinclusions included the following:
a) Amendmentof theNationalPaymentSystemsAct toensureharmonisationwithother lawsand totake account of new developments in payment systems and ensure alignment with the SADCModelLaw;
b) Enhancementof consumerprotectiontosafeguardandprotectconsumers;c) Enhancement of cyber security in the �inancial sector in order to maintain the integrity of
paymentsystems;d) PromotionofDigitalFinancial Services; ande) EnhancementofRemittanceServicesmarket toencourageuptakeof formal remittancechannels.
Financial Inclusion
In2018, theBoZcontinued toundertakevarious initiativesaimedatexpandingaccess toandusageofformal �inancial services. Some of the activities implemented included the annual Financial LiteracyWeekandtheWorldSavingsDay.
Financial LiteracyWeek
The 2018 Financial Literacy Week, under the theme: 'Save, Invest, Insure- To LiveaBetter Life', wascommemoratedduring theweek18–24March2018.The themeemphasizedonempoweringpeopleto understand the available �inancial products and services for the various key life events as well ascreate momentum on both the supply and demand side for the development of consumer centric�inancialproductsandservices.
WorldSavingsDay
The2018World SavingsDaywas commemoratedon31October2018, under the theme 'Save,Invest,Insure: What Do You Wish For?' This event emphasised the importance of saving for nationaleconomiesand individuals.
58
Strategy and Risk Management6.0
6.0 STRATEGYANDRISKMANAGEMENTPerformanceof theStrategicPlan
The Bank continued to implement the 2016-2019 Strategic Plan under the theme “Excellence inExecution”. A mid-term review of the Plan was conducted without signi�icant changes. The Bankachieved an overall effective execution rate of 82.0% as at the end of 2018, compared to 62.9% in2017.Signi�icantprogresswasattained in the followingareas:
! Enhancement of alternative instruments for implementing monetary policy in response to theeverchangingeconomicenvironment,
! EstablishmentofElectronicBureaudeChangeMonitoring,! Deepening of the domestic capital, money and foreign exchangemarkets in order to enhance the
transmissionofmonetarypolicy, and! Implementationof theNationalFinancial Switch.
ProjectManagement
EnterpriseRiskManagement
The Bank, in collaboration with other stakeholders, conducted business continuity management(BCM)market-wide simulation tests with a view to establishing the Bank's level of preparedness inthe event of a disruptive incident. The tests were successful and infrastructure was resumedwithintherecovery timeobjective.
Gender Mainstreaming
In 2018, theBank approved theGenderPolicy and Strategy,whichacts as a catalyst in in�luencing the�inancial sector to be more gender responsive. This policy is meant to mitigate the numerouschallenges towomen's �inancial inclusion.
Further, the Bank continued to roll out the Female and Male Operated Small Enterprises (FAMOS)tool in the �inancial sector and collect sex-disaggregated data in order to encourage the widespreadproductionanduseof supply anddemand-side sex-disaggregateddataonwomen's access toanduseof �inancial services.
60
Human Resour ce Management7.0
7.0 HUMANRESOURCEMANAGEMENTStructureandStaffing
The total number of staff in employment as at end December 2018 stood at 533, of which 327 weremale and 206 were female, against an establishment of 679. This staff complement comprised 322(60%) on Fixed-Term Employment Contracts and 211 (40%) employees on Permanent andPensionableService (Tables7.1and7.2).
StaffMovements
In 2018, the Bank recruited a total of 29 employees across various departments (Table 7.3), while 31separated from the Bank (Table 7.4). The separations were due to expiry of contracts, medicaldischarge, resignations, statutoryearly retirementsandvoluntary separations.
Functions
Executive
SubtotalCoreDepartmentsBank Supervision
Banking, Currency & Payment Systems
Economics
Financial Markets
Non-Banks Financial Institutions Supervision
Strategy & Risk Management
SubtotalSupport ServicesBoard Services
Finance
Human Resources
Information &CommunicationsTechnology
Legal Services
Internal Audit
Procurement &Maintenance Services
Security
SubtotalRegionalOffice
SubtotalTOTAL
Estab.15
15
46
84
45
36
38
13
279
19
36
22
35
8
17
92
91
32062
62676
Actual11
11
30
63
42
32
24
10
212
11
22
19
31
8
15
70
63
23962
62524
Diff-4
-4
-16
-21
-3
-4
-14
-3
-67
-8
-14
-3
-4
0
-2
-22
-28
-810
0-152
Estab.15
15
54
85
56
36
43
13
287
21
37
26
35
9
17
85
85
31562
62679
Actual10
10
42
68
43
31
38
9
231
12
33
21
31
7
13
76
45
23856
56535
Diff-5
-5
-12
-17
-13
-5
-5
-4
-56
-9
-4
-5
-4
-2
-4
-9
-40
-77-6
-6-144
Estab.15
15
54
85
56
36
43
13
287
21
37
26
35
9
17
85
85
31562
62679
Actual12
12
44
72
41
32
36
10
235
15
34
19
30
7
16
71
40
23254
54533
Diff-3
-3
-10
-13
-15
-4
-7
-3
-52
-6
-3
-7
-5
-2
-1
-14
-45
-83-8
-8-146
2016 2017 2018
Table 7.1:StaffingLevels, 2016 - 2018
Source: Bank of Zambia
LocationLusaka
Ndola
Overall
M125
13
138
Table7.2: Distributionof Staff byLocation, Gender andEmployment Type in2018
Source: Bank of Zambia
F62
11
73
SubTotal187
24
211
Permanent &PensionableM175
14
189
F119
14
133
FixedTermContractSubTotal
294
28
322
GrandTotal481
52
533
62
StaffWelfare
The industrial relations climate remained cordial in 2018 despite the non-conclusion of thenegotiations for the2018-2020CollectiveAgreement.
Further, the Bank continued to offermedical services to its employees and their immediate families.As part of the employee welfare programme, the Bank also organised a number of health awarenessprogrammesduring theyear.
CapacityBuildingProgrammes
The Bank continued to provide capacity building programmes through relevant workshops andseminars both locally and abroad. In addition, somemembers of staff are currently pursuing variousprogrammes toupgrade theirquali�ications (Table7.5).
DepartmentBank Supervision
Banking, Currency & Payment Systems
Board Services
Financial Markets
Human Resources
Information &CommunicationsTechnology
Internal Audit
Procurement &Maintenance Services
RegionalOffice
Total
Table7.3:StaffRecruitmentsin2018
Source: Bank of Zambia
Number2
6
3
4
4
2
3
2
3
29
Modeof SeparationExpiry of Contracts
Medical Discharge
Resignations
Statutory Early Retirements
Voluntary Separations
Total
Table7.4:StaffSeparationsin2018
Source: Bank of Zambia
Number2
2
5
7
15
31
Programme
PhD/DBA
Masters Degrees
Bachelor's Degrees
ProfessionalQualifications
TOTAL
20165
3
0
3
11
Table 7.5: Numberof StudentsPursuingStudyProgrammes, 2016 –2018
20175
3
0
3
11
20185
0
0
2
7
Year
Source: Bank of Zambia
63
Financial Statements for the yearended 31 December 2018
8.0
BANKOFZAMBIA
FINANCIALSTATEMENTSFORTHEYEARENDED 31 DECEMBER2018
Contents Page
Statement of Directors' responsibilities 66
Report of the independent auditor 67
Statement of comprehensive income 69
Statement of �inancial position 70
Statement of changes in equity 71
Statement of cash �lows 72
Notes to the �inancial statements 73 - 116
65
BANK OF ZAMBIA
STATEMENTOFDIRECTORS'RESPONSIBILITIES
The Bank of Zambia Act, No. 43 of 1996 requires the Directors to keep proper books of accounts and other records relating to itsaccounts and to prepare financial statements for each financial year which present fairly the state of affairs of the Bank of Zambia andof its profit or loss for theperiod.
The Directors accept responsibility for the annual financial statements, which have been prepared using appropriate accountingpolicies supported by reasonable estimates, in conformity with International Financial Reporting Standards and the requirements ofthe Bank of Zambia Act, No. 43 of 1996. The Directors are of the opinion that the financial statements give a true and fair view of thestate of the financial affairs of the Bank and of its financial performance in accordance with International Financial ReportingStandards. The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in thepreparation of financial statements, and for such internal controls as the Directors determine necessary to enable the preparation offinancial statements that are free frommaterialmisstatement, whether due to fraudor error.
Nothing has come to the attention of the Directors to indicate that the Bank will not remain a going concern for at least twelvemonthsfrom thedate of this statement.
Approval of the financial statements
The financial statements of the Bank set out on pages 69 to 116 were approved by the Board of Directors on 18 March, 2019 andsignedon their behalf by:
Governor Director
66
REPORTOFTHE INDEPENDENTAUDITORTOTHEMEMBERSOFBANKOFZAMBIA
Reporton the Audit of the Financial Statements
OpinionWe have audited the financial statements of Bank of Zambia, which comprise the statement of financial position as at 31 December2018, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year thenended, andnotes to the financial statements, including a summary of significant accountingpolicies.
In our opinion, the financial statements give a true and fair view of the financial position of Bank of Zambia as of 31 December 2018,and of its financial performance and its cash flows for the year then ended in accordance with International Financial ReportingStandards.
Basis forOpinionWe conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standardsare further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Bank in accordance with the International Ethics Standards Board for Accountant's Code of Ethics forProfessional Accountants (IESBACode togetherwith the ethical requirements that are relevant to our audit of the financial statementsin Zambia, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the auditevidencewehaveobtained is sufficient andappropriate to provide abasis for our opinion.
KeyAuditMattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financialstatements of the current period. Thesematters were addressed in the context of our audit of the financial statements as awhole, andin formingour opinion thereon, andwedonot provide a separate opinionon thesematters.
GrantThorton5th Floor MukubaPension HouseDedan Kimathi RoadP. O. Box 30885Lusaka, Zambia
T + 260 (211) 227722-8F + 260 (211) [email protected]
2.
Partners
Edgar Hamuwele [Managing]Christopher MulengaWesley BeeneRodia MusondaChilala Banda
Chartered AccountantsZambia Member of Grant Thorton InternationalVAT reg 1001696100. Registered in Lusaka. Company number 8116Grant Thornton Zambia and other member firms are not a worldwide partnership. GTI and each member firm is separate legal entity.Services are delivered independently by the member firms. GTI and itsmember firms are not agents, and do not obligate, one anotherand are not liable for one another’s acts or omissions.
Audit Tax Advisory
www.gt.com.zm 67
Descriptionofmatter
Classification, measurement and impairment offinancial assets
The Bank applied IFRS 9 “financial instruments” for thefirst time in the financial period under review.
The directors are required to review the classificationsof assets and align the classifications to therequirements of the reporting standards. The directorsalso reviewed the fair valuations and impairmentmodels.
Due to the complex and subjective judgementsrequired in estimating the timing and valuation ofimpairment and in estimating the fair value of assets,thiswas considereda key auditmatter.
Howmatterwasaddressed
We reviewed the classification of the financial assets to ensurecompliancewith the reporting standards.
We reviewed the valuation and verified the calculation of the fair values.Wealso verified the inputs used in the valuations.
In considering the reasonableness of the impairment provision, wereviewed the assumptions used in impairment calculations.
We further assessed their recoverability through testing of current yearand subsequent receipts.
Based on the procedures performed, we are satisfied that the impairmentprovision is reasonable and the financial assets were properly classifiedand valued.
REPORTOFTHE INDEPENDENTAUDITORTOTHEMEMBERSOFBANKOFZAMBIA
ResponsibilitiesofManagement andThoseChargedwithGovernance for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with InternationalFinancial Reporting Standards and for such internal control as management determines is necessary to enable the preparation offinancial statements that are free frommaterialmisstatement, whether due to fraudor error.
In preparing the financial statements, management is responsible for assessing the Bank's ability to continue as a going concern,disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless managementeither intends to liquidate theBankor to ceaseoperations, or has no realistic alternative but to do so.
Those chargedwith governance are responsible for overseeing theBank's financial reporting process.
Auditor'sResponsibilities for theAudit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatements, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is ahigh-level assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financialstatements.
As part of an audit in accordancewith ISAs, we exercise professional judgement andmaintain professional skepticism throughout theaudit. Wealso:
! Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design andperform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resultingfrom error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internalcontrol.
! Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances, but not for thepurpose of expressing anopinion on the effectivenessof theBank's internal control.
! Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosuresmadebymanagement.
! Conclude on appropriateness of management's use of the going concern basis of accounting and, based on the auditevidence obtained, whether amaterial uncertainty exists related to events or conditions thatmay cast significant doubt on theBank's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to drawattention in our auditor's report to the related disclosures in the financial statements, or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report.However, future events or conditionsmaycause theBank to cease to continue as agoing concern.
! Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whetherthe financial statements represent the underlying transactions and events in amanner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the auditand significant audit findings, including significant deficiencies in internal control thatwe identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirementsregarding independence, and to communicate with them all relationships and othermatters thatmay reasonably be thought to bearon our independence, andwhere applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance inthe audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that amatter should not be communicated in our report because the adverse consequences of doing sowould reasonablybeexpected to outweigh thepublic interest benefits of such communication.
ReportonOther Legal andRegulatoryRequirementsIn our opinion, the financial statements of Bank of Zambia as of 31 December 2018 have been properly prepared in accordance withthe Bank of Zambia Act No 43 of 1996, and the accounting and other records and registers have been properly kept in accordancewith theAct.
CharteredAccountants
ChristopherMulenga (AUD/F000178)Name ofPartner signingonbehalf of the Firm
Lusaka
Date: 18March201968
BANKOFZAMBIA
STATEMENTOFCOMPREHENSIVE INCOMEFORTHEYEARENDED31DECEMBER2018
Note
55
66
7
89
23, 2410
20
2023
Interest incomeInterest expense
Net interest income
Fee and commission incomeFee and commission expense
Net fee and commission income
Net income from foreign exchange transactionsOther gains
Net income from foreign exchange transactions and other gains
Net income
Net impairment credit on financial assetsEmployee benefitsDepreciation and amortisationOperating expenses
Net expense
Profit for the year
Other comprehensive income
Items that will not be reclassified to profit or lossDividend converted to shares in AfreximbankFair value and exchange rate adjustment on equity investment in
AfreximbankRevaluation surplus
Total other comprehensive income
Total comprehensive income for the year
The notes on pages 73 to 116 are an integral part of these financial statements.
2018K000
1,067,041(34,345)
1,032,696
203,595(5,089)
198,506
91,7142,723,879
2,815,593
4,046,795
6,262(456,730)(30,800)(241,073)
(722,341)
3,324,454
3,156
26,626129,849
159,631
3,484,085
2017K'000
1,753,163(116,599)
1,636,564
203,228(3,828)
199,400
32,185193,762
225,947
2,061,911
41,966(408,707)(34,642)(355,811)
(757,194)
1,304,717
-
--
-
1,304,717
69
2017K'000
2,94220,776,662
39789,543
7,903,2212,047,82717,88329,950
3,367,16612,533,602451,2341,697
47,222,124
3,070,5606,582,976184,423167,9027,417,862291,457836,333
12,533,6021,365,7186,655,65439,106,487
500,0201,798,905230,5705,586,142
8,115,637
47,222,124
BANKOFZAMBIA
STATEMENTOFFINANCIALPOSITION - 31DECEMBER2018
Note
121314151618202122,332324
2627282930313222,333436
37383838
AssetsDomestic cash in handForeign currency cash and bank accountsItems in course of settlementDomestic financial assets at FVOCILoans and advancesDomestic financial assets at amortised costOther assetsEquity investments at FVOCIIMF funds recoverable from Government of the Republic of ZambiaIMF subscriptionsProperty, plant and equipmentIntangible assetsTotal assets
LiabilitiesDeposits from the Government of the Republic of ZambiaDeposits from financial institutionsForeign currency liabilities to other institutionsOther depositsNotes and coins in circulationOther liabilitiesProvisionsDomestic currency liabilities to IMFForeign currency liabilities to IMFSDR allocationTotal liabilities
EquityCapitalGeneral reserve fundProperty revaluation reserveRetained earnings
Total equity
Total liabilities and equity
The financial statements on pages 69 to 116 were approved for issue by the Board of Directors on 18 March, 2019 and signed on itsbehalf by:
Governor Director
2018K'000
4,70018,756,737
23789,543
7,038,5753,994,08562,904138,0324,042,31313,748,378610,1992,166
48,487,869
1,840,7155,222,16326,68976,041
8,297,047179,83946,159
13,748,378729,4447,779,94237,946,417
500,0201,929,377354,5847,757,471
10,541,452
48,487,869
70
Balance at 1 January 2017
Profit for the yearAmortisation of revaluation surplus relating to
propertiesTotal comprehensive income
Transactions with owners:Amortised cost adjustment on the capitalization
bondTotal transactions with ownersBalance at 31 December 2017Changes on initial application of IFRS 9
Impairment on other assetsFair value adjustment on equityinvestment in Afreximbank
Profit for the yearTransfer to general reserve fundOther comprehensive income:Amortisation of revaluation surplus relating to
propertiesTotal comprehensive income
Transactions with owners:Dividend paid to shareholders'Unwinding of fair value adjustment on repayment
of capitalization bondTotal transactions with ownersBalance at 31 December 2018
Note
SharecapitalK'000
500,020
-
--
--
500,020
-
----
--
-
--
500,020
Generalreserve
fundK'000
1,798,905
-
--
--
1,798,905
-
--
130,472-
-130,472
-
--
1,929,377
Propertyrevaluation
reserveK'000
235,507
-
(4,937)(4,937)
--
230,570
-
---
129,849
(5,835)124,014
-
--
354,584
Retainedearnings
K'000
4,262,292
1,304,717
4,9371,309,654
14,19614,196
5,586,142
(1,028)
78,3003,324,454(130,472)29,782
5,8353,306,871
(1,174,298)
38,756(1,135,542)7,757,471
The notes on page 73 to 116 are an integral part of these financial statements.
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
TotalEquityK'000
6,796,724
1,304,717
-1,304,717
14,19614,196
8,115,637
(1,028)
78,3003,324,454
-159,631
-3,561,357
(1,174,298)
38,756(1,135,542)10,541,452
71
2017K'000
1,304,717
34,642(2,563)(732)
-(18,441)(23,525)326,820177,063
1,797,981
1,058(557)
(1,110,025)(22,718)(1,236)18,441
(365,291)778,7901,454,157(5,161,601)144,562116,045112,162(778,790)(428,232)863,722422,036
(2,159,496)(7,155)2,563
(14,147)-
--
(2,178,235)
(38,364)1,728
(36,636)
(2,186,528)23,292,952(326,820)
20,779,604
2,94220,776,662
20,779,604
2018K'000
3,324,454
30,800(1)
(115)(214)(6,048)
-(1,298,749)
1,006
2,051,133
160-
864,646(1,946,258)(44,807)6,048
(675,147)(1,214,776)(1,229,845)(1,360,813)(157,734)(91,861)(111,618)1,214,776(636,274)879,1851,124,288(1,328,897)(791,180)
1-
38,756
(1,028)(1,174,298)(3,256,646)
(60,393)123
(60,270)
(3,316,916)20,779,6041,298,749
18,761,437
4,70018,756,737
18,761,437
BANKOFZAMBIA
STATEMENTOFCASHFLOWSFORTHEYEARENDED31DECEMBER2018
Note
23, 24
888
32
32
23, 24
Cash flows from operating activitiesProfit for the yearAdjustment for:- Depreciation/amortisation- Dividend income- (Profit) on disposal of property, plant and equipment- Impairment effect on other assets- Impairment effect on amounts due from closed banks- Impairment effect on loans and advances- Effects of exchange-rate changes on cash and cash equivalents- Provisions made during the year
Changes in operating assets and liabilitiesChange in items in course of settlementChange in domestic financial assets held at FVOCIChange in loans and advancesChange in domestic financial assets held at amortised costChange in other assetsChange in amounts due from closed banksChange in IMF funds receivable from Government of the Republic of ZambiaChange in IMF subscriptionChange in deposits from the Government of the Republic of ZambiaChange in deposits from financial institutionsChange in foreign currency liabilities to other institutionsChange in other depositsChange in other liabilitiesChange in domestic currency liabilities to IMFChange in foreign currency liabilities to IMFChange in notes and coins in circulationChange in SDR allocation
Provisions paidDividends receivedReadjusted fair value on capitalization bondUnwinding of fair value adjustment on repayment of capitalisation bondFair value adjustment on equity investment in Afreximbank on initial application
of IFRS9Dividends paid to shareholdersNet cash outflow from operating activities
Cash flows from investing activitiesPurchase of property, plant and equipment and intangible assetsProceeds from sale of property, plant and equipmentNet cash used in investing activities
Net change in cash and cash equivalentsCash and cash equivalents at the beginning of the yearEffects of exchange-rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
Cash and cash equivalents at the end of the year comprises:Domestic cash in handForeign currency cash and bank accounts
Cash and cash equivalents excluding effects of exchange rate changes72
1 Principal activity
TheBank of Zambia is the central bank of Zambia, which is governed by the provisions of theBank of Zambia Act No. 43 of1996. TheBank's principal placeof business is at BankSquare,CairoRoad, Lusaka.
In these financial statements, theBankof Zambia is also referred to as the “Bank” or “BoZ”.TheBank is 100per cent ownedby theGovernment of theRepublic of Zambia.
TheBoard ofDirectors approved these financial statements for issue on18March, 2019.
2 Principal accountingpolicies
Theprincipal accounting policies applied in the preparation of these financial statements are set out below. Thesepolicies havebeenconsistently applied to all the years presented, unless otherwise stated:
2.1 Basisof preparation
The Bank's financial statements have been prepared in accordance with the International Financial ReportingStandards (IFRS) issued by the International Accounting Standards Board (IASB). The financial statements have beenprepared on the historical cost basis except for the revaluation of certain non-current assets and financial instrumentsthat aremeasured at fair values, as explained in the accounting policies below. Historical cost is generally based on thefair value of the considerationgiven in exchange for assets.
The preparation of financial statements in conformitywith IFRS requires the use of certain critical accounting estimates.It also requires the directors to exercise judgement in the process of applying the Bank's accounting policies. Changesin assumptions may have a significant impact on the financial statements in the period the assumptions changed. Theareas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significantto the financial statements aredisclosed inNote 3.
(a) NewStandardseffective 1 January2018
(i) IFRS 15 'Revenue fromContractswithCustomers'IFRS 15 'Revenue from Contracts with Customers' and the related 'Clarifications to IFRS 15 RevenuefromContracts with Customers' (hereinafter referred to as 'IFRS 15') replace IAS 18 'Revenue', IAS 11'ConstructionContracts', and several revenue-related Interpretations.
In accordance with the transition guidance, IFRS 15 can only been applied to contracts that areincomplete as at 1 January 2018. The newStandard has not been applied retrospectively as theBankdid not have any revenue from contracts with customers, as at 1 January 2018, that required achange in either the valuationor timingof income.
LosscontractsIFRS 15 does not include any guidance on how to account for loss contracts. Accordingly, suchcontracts are accounted for using the guidance in IAS 37 'Provisions, Contingent Liabilities andContingent Assets'.
The Bank also notes that the amount of loss accrued in respect of a loss contract under IAS 11 takesinto account an appropriate allocation of construction overheads. This contrasts with IAS 37 whereloss accrualsmaybe lower as they are basedon the identification of 'unavoidable costs'.
As at 1 January 2018, theBankhas not identified any loss provisions relating to contracts.
Contractswithmultiple performance obligationsUnder IFRS 15, the Bank must evaluate the separability of the promised goods or services based onwhether they are 'distinct'. A promisedgoodor service is 'distinct' if both:
! The customer benefits from the item either on its own or together with other readily availableresources, and
! It is 'separately identifiable' (i.e. the Bank does not provide a significant service integrating,modifyingor customising it).
While this represents significant new guidance, the implementation of this new guidance did nothave a significant impact on the timing or amount of revenue recognised by the Bank in any year. Inassessing the impact of IFRS 15, the Bank undertook an exercise to determine revenue streamsfalling within its scope and those that are governed by different standards. The conclusion of theexercise was that IFRS 15 accounts for an insignificant portion of the Bank's income of around 4 percent of total revenue with the reminder arising mainly from the operation of financial instrumentswhich are accounted for independently under other standards.
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
73
2. Principal accountingpolicies (Continued)
(a) NewStandardseffective 1 January2018 (Continued)
(i) IFRS 15 'Revenue fromContractswithCustomers'(Continued)
(ii) IFRS9 'Financial Instruments’
IFRS 9 replaces IAS 39 'Financial Instruments: Recognition and Measurement'. It makes majorchanges to the previous guidance on the classification and measurement of financial assets andintroduces an 'expected credit loss'model for the impairment of financial assets.
When adopting IFRS 9, the Bank applied transitional relief and opted not to restate prior periods.Differences arising from the adoption of IFRS 9 in relation to classification, measurement, andimpairment are recognised in retainedearnings.
IFRS 9 also contains new requirements on the application of hedge accounting. The newrequirements look to align hedge accounting more closely with entities' risk management activitiesby increasing the eligibility of both hedged items and hedging instruments and introducing a moreprinciples-based approach to assessing hedge effectiveness. The Bank does not currently applyhedge accounting requirements which are necessary when financial instruments are used as a toolto manage exposures arising from particular risks that could affect profit or loss (P&L) or othercomprehensive income (OCI). The adoptionof IFRS9 impacted the followingareas:
! Theclassification andmeasurement of theBank's financial assets as follows:
Loans and advances toGovernment, commercial banks and staff that are classified as loans andreceivables and measured at amortized cost under IAS 39 will continue to be measured atamortized cost under IFRS9;
Held-to-maturity financial assetsmeasured at amortized cost under IAS 39 will still bemeasuredat amortized cost under IFRS9;
Held-for-trading financial assets which were measured at FVTPL under IAS 39, will now insteadbemeasured at FVOCI under IFRS9;
The Bank's foreign reserve assets, which comprise assets under stewardship of fund managersfor the improvement of returns and other balances heldmainly for transaction andprecautionarypurposes are currently measured at FVTPL under IAS 39. However, under IFRS 9 they will bemeasuredunder FVOCI.
The Bank's equity investments in Afreximbank and Electronic Clearing House were classified asavailable-for-sale andmeasured at cost, as permitted under IAS 39, due to their non-marketablenature. Under IFRS 9, they are required to bemeasured at FVTPL. However, due to the long termand strategic nature of the investments, the Bank designated the two investments to bemeasuredat FVOCI as permittedunder IFRS9.
! The impairment of financial assets applying the expected credit lossmodel.
In accordance with IFRS 9, impairment applies on loans, debt securities and other financialinstruments classified as financial assets at amortized cost and financial assets at fair valuethrough comprehensive income. Therefore, the Bank's financial assets, within the scope forimpairment are loans and advances, the Bank's holdings of securities and foreign currencydeposits and investments.
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
74
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
2. Principal accountingpolicies (Continued)
(a) NewStandardseffective 1 January2018 (Continued)
(i) IFRS 15 'Revenue fromContractswithCustomers'(Continued)
(ii) IFRS9 'Financial Instruments’(Continued)
On the date of initial application, 1 January 2018, the financial instruments of the Bank werereclassifiedas follows:
As illustrated above, the effect of adopting IFRS 9 on the carrying amounts of financial assets at 1January 2018 relates solely to fair value adjustments on the equity investment inAfreximbank.
Further, a loss of K1.028million was recorded on application of IFRS 9 on the outstanding balance offormer staff debtors contained inOther Assets balance – see note 8.
There have been no changes to the classification or measurement of financial liabilities as a result ofthe application of IFRS9.
Reconciliationof statement of financial position balances from IAS39 to IFRS9at 1 January 2018
75
Domestic financial assets at FVOCIEquity investments at FVOCI
Financial assets at amortised cost
Loans and advances
Foreign currency cash and bankaccountsTotal financial asset balances
Original IAS39 category
Held-for-tradingAvailable-for-saleHeld-to-maturityLoans andreceivablesFVTPL
New IFRS 9category
FVOCIEquityinvestments at FVOCIAmortised cost
Amortised cost
FVOCI
Closingbalance 31December
2017 (IAS 39)K'000
89,543
29,9502,047,827
7,903,221
20,776,662
30,847,203
Adoptionof IFRS 9
K'000
-
78,300-
-
-
78,300
Openingbalance 1
January 2018(IFRS 9)
K'000
89,543
108,2502,047,827
7,903,221
20,776,662
30,925,503
Measurement category Carrying amount
Financial assets
Fair value through profit and lossAvailable for sale financial assetsHeld-for-tradingForeign currency cash and bank accountsTotal financial assets measured at FVTPLAmortised costHeld-to-maturityLoans and advancesTotal financial assets measured at
amortised costFair value through other comprehensive
incomeAvailable for sale financial assetsHeld-for-tradingForeign currency cash and bank accountsTotal financial assets measured at FVOCITotal financial asset balances,reclassification and remeasurement at 1January 2018
IAS 39 carryingamount 31December
2017
29,95089,543
20,776,66220,896,155
2,047,8277,903,221
9,951,048
----
30,847,203
Reclassification
(29,950)(89,543)
(20,776,662)(20,896,155)
--
-
29,95089,543
20,776,66220,896,155
-
Remeasurement
----
--
-
78,300--
78,300
78,300
IFRS 9carryingamount 1
January 2018
----
2,047,8277,903,221
9,951,048
108,25089,543
20,776,66220,974,455
30,925,503
Retainedearnings
effect
----
--
-
78,300--
78,300
78,300
2. Principal accountingpolicies (Continued)
(b) Other Standards and amendments that are effective for the first time in2018 and couldbe applicable totheBank are:
! Annual Improvements to IFRS2014-2016Cycle (Amendments to IFRS1and IAS 28);! Applying IFRS9 'Financial Instruments' with IFRS4 'InsuranceContracts' (Amendments to IFRS4);! Classification andMeasurement of Share-basedPayment Transactions (Amendments to IFRS2); and! IFRIC22 'ForeignCurrencyTransactions andAdvanceConsideration.’
These amendments do not have a significant impact on these financial statements and therefore disclosureshavenot beenmade.
(c) Standards, amendments and Interpretations to existing Standards that are not yet effective and havenotbeenadopted earlyby the Bank
At the date of authorisation of these financial statements, new, but not yet effective, Standards, amendmentsto existing Standards, and Interpretations have been published by the IASB. None of these Standards,amendments or Interpretations havebeenadopted early by theBank.
Management anticipates that all relevant pronouncementswill be adopted for the first period beginning on orafter the effective date of the pronouncement. New Standards, amendments and Interpretations neitheradopted nor listed below have not been disclosed, as they are not expected to have amaterial impact on theBank's financial statements.
IFRS16 'Leases’
IFRS 16 will replace IAS 17 'Leases' and three related Interpretations. It completes the IASB's long runningproject to overhaul lease accounting. Leaseswill be recorded in the statement of financial position in the formof a right-of-use asset and a lease liability. There are two important reliefs provided by IFRS 16 for assets oflow value and short-term leasesof less than 12months.
IFRS 16 is effective from periods beginning on or after 1 January 2019. Early adoption is permitted; however,theBankdecidednot to early adopt.
Management is in the processof assessing the full impact of theStandard. So far, it hasbeen assessed that:
! The Bank is a lessor in most of its leasing arrangements mainly involving the leasing of property. Lessoraccounting remains largely unchanged from IAS 17 and accounting for rentals will continue as currentlydone;
! The assets for which the Bank is a leasee and which IFRS 16 requires to be recognised on the statementof financial position are immaterial. These involve renting of limited space within established businessoperations to carry out specified Bank business. As at 31 December 2018 the average annual leasepayments on a leaseby lease basiswasK46,560 including fees formanagement of the facilities
! After applying the practical expedient option which permits an explicit recognition and measurementexemption for leases of small value or those for which the term endswithin 12months or fewer of the dateof initial application and account for those leases as short-term leases the Bank has assessed that thereare currently no leases for which a right-of-use asset would be required to be recognised on thestatement of financial position.
This will mean that the nature of the expense of the above cost will remain as an operating lease expenseand not charged to depreciation and interest expense as required by IFRS 16 when accounting forleasee's transactions.
The Bank is planning to adopt IFRS 16 on 1 January 2019 using the Standard modified retrospectiveapproach. Under this approach, the cumulative effect of initially applying IFRS 16 is recognised as anadjustment to equity at thedate of initial application.Comparative information is not restated.
Choosing this transition approach results in further policy decisions the Bank needs to make, as there areseveral other transitional reliefs that can be applied. These relate to those leases previously held as operatingleases and can be applied on a lease-by-lease basis. The Bank is currently assessing the impact of applyingtheseother transitional reliefs.
IFRS 16 has notmade any significant changes to the accounting for lessors, and therefore the Bank does notexpect any changes for leaseswhere they are acting as a lessor.
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
76
2. Principal accountingpolicies (Continued)
(c) Standards, amendments and Interpretations to existing Standards that are not yet effective and havenotbeenadopted earlyby the Bank (Continued)
IFRS16 'Leases' (Continued)
(d) Functional and presentationcurrency
These financial statements are presented in Zambian Kwacha, the currency of the primary economicenvironment in which the Bank operates. Zambian Kwacha is both the Bank's functional and presentationcurrency. Except where indicated financial information presented in Kwacha has been rounded to thenearest thousand.
(e) Interest income and expense
Interest income and expense for all interest-bearing financial instruments are recognised in the profit or losswithin 'interest income' and 'interest expense' using the effective interest method. The effective interestmethod is amethod of calculating the amortised cost of a financial asset or financial liability and of allocatingthe interest incomeor interest expenseover the relevant period.
The effective interest rate is the rate that exactly discounts the estimated future cash payments and receiptsthrough the expected life of the financial asset or liability (or, where appropriate, a shorter period) to thecarrying amount of the financial asset or liability. When calculating the effective interest rate, the Bankestimates future cash flows considering all contractual terms of the financial instrument but does notconsider future credit losses.
The calculation of the effective interest rate includes all fees paid or received, transaction costs, anddiscounts or premiums that are an integral part of the effective interest rate. Transaction costs areincremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset orliability
Interest incomeandexpensepresented in the statement of comprehensive income include:
! Interest on financial assets and liabilities at amortised cost calculated onan effective interest basis; and
! Interest on financial assets at FVOCI calculatedon aneffective interest basis.
Once a financial asset or a group of similar financial assets has been written down as a result of animpairment loss, interest income is recognised using the rate of interest used to discount the future cashflows for thepurpose ofmeasuring the impairment loss.
(f) Fees and commission income
Fees and commissions, including account servicing fees, supervision fees, licensing and registration fees,are generally recognisedon anaccrual basiswhen the related service has beenperformed.
(g) Dividend income
Dividend income from investments is recognised when the shareholder's right to receive payment has beenestablished (provided that it is probable that the economic benefits will flow to the Bank and the amount ofrevenue canbemeasured reliably).
(h) Rental income
Rental income fromoperating leases is recognised on a straight-line basis over the termof the relevant lease.Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amountof the leasedasset and recognisedona straight-linebasis over the lease term.
(i) Foreigncurrency transactionsandbalances
In preparing the financial statements of the Bank, transactions in foreign currencies are recognised at therates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetaryitemsdenominated in foreign currencies are retranslated at the rates prevailing at that date.
77
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
2) Principal accountingpolicies (Continued)
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at therates prevailing at the date when the fair value was determined. Non-monetary items that are measured intermsof historical cost in a foreign currency are not retranslated.
Exchangedifferences are recognised in profit or loss in the period inwhich they arise.
Foreign exchange differences arising on translation are recognised in the profit or loss, except fordifferences arising on the translation of equity instruments at FVOCI that are recognised directly in othercomprehensive income.
(j) Financial instruments
Financial assets and financial liabilities are recognised when the Bank becomes a party to the contractualprovisionsof the instrument.
Financial assets
All financial assets are recognised on the trade datewhere the purchase or sale of a financial asset is under acontract whose terms require delivery of the financial asset within the timeframe established by the marketconcerned, and are initiallymeasuredat fair value, plus transaction costs.
(i) ClassificationIFRS 9 contains new classification and measurement conditions for financial assets, based on thebusiness model for managing such assets as well as their cash flow characteristics. It introducesthree principal classification categories for financial assets: measured at amortised cost, fair valuethrough other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). IFRS 9eliminates the existing IAS39 categories of held-to-maturity, loans and receivables and available-for-sale.
On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI – debtinvestment; FVOCI – equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Bank changesits business model for managing financial assets, in which case all affected financial assets arereclassifiedon the first dayof the first reportingperiod following the change in thebusinessmodel.
A financial asset is measured at amortised cost if it meets both of the following conditions and is notdesignatedas at FVTPL:
! It is held within a business model whose objective is to hold assets to collect contractual cashflows: and
! Its contractual terms give rise on specified dates to cash flows that are solely payments ofprincipal and interest (SPPI) on the principal amount outstanding.
A financial asset is measured at FVOCI only if it meets both of the following conditions and is notdesignatedas at FVTPL:
! It is held within a business model whose objective is achieved by both collecting contractualcash flows and selling financial assets: and
! Its contractual terms give rise on specified dates to cash flows that are SPPI on the principalamount outstanding.
On initial recognition of an equity investment that is not held for sale, the Bankmay irrevocably electto present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.
All other financial assets not classified at amortised cost or FVOCI as described above aremeasuredat FVTPL. The Bank may if desired irrevocably designate a financial asset that otherwise meetsrequirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates orsignificantly reduces the accountingmismatch thatwould otherwise arise.
78
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
2) Principal accountingpolicies (Continued)
(j) Financial instruments (Continued)
Financial assets (Continued)
(i) Classification
Assessmentof applicable businessmodelThe Bank assesses the business model for newly originated or newly purchased financial assets atportfolio level because this best reflects the way the financial instruments are managed and howinformation is provided tomanagement.
The features assessedmay include:! In case of variable interest instruments, determination of the significance of impact of a rate reset
on cash flows;! Extent to which contractual terms, such as prepayment callable or extension, could change the
timingor amount of cash flows;! For asset backed securities to assess underlying assets to determine if they are classified as
SPPI.
(ii) Subsequentmeasurement
Subsequent measurement, gains, and losses applicable from 1 January 2018 in respect of financialassets are as follows:
Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses, including any interestor dividend income, are recognised in profit or loss.
No financial assets were designated at FVTPL during the period. This was due to the fact that nofinancial assetswere found to havebeenmanagedwith performance evaluated solely on the basis offair value changes, in accordance with the Bank's documented risk management or investmentstrategy.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest method. Theamortised cost is reduced by impairment losses. Interest income, foreign exchange gains andlosses and impairment are recognised in profit or loss. Any gain or loss on derecognition isrecognised in profit or loss.
TheBank has classified the following financial assets as financial assets at amortised cost:! GRZconsolidatedbond;! OtherGRZ securities;! Staff savings securities; and! Loans and receivables, which include budgetary advances to Government, credit to banks and
staff loans.
Debt investmentsat FVOCI
These assets are subsequently measured at fair value. Interest income calculated using the effectiveinterest method, foreign exchange gains and losses and impairment are recognised in profit or loss.Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulatedinOCI are reclassified toprofit or loss.
The Bank has designated its foreign reserves portfolio and domestic securities used in monetarypolicy operation at FVOCI.
TheBank has classified its foreign reserves portfolio at FVOCI becausemost investments are held fortheir contractual cash flows, however, whenever necessary the Bank could potentially sell itsholdings for re-balancing or liquidity needs. Therefore, the Bank considers that FVOCI gives themost appropriate reflection of the business model for managing the Bank's foreign reservesportfolio.
79
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
2) Principal accountingpolicies (Continued)
(j) Financial instruments (Continued)
(ii) Subsequentmeasurement (Continued)
Equity investmentsat FVOCI
These assets are subsequently measured at fair value. Dividends are recognised as income in profitor loss unless the dividend clearly represents a recovery of part of the cost of the investment. Othernet gains and losses are recognised inOCI andare never reclassified toprofit or loss.
The Bank has irrevocably designated at FVOCI, equity investments in Afrexinbank and ZambiaElectronic Clearing House Limited (ZECHL). The Bank chose this classification alternative becauseboth investments were made for strategic purposes rather than with a view to profit on subsequentsale. There are noplans to disposeoff these investments in the short ormedium term.
The fair value of these investments was K138.032 million as at 31 December 2018. No dividend wasrecorded during the period in respect of ZECHL. However, K3.156 million was recognised as adividend thatwas converted into additional shares in Afreximbank.
(i) Derecognition
The Bank de-recognises financial assets or a portion thereof when the contractual rights to the cashflows from the asset expire, or it transfers the rights to receive the contractual cash flows on thefinancial asset in a transaction in which substantially all the risks and rewards of ownership of thefinancial asset are transferred. If the Bank neither transfers nor retains substantially all the risks andrewards of ownership and continues to control the transferred asset, the Bank recognises itsretained interest in the asset and an associated liability for amounts it may have to pay. If the Bankretains substantially all the risks and rewards of ownership of a transferred financial asset, the Bankcontinues to recognise the financial asset and also recognises a collateralised borrowing for theproceeds received.
The Bank also derecognises a financial liability when its terms aremodified and the cash flows of themodified liability are substantially different, in which case a new financial liability based on themodified terms is recognised at fair value.
(ii) Impairment
IFRS 9's impairment requirements use more forward-looking information to recognise expectedcredit losses – the 'expected credit loss (ECL)model'. This replaces IAS39's 'incurred lossmodel'.
Instruments within the scope of the new requirements included loans and other debt-type financialassets measured at amortised cost and FVOCI, trade receivables, contract assets recognised andmeasured under IFRS 15 and loan commitments and some financial guarantee contracts (for theissuer) that are notmeasuredat fair value throughprofit or loss.
Recognition of credit losses is no longer dependent on the Bank first identifying a credit loss event.Instead the Bank considers a broader range of information when assessing credit risk andmeasuring expected credit losses, including past events, current conditions, reasonable andsupportable forecasts that affect the expected collectability of the future cash flows of theinstrument.
In applying this forward-looking approach, a distinction ismadebetween:
! Financial instruments that have not deteriorated significantly in credit quality since initialrecognitionor that have lowcredit risk ('Stage 1'); and
! Financial instruments that have deteriorated significantly in credit quality since initial recognitionandwhose credit risk is not low ('Stage 2').
! Stage 3' would cover financial assets that have objective evidence of impairment at the reportingdate. '12-month expected credit losses' are recognised for the first category while 'lifetimeexpected credit losses' are recognised for the second category.
80
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
2) Principal accountingpolicies (Continued)
(j) Financial instruments (Continued)
Financial assets (Continued)
(ii) Impairment (Continued)
Determiningwhether there issignificant increase incredit risk
When determining whether the credit risk of a financial asset has increased significantly since initialrecognition andwhenestimatingECLs, theBank considers reasonable and supportable informationthat is relevant and available without undue cost or effort. This includes both quantitative andqualitative information and analysis, based on the Bank's historical experience and informed creditassessment and including forward-looking information.
The Bank assumes that the credit risk on a financial asset has increased significantly if it is more than30days past due.
Definitionofdefault
TheBank considers a financial asset to be in default when:
! The borrower is unlikely to pay its credit obligations to the Bank in full, without recourse by theBank to actions such as realising security (if any is held); or
! The financial asset ismore than 90days past due.
The Bank considers a debt security to have low credit risk when its credit risk rating is equivalent tothe globally understood definition of 'investment grade'. The Bank considers this to be Baa3 orhigher per [RatingAgencyX] or BBB-or higher per [RatingAgencyY].
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of afinancial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12months after the reporting date (or a shorter period if the expected life of the instrument is less than12months).
MeasurementofECL
ECLs are a probability-weighted estimate of credit losses. Credit losses aremeasured as the presentvalue of all cash shortfalls (i.e. the difference between the cash flows due to the Bank in accordancewith the contract and the cash flows that the Bank expects to receive). ECLs are discounted at theeffective interest rate of the financial asset.
Financial liabilities
(i) Classification
Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'.
Financial liabilities atFVTPL
Financial liabilities are classified as at FVTPLwhen the financial liability is either held for trading or it isdesignatedas at FVTPL at initial recognition.
A financial liability is classifiedas held for trading if:
! It has beenacquired principally for thepurpose of repurchasing it in the near term; or! On initial recognition it is part of a portfolio of identified financial instruments that the Bank
manages together andhas a recent actual pattern of short-termprofit-taking; or! It is a derivative that is not designated andeffective as a hedging instrument.
A financial liability other than a financial liability held for tradingmay be designated as at FVTPL uponinitial recognition if:
! Such designation eliminates or significantly reduces a measurement or recognitioninconsistency thatwouldotherwise arise; or 81
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
2) Principal accountingpolicies (Continued)
(j) Financial instruments (Continued)
Financial liabilities (Continued)
(i) Classification (Continued)
! The financial liability formspart of a groupof financial assets or financial liabilities or both, whichismanaged and its performance is evaluated on a fair value basis, in accordancewith the Bank'sdocumented risk management or investment strategy, and information about the grouping isprovided internally on that basis; or
! It forms part of a contract containing one or more embedded derivatives, and IAS 39 FinancialInstruments: Recognition and Measurement permits the entire combined contract (asset orliability) to bedesignated as at FVTPL.
TheBanks hasnot classifiedany financial liabilities asFVTPL.
(ii) Derecognitionof financial liabilities
A financial liability is de-recognised when the Bank's contractual obligations have been discharged,cancelledor expired.
(k) Other financial liabilities
Other financial liabilities, includingborrowings, are initiallymeasured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method,with interest expense recognisedonan effective yield basis.
(l) Determinationof fair value
'Fair value' is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction betweenmarket participants at themeasurement date.
When a quoted price is available, the Bankmeasures the fair value of an instrument using the quoted price inanactivemarket for that instrument.
If a market for a financial instrument is not active, the Bank establishes fair value using appropriate valuationtechniques. Valuation techniques include using recent arm's length transactions between knowledgeable,willing parties (if available), reference to the current fair value of other instruments that are substantially thesame, discounted cash flow analyses and option pricing models. The chosen valuation technique makesmaximum use of market inputs, relies as little as possible on estimates specific to the Bank, incorporates allfactors that market participants would consider in setting a price, and is consistent with accepted economicmethodologies for pricing financial instruments. Inputs to valuation techniques reasonably representmarketexpectations andmeasures of the risk-return factors inherent in the financial instrument. The Bank calibratesvaluation techniques and tests them for validity using prices from observable current market transactions inthe same instrument or basedonother available observablemarket data.
(m) Offsetting
The Bank offsets financial assets and liabilities and presents the net amount in the statement of financialposition when and only when, there is a legally enforceable right to offset the recognised amounts and thereis an intention either to settle on a net basis or to realise the asset and settle the liability simultaneously.Income and expenses are presented on a net basis only when permitted by the accounting standards or forgains and losses, arising fromagroupof similar transactions suchas theBank's trading activity.
(n) Property, plant and equipment
i) Property
Properties held for use in the production or supply of goods or services, or for administrative purposes,are stated in the statement of financial position at their revalued amounts, being the fair value at the dateof revaluation, less any subsequent accumulated depreciation and subsequent accumulatedimpairment losses. TheBankobtains an independent valuation of properties every five years.82
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
2) Principal accountingpolicies (Continued)
(n) Property, plant and equipment (Continued)
i) Property (Continued)
Any revaluation increase arising on the revaluation of such property is recognised in othercomprehensive income, except to the extent that it reverses a revaluation decrease for the same assetpreviously recognised in profit or loss, in which case the increase is credited to profit or loss to the extentof the decrease previously expensed. A decrease in the carrying amount arising on the revaluation ofsuch buildings is recognised in profit or loss to the extent that it exceeds the balance, if any, held in theproperties revaluation reserve relating to a previous revaluation of that asset.
(ii) Plant and equipment
Items of plant and equipment are stated in the statement of financial position at cost less accumulateddepreciation and accumulated impairment losses.
(iii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the item's carryingamount only when it is probable that future economic benefits associated with the item will flow to theBank and the cost of the item can be measured reliably. The costs of day-to-day servicing of property,plant and equipment are charged to the profit or loss during the financial period in which they areincurred.
When parts of an item of property or equipment have different useful lives, they are accounted for asseparate items (major components) of property, plant andequipment.
iv) Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of eachpart of an item of property, plant and equipment to write off the depreciable amount of the various assetsover the periodof their expected useful lives.
Depreciation on revalued buildings is recognised in profit or loss. On the subsequent sale or retirement ofa revalued property, the attributable revaluation surplus remaining in the properties revaluation reserve istransferred directly to retained earnings. A portion of the surplus equal to the difference betweendepreciation based on the revalued carrying amount of the asset and depreciation based on the asset'soriginal cost is transferred as the asset is used by the Bank. The transfers from revaluation surplus toretainedearnings are notmade throughprofit or loss.
Other assets are stated at cost less accumulateddepreciation and accumulated impairment losses.
Thedepreciation rates for the current andcomparative period are as follows:
The assets' residual values, depreciation methods and useful lives are reviewed, and adjusted ifappropriate, at each reporting date.
83
BuildingsFixtures and fittingsPlant and machineryFurnitureSecurity systems and other equipmentMotor vehiclesArmoured Bullion VehiclesArmoured Escort VehiclesComputer equipment - hardwareOffice equipment
20182%4%5%10%
10-20%25%10%16.7%25%33.3%
20172%4%5%10%
10-20%25%10%16.7%25%33.3%
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
2 Principal accountingpolicies (Continued)
(n) Property, plant and equipment (Continued)
(i) De- recognition
An item of property, plant and equipment is derecognised upon disposal or when no future economicbenefits are expected to arise from the continued use of the asset. Any gain or loss arising on thedisposal or retirement of an item of property, plant and equipment is determined as the differencebetween the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
(ii) Capitalwork-in-progress
Capital work-in-progress represents assets in the course of development, which at the reporting datehavenot beenbrought into use.Nodepreciation is chargedoncapital work-in-progress.
(o) Intangible assets - computer software
(i) Intangible assets acquiredseparately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulatedamortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basisover their estimated useful lives. The estimated useful life and amortisation method are reviewed at theend of each reporting period, with the effect of any changes in estimate being accounted for on aprospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried atcost less accumulated impairment losses.
(ii) Internally-generated intangible assets
An internally generated intangible asset arising fromdevelopment (or from the development phase of aninternal project) is recognised if, andonly if, all of the followinghavebeendemonstrated:
! The technical feasibility of completing the intangible asset so that it will be available for use or sale;! The intention to complete the intangible asset anduseor sell it;! Theability to use or sell the intangible asset;! How the intangible assetwill generate probable future economicbenefits;! The availability of adequate technical, financial and other resources to complete the development
and to useor sell the intangible asset; and! The ability to measure reliably the expenditure attributable to the intangible asset during its
development.
The amount initially recognised for internally generated intangible assets is the sum of the expenditureincurred from the date when the intangible asset first meets the recognition criteria listed above. Whereno internally generated intangible asset can be recognised, development expenditure is recognised inprofit or loss in theperiod inwhich it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost lessaccumulated amortisation and accumulated impairment losses, on the same basis as intangible assetsthat are acquired separately.
(p) Impairment of non-financial assets
The carrying amounts of theBank's non-financial assets that are subject to depreciation and amortisation arereviewed at each reporting date to determine whether there is any indication of impairment. If any suchindication exists, then the asset's recoverable amount is estimated. An asset's carrying amount is writtendown immediately to its recoverable amount if the asset's carrying amount is greater than its estimatedrecoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and valuein use. In assessing value in use, the estimated future cash flows are discounted to their present value using apre-tax discount rate that reflects current market assessments of the time value of money and the risksspecific to the asset.
Impairment losses are recognised in profit or loss otherwise in equity if the revalued properties are impairedto the extent that an equity reserve is available.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications thatthe loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in theestimates used to determine the recoverable amount. An impairment loss is reversed only to the extent thatthe asset's carrying amount does not exceed the carrying amount that would have been determined, net ofdepreciationor amortisation if no impairment loss hadbeen recognised.
84
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
2 Principal accountingpolicies (Continued)
(q) Employee benefits
(i) Defined contributionplan
A defined contribution plan is a post-employment benefit plan under which an entity pays fixedcontributions into a separate entity and will have no legal or constructive obligation to pay furtheramounts. Obligations for contributions to defined contribution pension plans are recognised as anemployee benefit expense in the profit or loss when they are due. Prepaid contributions are recognisedas an asset to the extent that a cash refundor a reduction in future payments is available.
The Bank contributes to the Statutory Pension Scheme in Zambia, namely National Pension SchemeAuthority (NAPSA) where the Bank pays an amount equal to the employees' contributions. Membership,with the exceptionof expatriate employees is compulsory.
(ii) Defined benefit plan
The Bank provides for retirement benefits (i.e. a defined benefit plan) for all permanent employees inaccordance with established pension scheme rules as well as the provisions of Statutory Instrument No.119 of the Laws of Zambia. A defined benefit plan is a post-employment benefit plan other than a definedcontributionplan.
The cost of providing the defined benefit plan is determined annually using the Projected Unit CreditMethod, with actuarial valuations being carried out at the end of each reporting period. The discount rateis required to be determined with reference to the corporate bond yield, however, due to the non-availability of an active developed market for corporate bonds the discount rate applicable is the yield atthe reporting date on the GRZ bonds that have maturity dates approximating the terms of the Bank'sobligations and that are denominated in the samecurrency inwhich the benefits are expected tobepaid.
The defined benefit obligation recognised by the Bank, in respect of its defined benefit pension plan, iscalculated by estimating the amount of future benefit that employees have earned in return for theirservice in the current and prior periods and discounting that benefit to determine its present value, thendeducting the fair value of any plan assets.
When the calculations above result in a benefit to the Bank, the recognised asset is limited to the lower ofany surplus in the fund and the 'asset ceiling' (i.e. the present value of any economic benefits available inthe formof refunds from theplanor reductions in future contributions to the plan).
Actuarial gains and losses arising fromchanges in actuarial assumptions are chargedor credited to othercomprehensive income when they arise. These gains or losses are recognised in full in the year theyoccur. Past-service costs are recognised immediately in the profit or loss, unless the changes to thepension plan are conditional on the employees remaining in service for a specified period (the vestingperiod). In this case, thepast-service costs are amortisedon a straight-linebasis over the vestingperiod.
(iii) Terminationbenefits
Termination benefits are recognised as an expense when the Bank is demonstrably committed, withoutrealistic possibility of withdrawal, to a formal detailed plan to either terminate employment before thenormal retirement date, or to provide termination benefits as a result of an offer made to encouragevoluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense ifthe Bank hasmade an offer of voluntary redundancy, it is probable that the offer will be accepted, and thenumber of acceptances canbeestimated reliably.
The Bank has a device referred to as Voluntary Early Separation Scheme (VESS) designed to exitpermanent and pensionable staff who volunteer under the rules and conditions as defined and approvedby the Board of Directors. VESS costs are recognised as an expense in full when the Bank approves aseparation request of amember of staff whomeets eligibility conditions stipulated under theVESS rules.
(iv) Short-termbenefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed asthe related service is provided.
A liability is recognised for the amount expected to be paid under short-termcash bonus, gratuity or leavedays if the Bank has a present legal or constructive obligation to pay this amount as a result of pastserviceprovidedby the employeeand theobligation canbe estimated reliably.
85
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
2 Principal accountingpolicies (Continued)
(q) Employee benefits (Continued)
(v) Other staffbenefits
The Bank also operates a staff loans scheme for its employees for the provision of facilities such ashouse, car and other personal loans. From time to time, the Bank determines the terms and conditionsfor granting of the above loans with reference to the prevailing market interest rates and may determinedifferent rates for different classesof transactions andmaturities.
In cases where the interest rates on staff loans are below market rates, a fair value calculation isperformed using appropriate market rates. The Bank recognises, a deferred benefit to reflect the staffloan benefit arising as a result of this mark to market adjustment. This benefit is subsequently amortisedto the profit or loss on a straight-line basis over the remainingperiod tomaturity (seeNote 15).
(r) Cash and cashequivalents
For the purposes of the statement of cash flows, cash and cash equivalents include notes and coins on hand,unrestricted balances held with other central banks and highly liquid financial assets with original maturitiesof less than threemonths, which are subject to insignificant risk of changes in their fair value, and are used bythebank in themanagement of its short-termcommitments.
Cashand cashequivalents are carried at fair value in the statement of financial position.
(s) Transactionswith the InternationalMonetaryFund ("IMF")
The Bank is the GRZ's authorized agent for all transactions with the IMF and is required to record alltransactions between the IMF and the GRZ in its books as per guidelines from the IMF. The Bank thereforemaintains different accounts of the IMF: the IMF subscriptions, securities account, and IMF No. 1 and No. 2accounts.
The Bank revalues IMF accounts in its statement of financial position in accordance with the practices of theIMF's Treasury Department. In general, the revaluation is effected annually. Any increase in value is paid bythe issue of securities as stated abovewhile any decrease in value is affected by the cancellation of securitiesalready in issue. These securities are lodged with the Bank acting as custodian and are kept in physical formas certificates at theBankand they formpart of the records of theGRZ.
The IMF Subscriptions account represents the GRZ's subscription to the IMF Quota and is reported as anasset under the heading IMF Subscription. This Quota is represented by the IMF Securities, IMF No.1 andNo. 2 accounts which appear in the books of the Bank under the heading “Domestic currency liabilities toIMF”.
The Quota is fixed in Special Drawing Rights and may be increased by the IMF. Any increase in the quota issubscribed in local currency by way of non-negotiable, non-interest bearing securities issued by GRZ infavour of the IMF, which are repayable on demand. There is also a possibility that the increase in the quotamay be subscribed in any freely convertible currency, of which the value of the portion payable would bedebited to the account ofGRZmaintainedwith theBank.
(u) Provisions
Provisions are recognised when the Bank has a present legal or constructive obligation as a result of pastevents for which it is probable that an out-flow of resources embodying economic benefits will be required tosettle the obligation, and a reliable estimate of the amount of the obligation can be made. The amountrecognised as a provision is the best estimate of the consideration required to settle the present obligation atthe end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.Where a provision is measured using the cash flows estimated to settle the present obligation, its carryingamount is thepresent valueof those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from athird party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be receivedand the amount of the receivable canbemeasured reliably.
(v) Currency incirculation
Currency issued by the Bank represents a claim on the Bank in favour of the holder. The liability for currencyin circulation is recorded at face value in the financial statements. Currency in circulation represents the facevalue of notes and coins issued to commercial banks and Bank of Zambia cashiers. Unissued notes andcoins held by theBank in the vaults donot represent currency in circulation.
86
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
2 Principal accountingpolicies (Continued)
(w) Currencyprintingandmintingexpenses
Notes printing and coins minting expenses which include ordering, printing, minting, freight, insurance andhandling costs are expensed in the period the cost is incurred.
(x) Sale and repurchase agreements
Securities sold subject to repurchase agreements ('repos') are classified in the financial statements aspledged assets with the counterparty liability included in Term deposits from financial institutions. Securitiespurchased under agreements to resell ('reverse repos') are recorded as loans and advances to commercialbanks.
The Bank from time to time withdraws money from the market ('repos') or injects money into the economy('reverse repos'), through transactions with commercial banks, to serve its monetary objectives or deal withtemporary liquidity shortages in the market. In the event of the Bank providing overnight loans ('reverserepos') to commercial banks, the banks pledge eligible securities in the form of treasury bills andGRZ bondsas collateral for this facility.
A 'repo' is an arrangement involving the sale for cash, of securities at a specified price with a commitment torepurchase the sameor similar securities at a fixedprice either at a specific future date or atmaturity.
3 Critical accounting judgements and key sources of estimation uncertainty
In the application of the Bank's accounting policies, which are described in note 2 -'significant accounting policies', theDirectors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilitiesthat are not readily apparent from other sources. The estimates and associated assumptions are based on historicalexperience and other factors that are considered relevant and reasonable under the circumstances. Actual results may differfrom these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates arerecognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revisionand future periods if the revision affects both current and future periods.
Summarised below are areas where the directors applied critical accounting judgements and estimates that may have themost significant effect on the amounts recognised in the financial statements.
3.1 Realised foreignexchange revaluationgains
In establishing, the amounts recognised as realised foreign exchange gains or losses in the profit or loss, the Bankapplies first in first out (FIFO) basis for valuation of foreign exchange stock sold. Management appraises theappropriateness of valuation techniques used and ensures consistency in such methods from period to period andacross currencies and assets sold. Further information regarding the impact of realised foreign exchange revaluationgains on theBank's performance is contained in note 7.
3.2 Defined benefitsobligations
Whereas the directors relied on a qualified Actuary to determine the present value of the retirement benefitobligations the assumptions and judgements used by the Actuary were considered by the directors and deemedreasonable in the light of the prevailing and anticipated future economic conditions. Seealso note 35.
3.3 Measurementof the expected credit lossallowance
Themeasurement of the expected credit loss allowance for financial assetsmeasured at amortised cost andFVOCI isan area that requires the use of complex models and significant assumptions about future economic conditions andcredit behavior (e.g. The likelihoodof default and the resulting losses).
A number of significant judgements are also required in applying the accounting requirements for measuring ECL,suchas:! Determining criteria for significant increases in credit risk;! Choosingappropriatemodels and assumptions formeasuringof ECL;
87
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
3 Critical accounting judgementsand keysourcesof estimationuncertainty (Continued)
3.4 Fair Valuemeasurement
Management uses valuation techniques to determine the fair value of financial instruments (where active marketquotes are not available) and non-financial assets. This involves developing estimates and assumptions consistentwith howmarket participants would price the instrument. Management bases its assumptions on observable data asfar as possible but this is not always available. In that case, management uses the best information available.Estimated fair values may vary from the actual prices that would be achieved in an arm's length transaction at thereportingdate
3.5 Useful livesofdepreciatable assets
Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on theexpected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may changetheutility of certain software and IT equipment.
4 Riskmanagement policies
(a) Overviewand riskmanagement framework
TheBank has exposure to the following risks fromfinancial instruments:
! Credit risk;! Liquidity risk; and! Market riskwhich include interest rate risk, currency risk andother price risk.
This note presents information about the Bank's exposure to each of the above risks, the Bank's objectives,policies and processes for measuring and managing risk, and the Bank's management of capital.
In its ordinary operations, the Bank is exposed to various financial risks, which if not managed may have adverseeffects on the attainment of the Bank's strategic objectives. The identified risks are monitored and managedaccording to an existing and elaborate internal control framework. To underscore the importance of riskmanagement in the Bank, the Board has established a Risk Management Department, whose role is to co-ordinate the Bank-wide framework for risk management and establish risk standards and strategies for themanagement and mitigation of risks.
The Audit Committee and the Risk Management Committee oversees how Directors monitor compliance with theBank's risk management policies and procedures and reviews the adequacy of the risk management frameworkin relation to the risks faced by the Bank. The Audit Committee is assisted in its oversight role by Internal Audit.Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, theresults of which are reported to the Audit Committee.
The Board of Directors has ultimate responsibility for ensuring that sound risk management practices are in placethat enable the Bank to efficiently and effectively meet its objectives. The approach of the Board is to ensure thefollowing conditions are enhanced:
i) Active Board and senior management oversight. Management maintains an interest in the operations andensures appropriate intervention is available for identified risks.
ii) Implementation of adequate policies, guidelines and procedures. The existing policies, procedures andguidelines are reviewedand communicated to relevant users tomaintain their relevance.
iii) Maintain risk identification, measurement, treatment and monitoring as well as control systems. Managementreviews riskmanagement strategies andensures that they remain relevant.
iv) Adequate internal controls. Improved internal control structures and culture emphasizing the highest level ofethical conduct havebeen implemented to ensure safe and soundpractices.
88
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(a) Overviewand riskmanagement framework (Continued)
v) Correction of deficiencies. TheBank has implemented a transparent systemof reporting controlweaknesses andfollowinguponcorrectivemeasures.
Followingbelow is thedescription anddetails of exposure to the risks identified:
Financial instrumentsbycategory
89
Financial assets
At 31 December 2018Domestic cash in handForeign currency cash and bank accountsItems in course of settlementDomestic financial assets held at FVOCILoans and advancesDomestic assets at amortised costEquity investments at FVOCIIMF funds recoverable from the Government ofthe Republic of ZambiaIMF Subscriptions
At 31 December 2017Domestic cash in handForeign currency cash and bank accountsItems in course of settlementDomestic financial assets held at FVOCILoans and advancesDomestic financial assets at amortised costEquity investments at FVOCIIMF funds recoverable from the Government ofthe Republic of ZambiaIMF Subscriptions
FVOCIK'000
4,70018,756,737
-89,543
---
--
18,850,980
2,94220,776,662
-89,543
---
--
20,869,147
AmorisedcostK'000
-----
3,994,086-
--
3,994,086
-----
2,047,827-
--
2,047,827
Loans andreceivables
K'000
--
237-
7,038,575
-
4,042,31313,748,37824,829,503
--
397-
7,903,221
-
3,367,16612,533,60223,804,386
EquityFVOCIK'000
-----
138,032
--
138,032
-----
29,950
--
29,950
Total
K'000
4,70018,756,737
23789,543
7,038,5753,994,086138,032
4,042,31313,748,37847,812,600
2,94220,776,662
39789,543
7,903,2212,047,82729,950
3,367,16612,533,60246,751,310
Financial liabilities at amortised cost
At 31 December 2018
Deposits from the Government of the Republic of ZambiaDeposits from financial institutionsForeign currency liabilities to other institutionsOther depositsOther liabilitiesDomestic currency liabilities to the IMFForeign currency liabilities to the IMFNotes and coins in circulationSDR allocation
2018K'000
1,840,7155,222,16326,68976,041
8,297,047179,839
13,748,378729,4447,779,94237,900,258
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(a) Credit risk
Credit risk is the risk of financial loss to the Bank if a counterparty to a financial instrument fails to meet its obligationsand arises principally from theBank's receivables fromstaff, GRZ, commercial banks, foreign exchangedeposits andinvestment securities.
The Bank has twomajor committees that deal with credit risk. The Investment Committee deals with risk arising fromforeign currency denominated deposits while the Budget and FinanceCommittee handles risks arising from all otherassets. Thedetails of policy andguidelines arepassedon to relevant heads of departments to implement on aday-to-daybasis.
The major issues covered in the credit risk assessment include establishing criteria to determine choice of counterparties to deal with, limiting exposure to a single counter party, reviewing collectability of receivables anddeterminingappropriate credit policies.
The key principle the Bank enforces in the management of credit risk is the minimizing of default probabilities of thecounterparties and the financial loss in case of default. As such, theBank carefully considers the credit and sovereignrisk profiles in its choice of depository banks for deposit placements. Currently, the Bank's choice of depositorybanks is restricted to international banks thatmeet the set eligibility criteria of financial soundness on long-term creditrating, short-term credit rating, composite rating and capital adequacy. The current approved depository banksholding the Bank's deposits have their performance reviewed periodically, based on performance ratings providedby international rating agencies. The Bank's counterparties which, comprises mostly central banks continued tomeet theBank'sminimumaccepted credit rating criteria of A- except for theSouth AfricanReserveBank and theBankofMauritius (see table below),whichmaintainminimumbalances tomeet operational and strategic objectives.
Counterparty ratings
90
Financial liabilities
At 31 December 2017
Deposits from the Government of the Republic of ZambiaDeposits from financial institutionsForeign currency liabilities to other institutionsOther depositsOther liabilitiesDomestic currency liabilities to the IMFForeign currency liabilities to the IMFNotes and coins in circulationSDR allocation
2017K'000
3,070,5606,582,976184,423167,9027,417,862291,457
12,533,6021,365,7186,655,65438,270,154
Counterparty
Federal Reserve BankCiti Bank New YorkBank of New York Mellon (BNY)Deutsche BundesbankBank of England (BOE)South African Reserve BankBank of MauritiusWorld BankBank for International Settlement
Moody'sAaaA1Aa2AaaAa2Baa3Baa1AaaAaa
S&PAA+A+AA-AAAAABBN/AAAAAAA
FitchAAAA+AAAAAAA
BB+N/AN/AAAA
BoZ MinimumAcceptable Rating
A-A-A-A-A-A-A-A-A-
Rating agency
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(a) Credit risk
Exposure to credit risk
The Bank is exposed to credit risk on all its balances with foreign banks, investments and its loans and advancesportfolios. The credit risk on balances with foreign banks and investments arise from direct exposure on account ofdeposit placements, direct issuer exposure with respect to investments including sovereigns, counterparty exposurearising from repurchase transactions, and settlement exposure on foreign exchange or securities counterpartiesbecause of timezonedifferencesor because securities transactionsare not settledonadelivery versuspayment basis.
The Bank invests its reserves in assets that are deemed to have low credit risk such as balances at other centralbanks, or balances at highly rated supranational such as the Bank for International Settlement (BIS) and othercounterpartiesmeeting theminimumaccepted ratings criteria.
Themaximum exposure to credit risk for financial assets is similar to the carrying amounts shown on the statement offinancial position.
(i) GRZbondsand TreasuryBills
Having full visibility of the Government's debt obligations and its assets the Directors are satisfied withGovernment's ability to settle outstanding obligations. Therefore, the credit risk of such instruments isclassifiedas low.
(ii) Fixed termdeposits
The directors believe that the credit risk of such instruments is also low as the policy is to rigorously reviewcounterparties and accept only those thatmeetminimumset benchmarks.BANKOFZAMBIA
Neither past due nor impaired - Institutional credit risk exposure analysis
The table below shows the credit ratings of foreign currency cash and bank accounts. The ratings were obtainedfromMoody's.
(iii) Staff loansand advances
The credit risk on staff housing loans is mitigated by security over property and mortgage protectioninsurance. The risk onother staff loans ismitigatedby security in the formof terminal benefits payments.
The Bank holds collateral against certain staff loans and advances to former and serving staff in form ofmortgage interest over property and endorsement of the Bank's interest in motor vehicle documents of title.Estimates of the fair values of the securities are based on the value of collateral assessed at the time ofborrowing, andgenerally are not updated exceptwhen a loan is individually assessedas impaired.
No formal credit ratings are available for staff loans. All loans to staff are performing loans.91
Financial Asset
Cash balancesDepositsSecuritiesSpecial drawing rights
Total
Aa1K'00037,017
---
37,017
A1K'00033,645
---
33,645
Baa1K'0003,643
---
3,643
Baa2K'000718---
718
Ratings - 2018Aaa
K'0001,278,15010,221,2954,324,9482,857,321
18,761,714
TotalK'000
1,353,17210,221,2954,324,9482,857,321
18,756,737
Financial Asset
Cash balancesDepositsSecuritiesSpecial drawing rightsTotal
Aa1K'00012,962
---
12,962
A1K'000
141,556---
141,556
Baa1K'0002,985
---
2,985
Baa2K'000249---
249
Ratings - 2017Aaa
K'0003,258,45610,665,8673,601,0093,093,57820,618,910
TotalK'000
3,416,20810,665,8673,601,0093,093,57820,776,662
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(a) Credit risk (Continued)
Exposure to credit risk (Continued)
(iii) Staff loansand advances(Continued)
Anestimate of the fair valueof collateral held against financial assets is shown below:
Thepolicy for disposingof theproperties andother assets held as collateral p r o v i d e s f o r s a l e a tcompetitivemarket prices to ensure theBank suffers noor minimal loss.
All staff loans are neither past duenor impaired.
The Bank monitors concentration of credit risk by the nature of the financial assets. An analysis of theconcentrationof credit risk at the reportingdate is shownbelow:
(iv) Advances toGovernment, commercial banksandother international institutions
Government has a rating of B stable from S & P and advances to them are considered low risk. Advancesextended to commercial bankswere fullycollaterised. As at 31December 2018, all amountswere neither pastduenor impaired.
The Bank's FVOCI investment in treasury bills, held at amortised cost instruments, IMF subscriptions andother assetswheregovernment is the counterparty are all neither past due nor impaired.
(v) Collateral andother credit enhancements
TheBank employees a range of policies tomitigate credit risk. Themost commonof these are insurance andaccepting collateral for funds advanced.
Lending to commercial banks is secured over some loans extended to staff are secured against residentialproperty and motor vehicles. Amounts due from government through debt securities or bridging loans areunsecured.
The Bank's policies regarding collateral have not significantly changed during the period, neither has therebeen significant change in theoverall quality of collateral by theBank since the prior period.
92
2017K'000
89,6081,54591,153
11,50250,70319,8961,5455,0842,42391,153
Loans and advances (Note 15)
Carrying amount- Staff loans- Staff advances
Concentration by nature- House loans- Multi-purpose loans- Motor vehicle loans- Other advances- Personal loans- Other
2018K'000
96,8871,35098,237
12,24855,69920,9321,3505,1672,84198,237
2017K'000
11,50246,79519,89678,193
Loans and advances (Note 15)
Against neither past due nor impaired- Property- Gratuity and leave days- Motor vehicles
2018K'000
10,63630,94414,25355,833
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(b) Credit risk (Continued)
Exposure to credit risk (Continued)
(vi) Impaired loansand investmentdebt securities
Impaired loans and securities are loans and advances and investment securities (other than those carried atfair value through profit or loss) for which the Bank determines that it is probable that it will be unable to collectall or part of principal and interest due according to the contractual terms of the loan / investment securityagreement(s).
As shown in Note 19 amounts due from closed banks of K99.7 million (2017: K105.7 million) were also fullyprovided for. No collateral was held against these assets.
(vii) Allowances for impairment
The Bank establishes a specific allowance for impairment losses on assets carried at amortised cost orclassified as FVOCI that represents its estimate of incurred losses in its loan and investment security portfolio.The only component of this allowance is a specific loss component that relates to individually significantexposures.
Concentrationof risksof financial assetswithcredit risk exposure
Foreign currency cash and bank accountsItems in course of settlementDomestic financial assets at FVOCILoans and advancesDomestic financial assets at amortised costEquity investments at FVOCIIMF funds recoverable from Government of the
Republic of ZambiaIMF subscriptions
Foreign currency cash and bank accountsItems in course of settlementDomestic financial assets at FVOCILoans and advancesDomestic financial assets at amortised costEquity investments at FVOCIIMF funds recoverable from Government of the
Republic of ZambiaIMF subscriptions
FinancialInstitutions
K'000
18,756,737237
89,54328,104
-138,032
-13,748,37832,761,031
FinancialInstitutions
K'00020,776,662
39789,543115,830
-27,950
-12,533,602
33,543,984
IndividualsK'000
98,238
-98,238
IndividualsK'000
---
91,153--
--
91,153
GovernmentK'000
6,912,2333,994,085
4,042,313-
14,948,631
GovernmentK'000
---
7,696,2382,047,827
-
3,367,166-
13,111,231
OthersK'000
--
OthersK'000
------
--
-
TotalK'000
18,756,737237
89,5437,038,5753,994,085138,032
4,042,31313,748,37847,812,600
TotalK'000
20,776,662397
89,5437,903,2212,047,82727,950
3,367,16612,533,602
46,746,368
93
31 December 2018
31 December 2017
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(b) Liquidity risk
This is the risk of being unable to meet financial commitments or payments at the correct time, place and in therequired currency. TheBankas a central bankdoes not face ZambianKwacha liquidity risks.
In the context of foreign reserves management, the Bank's investment strategy ensures the portfolio of foreignreserves is sufficiently liquid to meet external debt financing, GRZ imports and interventions in the foreign exchangemarket when need arises. TheBankmaintains a portfolio of highlymarketable foreign currency assets that can easilybe liquidated in the event of unforeseen interruption or unusual demand for cash flows.
The following table provides an analysis of the financial assets held for managing liquidity risk and liabilities of theBank into relevantmaturity groupsbasedon the remainingperiod to repayment from31December 2018.
Financial assets and liabilitiesheld formanaging liquidity risk
94
31 December 2018
Non-derivative liabilitiesDeposits from the GRZDeposits from financial institutionsForeign currency liabilities to other
institutionsOther depositsNotes and coins in circulationOther liabilitiesDomestic currency liabilities to IMFForeign currency liabilities to IMFSDR allocation
Total non-derivative liabilities
Assets held for managing liquidity riskDomestic cash in handForeign currency cash and bank accountsFinancial assets held at FVOCIFinancial assets held at amortised costLoans and advancesIMF funds recoverable from theGovernment of the Republic of ZambiaIMF Subscription
Total assets held for managing liquidity risk
Net exposure
Ondemand
K'000
1,840,7155,222,163
26,68976,041
8,297,047
13,748,377729,444
-
29,940,476
4,70016,667,617
--
126,342
4,042,31313,748,378
34,589,350
(4,648,874)
Duebetween
3 - 12monthsK'000
--
---
179,839---
179,839
-2,084,490
---
--
2,084,490
(1,929,571)
Due within3 months
K'000
--
-------
-
-4,63189,543
-6,912,233
--
7,006,407
(7,006,407)
Duebetween
1 – 5 yearsK'000
--
-------
-
---
3,994,085-
--
3,994,085
(3,994,085)
Dueafter 5yearsK'000
--
-------
-
-----
--
-
-
TotalK'000
1,840,7155,222,163
26,68976,041
8,297,047179,839
13,748,377729,444
-
30,120,315
4,70018,756,737
89,5433,994,0857,038,575
4,042,31313,748,378
47,674,331
(17,554,016)
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(b) Liquidity risk
Assets held formanaging liquidity risk
The Bank holds a diversified portfolio of cash and high-quality highly-liquid balances to support payment obligationsand contingent funding in a stressed market environment. The Bank's assets held for managing liquidity riskcomprise:
! GRZ bonds and other securities that are readily acceptable in repurchase agreements with commercial banks;and
! Cashand foreign currency balanceswith central banks andother foreign counterparties;
Sources of liquidity are regularly reviewed by the Investment Committee to maintain a wide diversification bycurrency, geography, provider, product and term.
(c) Market risk
Market risk is the risk that changes in market prices, such as interest rate, equity prices and foreign exchange ratesandcredit spreadswill affect theBank's incomeor the valueof its holding of financial instruments.
The Bank sets its strategy and tactics on the level of market risk that is acceptable and how it would be managedthrough the Investment Committee. The major thrust of the strategy has been to achieve a sufficiently diversifiedportfolio of foreign currency investments to reduce currency risk and induceadequate returns.
95
31 December 2017
Non-derivative liabilitiesDeposits from the GRZDeposits from financial institutionsForeign currency liabilities to other
institutionsOther depositsNotes and coins in circulationOther liabilitiesDomestic currency liabilities to IMFForeign currency liabilities to IMFSDR allocation
Total non-derivative liabilities
Assets held for managing liquidity riskDomestic cash in handForeign currency cash and bank accountsFinancial assets at FVOCIFinancial assets at amortised costLoans and advancesIMF funds recoverable from the
Government of the Republic of ZambiaIMF Subscription
Total assets held for managing liquidity risk
Net exposure
Ondemand
K'000
3,070,5606,582,976
184,423167,9027,417,862
12,533,6021,365,718
-
31,323,043
2,94216,897,626
--
251,018
3,367,16612,533,602
33,052,355
(1,729,312)
Duebetween
3 - 12monthsK'000
--
---
291,457---
291,457
-874,133
---
--
3,874,133
(3,582,676)
Duewithin
3 monthsK'000
--
-------
-
-4,90289,543
-7,652,203
--
7,746,648
7,746,648
Duebetween
1 – 5 yearsK'000
--
-------
-
---
2,047,827-
--
2,047,827
2,047,827)
Dueafter 5yearsK'000
--
-------
-
-----
--
-
-
TotalK'000
3,070,5606,582,976
184,423167,9027,417,862291,457
12,533,6021,365,718
-
31,614,500
2,94220,776,662
89,5432,047,8277,903,221
3,367,16612,533,602
46,720,964
(15,106,464)
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(d) Exposure to currency risk
Currency risk is the risk of adverse movements in exchange rates that will result in a decrease in the value of foreignexchangeassets or an increase in the value of foreign currency liabilities.
The Bank's liabilities are predominately held in Kwacha, while the foreign currency assets have been increasing,resulting in large exposure to foreign exchange risk. This position coupled with substantial exchange ratefluctuations is primarily responsible for the Bank recording large realised and unrealised exchange gains/ (losses)over the years. The Bank is exposed to foreign exchange risk arising from various currency exposures primarily withrespect to the US Dollar, British Pound and Euro. The Investment Committee is responsible for making investmentdecisions that ensuremaximumutilisationof foreign reserves atminimal risk.
The Bank as a central bank by nature holds a net asset position in its foreign currency balances. The Directors havemandated the Investment Committee to employ appropriate strategies and methods to minimise the eminentcurrency risk. Notable among useful tools used by the Investment Committee is the currencymix benchmark, whichensures that the foreign currency assets that are held correspond to currencies that are frequently used forsettlement of GRZ and other foreign denominated obligations. All benchmarks set by the Committee are reviewedregularly to ensure that they remain relevant.
TheBank takes on exposure to effects of fluctuations in the prevailing foreign currency exchange rates on its financialposition and cash flows and the net exposure expressed in Kwacha as at 31 December 2018 was as shown in thetable below:
96
At 31 December 2018Foreign currency assetsForeign currency cash and bank accountsIMF Subscriptions
Total foreign currency assets
Foreign currency liabilities
Foreign currency liabilities to otherinstitutions
Foreign currency liabilities to IMFSDR allocation
Total foreign currency liabilities
Net exposure
At 31 December 2017
Foreign currency assetsForeign currency cash and bank accountsIMF Subscriptions
Total foreign currency assets
Foreign currency liabilities
Foreign currency liabilities to otherinstitutions
Foreign currency liabilities to IMFSDR allocation
Total foreign currency liabilities
Net exposure
USDK'000
13,207,652-
13,207,652
23,272--
23,272
13,184,380
USDK'000
15,256,136-
15,256,136
145,526--
145,526
15,110,610
EURK'000313-
313
1,390--
1,390
(1,077)
EURK'000
1,586-
1,586
---
-
1,586
GBPK'000
877,400-
877,400
2,026--
2,026
875,374
GBPK'000
792,293-
792,293
38,897--
38,897
753,396
SDRK'000
2,857,32213,748,378
16,605,700
-729,4447,779,942
8,509,386
8,096,314
SDRK'000
3,093,57812,533,602
15,627,180
-1,365,7186,655,654
8,021,372
7,605,808
OtherK'000
1,814,049-
1,814,049
---
-
1,814,049
OtherK'000
1,633,069-
1,633,069
---
-
1,633,069
TotalKwacha
18,756,73613,748,378
32,505,114
26,689729,4447,779,942
8,536,075
23,969,039
TotalKwacha
20,776,66212,533,602
33,310,264
184,4231,365,7186,655,654
8,205,795
25,104,469
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(d) Exposure to currency risk (Continued)
The following are exchange rates for the significant currencies applied as at the endof the reporting period:
Foreigncurrencysensitivity
The following table illustrates the impact of a 12% (2017: 12%) strengthening of the Kwacha against the relevantforeign currencies. 12% is based on long-term observable trends, presented to key management personnel, in thevalue of Kwacha to major foreign currencies. The sensitivity analysis includes only foreign currency denominatedmonetary items outstanding at reporting date and adjusts their translation for a 12%change in foreign currency rates.This analysis assumesall other variables; in particular interest rates remain constant.
Effect in thousands of Kwacha
A 12 % weakening of the Kwacha against the above currencies at 31 December would have had an equal butopposite effect to the amounts shown above.
(e) Exposure to interest rate risk
Interest rate risk is the risk that the fair value of a financial instrument or the future cash flows will fluctuate due tochanges inmarket interest rates.
TheBank takes on exposure to the effects of fluctuations in the prevailing levels ofmarket interest rates on its financialposition and cash flows. Interest marginsmay increase as a result of such changes but may reduce or create lossesin the event that unexpectedmovements arise. The Board of Directors approves levels of borrowing and lending thatare appropriate for theBank tomeet its objective ofmaintainingprice stability at reasonable cost.
Foreign currency balances are subject to floating interest rates. Interest rate changes threaten levels of income andexpected cash flows. The Bank holds a net asset position of foreign exchange reserves and interest income faroutweighs interest chargesondomestic borrowing and staff savings.
Substantial liabilities including currency in circulation and balances for commercial banks andGRZministries attractno interest.
97
2017K'000
14.1913.4211.929.99
SDR 1GBP 1EUR 1USD 1
2018K'000
16.5815.1413.6611.92
Spot rate
Profit or (loss)K'000
(971,558)(1,581,655)
(129)(105,045)
(912,697)(1,813,273)
(190)(90,408)
31 December 2018
SDRUSDEURGBP
31 December 2017
SDRUSDEURGBP
EquityK'000
(971,558)(1,582,126)
(129)(105,045)
(912,697)(1,813,273)
(190)(90,408)
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(e) Exposure to interest rate risk (Continued)
Foreign currency deposits are the major source of interest rate risk for the Bank. The Directors have establishedinformation systems that assist in monitoring changes in the interest variables and other related information toensure the Bank is in a better position to respond or take proactive action tomeet challenges or opportunities as theyarise. The Directors have also set performance benchmarks for income arising from balances with foreign banks,that are evaluated monthly through the Budget and Finance Committee, Investment Committee and the ExecutiveCommittee. TheBoard reviews theperformance against budget onaquarterly basis.
Whilst adhering to the key objectives of capital preservation and liquidity, theBank continued to posture itself towardsimplementing return enhancing strategies which has seen a careful management of the distribution of reserves interms of liquidity, invested and working capital tranches to obtain optimum balance that enhances returns whileassuring security.
The table below shows the extent to which the Bank's interest rate exposures on assets and liabilities are matched.Items are allocated to time bands by reference to the earlier of the next contractual interest rate repricing date ormaturity date. This effectively showswhen the interest rate earnedor chargedon assets and liabilities are expected tochange. The table can therefore be used as the basis for an assessment of the sensitivity of the Bank's net income tointerest rate movements. Due to the short-term nature of most of the financial assets the Bank retains flexibility inshifting investment horizons resulting in reduced impact on interest rate changeson theBank financial performance.
98
At 31 December 2018
AssetsDomestic cash in handForeign currency cash and bank accountsItems in course of settlementLoans and advancesDomestic financial assets at FVOCIDomestic financial assets at amortised costEquity investments at FVOCIOther assetsIMF funds receivable from GovernmentIMF Subscriptions
Total financial assets
LiabilitiesDeposits from the GRZDeposits from financial institutionsForeign currency liabilities to other institutionsOther depositsNotes and coins in circulationOther liabilitiesDomestic currency liabilities to IMFForeign currency liabilities to IMFSDR allocation
Total financial liabilities
Net exposure at 31 December 2018
Less than 3monthsK'000
-18,752,107
-----
--
18,752,107
---
76,041-----
76,041
18,828,148
Over1 yearK'000
---
6,940,33789,543
3,994,085134,482
--
11,158,447
---------
-
11,065,904
Between 3months and
one yearK'000
---
96,887-----
96,887
---------
-
96,887
Non-interestbearingK'000
4,7004,6312371,350
--
3,55062,903
4,042,31313,748,377
17,868,061
1,840,7155,222,16326,689
-8,297,047179,839
13,748,378729,444
-
30,044,275
(12,176,214)
TotalK'000
4,70018,756,737
2377,038,57589,543
3,994,085138,03262,903
4,042,31313,748,377
47,875,502
1,840,7155,222,16326,68976,041
8,297,047179,839
13,742,378729,444
-
30,120,316
17,753,186
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(e) Exposure to interest rate risk (Continued)
(f) Fair values
The table below sets out fair values of financial assets and liabilities, together with their carrying amounts as shown inthe statement of financial position. The Directors believe that the carrying amounts of the Bank's financial assets andliabilities provide a reasonable estimate of fair value due to their nature. The financial assets are subject to regularvaluationswhile the liabilities are short term in nature, often repayable ondemand.
99
At 31 December 2017
AssetsDomestic cash in handForeign currency cash and bank accountsItems in course of settlementLoans and advancesDomestic financial assets at FVOCIDomestic financial assets at amortised costEquity investments at FVOCIIMF funds receivable from GovernmentIMF Subscriptions
Total financial assets
LiabilitiesDeposits from the GRZDeposits from financial institutionsForeign currency liabilities to other institutionsOther depositsNotes and coins in circulationOther liabilitiesDomestic currency liabilities to IMFForeign currency liabilities to IMFSDR allocation
Total financial liabilities
Net exposure at 31 December 2017
Less than 3monthsK'000
-20,771,760
-------
20,771,760
---
167,902-----
167,902
20,603,858
Over 1 yearK'000
---
7,812,06889,543
2,047,82726,400
--
9,975,838
---------
-
9,975,838
Between 3months and
one yearK'000
---
89,608-----
89,608
---------
-
89,608
Non-interestbearingK'000
2,9424,9023971,545
--
3,5503,367,16612,533,602
15,914,104
3,070,5606,582,976184,423
-7,417,862291,457
12,533,6021,365,718
-
31,446,598
(15,532,494)
TotalK'000
2,94220,776,662
3977,903,22189,543
2,047,82729,950
3,367,16612,533,602
46,751,310
3,070,5606,582,976184,423167,9027,417,862291,457
12,533,6021,365,718
-
31,614,500
15,136,810
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(f) Fair values (Continued)
Fair value hierarchy
IFRS13 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques areobservable or unobservable. Observable inputs reflect market data obtained from independent sources;unobservable inputs reflect the bank market assumptions. These two types of inputs have created the following fairvalue hierarchy:
Level 1 –Quotedprices (unadjusted) in activemarkets for identical assets or liabilities. This level includes listed equitysecurities and debt instruments on exchanges (for example, Lusaka Stock Exchange) and exchanges tradedderivatives like futures (for example,NASDAQ,S&P500).
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, eitherdirectly (that is, as prices) or indirectly (that is, derived from prices). This level includes the swaps and forwards. Thesourcesof input parameters like LIBORyield curve or counterparty credit risk areBloomberg andReuters.
Level 3 – inputs for the asset or liability that are not based onobservablemarket data (unobservable inputs). This levelincludes equity investments anddebt instrumentswith significant unobservable components.
This hierarchy requires the use of observable market data when available. The Bank considers relevant andobservablemarket prices in its valuationswherepossible.
100
AssetsDomestic cash in handForeign currency cash and bank accountsItems in course of settlementDomestic financial assets at FVOCILoans and advancesDomestic financial assets at amortised costEquity investments at FVOCIIMF funds receivable from GRZIMF Subscriptions
Total financial assets
LiabilitiesDeposits from the GRZDeposits from financial institutionsForeign currency liabilities to other institutionsOther depositsNotes and coins in circulationOther liabilitiesDomestic currency liabilities to IMFForeign currency liabilities to IMFSDR allocation
Total financial liabilities
Carryingamount
2018K'000
4,70018,756,737
23789,543
7,038,5753,994,085138,0324,042,31313,748,378
47,812,600
1,840,7155,222,16326,68976,041
8,297,047179,839
13,748,378729,4447,779,942
37,900,258
CarryingAmount
2017K'000
2,94220,776,662
39789,543
7,903,2212,047,82729,950
3,367,16612,533,602
46,751,310
3,070,5606,582,976184,423167,9027,417,862291,457
12,533,6021,365,7186,655,654
38,270,154
Fairvalue2018K'000
4,70018,756,737
23789,543
7,038,5753,994,085138,0324,042,31313,748,378
47,812,600
1,840,7155,222,16326,68976,041
8,297,047179,839
13,748,378729,4447,779,942
37,900,258
Fairvalue2017K'000
294220,776,662
39789,543
7,903,2212,047,82729,950
3,367,16612,533,602
46,751,310
3,070,5606,582,976184,423167,9027,417,862291,457
12,533,6021,365,7186,655,654
38,270,154
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
4 Riskmanagement policies (Continued)
(f) Fair values (Continued)
At 31December 2018, theBankdid not have financial liabilitiesmeasured at fair value (2017: nil).
(g) Managementof capital
The Bank's authorised capital is set and maintained in accordance with the provisions of the Bank of Zambia Act 43,1996. The Act provides a framework, which enables sufficient safeguards to preserve the capital of the Bank fromimpairment (Sections 6, 7 and 8 of the Bank of Zambia Act 43, 1996). The Government of the Republic of Zambia isthe sole subscriber to the paid up capital of the Bank and its holding is not transferable in whole or in part nor is itsubject to any encumbrance.
The scope of the Bank's capital management framework covers the Bank's total equity reported in its financialstatements. The major drivers of the total equity are the reported financial results and profit distribution policiesdescribedbelow.
The Bank's primary capital management objective is to have sufficient capital to carry out its statutory responsibilitieseffectively. Therefore, inmanaging the Bank's capital the Board's policy is to implement a sound financial strategy thatensures financial independence and maintains adequate capital to sustain the long-term objectives of the Bank andtomeet its operational andcapital budgetwithout recourse to external funding.
Distributable profits as described in the provisions of Sections 7 and 8 of theBank of ZambiaAct 43, 1996 are inclusiveof unrealised gains. The Board is of the opinion that the distribution of unrealised gains would compromise the Bank'scapital adequacy especially that such gains are not backed by cash but aremerely book gains thatmay reversewithinno time. The Bank has made proposals under the proposed amendments to the Bank of Zambia Act to restrictdistributable profits to those that are realised.
Therewere nochanges recorded in theBank's strategy for capitalmanagement during the year.
TheBank's capital position as at 31Decemberwas as follows:
The capital structure of the Bank does not include debt. As detailed above the Bank's equity comprises issued capital,general reserves, property revaluation reserve and the retained earnings. The Bank's management committeeperiodically reviews the capital structure of theBank to ensure theBankmaintains its ability tomeet its objectives.
101
31 December 2018
Financial assets at FVOCIEquity investment at FVOCI
31 December 2017
Financial assets at FVOCIEquity investment at FVOCI
Level 1
---
Level 1
---
Level 3
---
Level 3
-29,95029,950
Level 2
89,543138,032227,575
Level 2
89,543-
89,543
Total
89,543138,032227,575
Total
89,54329,950119,493
2017K'000
500,0205,586,1421,798,905230,5078,115,574
Notes
37383838
CapitalRetained earningsGeneral reserve fundProperty revaluation reserveTotal
2018K'000
500,0207,887,3201,929,377354,584
10,541,452
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
5 Interest income
There was a decline in the interest on loans and receivables due to the change in interest application on the Kwacha BridgeLoan to the Government from an average rate of 24.9 % at the time when the advance was obtained to a floating rate ofpreviousmonth's inflationplus 2%.
The reduction in the interest arising on open market operations was on account of lower open market operations activityduring the period.
No interest is paid ondeposits fromfinancial institutions, theGRZand foreign currency liabilities to other institutions.
6 Fee and commission income
7. Other gainsand losses
The rise in net unrealised gains/(losses) recorded during 2018, was account of the depreciation of the Kwacha against majorforeign currencies during the year. The Kwacha depreciated by about 20% from K9.91 per US dollars as at 31st December2017 to close at K11.92 on 31st December 2018. The increase in other income is because of reversal of provisions againstlegal cases followingdisposal of court proceedings.
102
2017K'000
1,283,752267,695201,716
1,753,163
2017K000
112,5724,027
116,599
2017K00096,69493,1929,5052,6651,172
203,228
3,828
2017K'000
494,97020,2912,5631,7071,051
(326,820)
193,762
Interest on loans and receivablesInterest Government securitiesInterest on foreign currency investments and deposits
Total interest income
Interest expense
Interest arising on open market operationsInterest arising on staff savings
Total interest expense
Fees and commission income on transactions with the GRZSupervision feesLicences and registration feesPenaltiesOther
Fees and commission income
Fee and commission expense
Arising on foreign exchange transactions
Net realised foreign exchange gainsOther incomeDividend on equity investments at FVOCIRental incomeGain on disposal of property, plant and equipmentNet unrealised foreign exchange gains/(losses)
2018K'000
443,620337,952285,469
1,067,041
2018K'00029,5034,842
34,345
2018K'00084,323102,4141,1404,25011,468
203,595
5,089
2018K'000
626,088796,566
12,360115
1,298,749
2,723,879
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
8. Impairment of financial assets
9 Employee benefits
10 Operatingexpenses
11 Income tax
TheBank is exempt from income tax under section 56of theBankof ZambiaAct, No. 43of 1996.
12 Foreigncurrencycashandbank accounts
103
At 1 January 2017Impairment loss for the year- Reversal during the year
Balance at 31 December 2017
At 1 January 2018Changes on initial application of IFRS 9Restated balance at 1 January 2018Impairment loss for the year- Reversal during the year
Balance at 31 December 2018
Amounts duefrom closed
banks(Note 19)
K'000124,158
(18,441)
105,717
105,717-
105,717
(6,048)
99,669
Loans andadvances(Note 15)
K'00023,525
(23,525)
-
---
-
-
Other assets(Note 18)
K'000910
-
910
9101,0281,938
(214)
1,724
TotalK'000
148,593
(41,966)
106,627
106,6271,028
107,655
(6,262)
101,393
2017K'000
205,818183,07716,7825,589(2,559)
408,707
Wages and salariesOther employee costsEmployer's pension contributionsEmployer's NAPSA contributionsStaff loan benefit (Note 15)
2018K'000
224,121213,2066,94215,627(3,166)
456,730
2017K'000
10,664,7783,871,1473,142,2573,093,578
4,902
20,776,662
Deposits with non-resident banksCurrent account balances with non-resident banksClearing correspondent accounts with other central banksSpecial Drawing Rights (“SDRs”)Foreign currency cash with banking office
2018K'000
10,031,5572,080,8463,782,3822,857,321
4,631
18,756,737
312,51221,92721,370
2
355,811
Administrative expensesExpenses for bank note productionRepairs and maintenanceSundry banking office expenses
130,55890,84019,658
17
241,073
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
13 Items incourse of settlement
Items in the course of settlement represent claims on credit institutions in respect of cheques lodged with the Bank by itscustomers on the last business day of the year and presented to the Bank on or after the first business day following thefinancial year-end.
14. Domestic financial assets at Fair Value throughotherComprehensive Income (FVOCI)
Balances represent actual holdings of TreasuryBills acquiredby theBank through rediscounts by commercial banks.
15 Loansand advances
Loans and advances to staff were made at concessionary rates. Credit quality is enhanced by insurance and collateraldemanded.Collateral will generally be in the formof property or retirement benefits.
Where staff loans are issued to members of staff at concessionary rates, fair value is calculated based on market rates. Thiswill result in the long-termstaff loansbenefit as shownabove.
Themaximumprevailing interest rates on staff loanswere as follows
a) RecapitalisationbondThe capitalisation bond of K221.2 million at 31st December 2017 represented a series of equity bonds authorised by theGRZ for thepurpose of financing theoutstanding calledup capital of theBank. Details are as illustratedbelow:
104
2017K'00079,43410,174
89,6087,474,994221,244115,8301,545
7,903,221
Staff loansStaff loans benefit at market value
Total staff loansBudgetary advances to the GovernmentCapitalisation bondCredit to banksStaff advances
Total loans and advances
2018K'00087,8449,044
96,8886,912,233
-28,1041,350
7,038,575
2017K'00012,733(5,118)7,6152,55910,174
a) Staff loansMovement in staff loans benefit
Balance at 1 JanuaryCurrent year fair value adjustment of new loans
Amortised to statement of comprehensive income (Note 9)Balance at 31 December
2018K'00010,174(4,296)5,8783,1669,044
2017K'000
10%10%12.5%
House loansPersonal loansMulti-purpose loans
2018K'000
10%10%12.5%
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
15 Loansand advances (Continued)
b) Recapitalisationbond (Continued)
As a way of financing the outstanding called up capital of K490.0 million in Bank of Zambia, GRZ agreed to issue aseries of bonds in accordancewith termsand conditions as statedbelow:
The series of bonds were designated as “GRZ Equity injection bonds, Series 2013A”, and were authorised by thePublic Finance Act in the aggregate sum of K490.0 million for the purpose of financing the outstanding called upauthorised capital of theBankand for paying costs related to the issuanceof theSeries 2013Abonds.
In January 2015, the 2013A bonds dates of delivery were revised by the issuer as per table below with a resultingimpact of a fair value adjustment of K50.9million.
The first instalment was paid on 16 January 2015 while the second was settled on 31 January 2017. The remaining two weresettledduring the year bywayof application of part of the dividendpaid togovernment.
The termsof the bondswere:
(a) The2013Abonds shall not bear any interest.
(b) The2013Abonds shall be non-transferable
(c) The2013Abonds shall be issuable in suchdenominations as theBankdeems appropriate.
(d) The principal amount on the 2013A bonds shall be payable through the accounts established at the Bank for thepurposesof thebond indenture.
16 Domestic financial assets at amortisedcost
17 TheGRZconsolidated securities
105
2017K'000
260,000(52,953)207,04714,197221,244
Total Capitalisation bondAmortised cost adjustment
Unwinding of fair value adjustmentCapitalisation bond after adjustments
2018K'000
-----
Order 2013A serial bonds2015201620172018
Principal amount due100,000130,000130,000130,000
Old maturity date30 June 201430 June 201530 June 201630 June 2017
New maturity date16 January 201531 January 201730 June 201830 June 2019
2017K'000
1,791,618215,52740,682
2,047,827
GRZ consolidated securities (Note 17)Other GRZ securitiesStaff savings treasury bills
2018K'000
1,762,9542,194,39236,739
3,994,085
2017K'000
1,154,597637,021
1,791,618
6% GRZ consolidated bond364 days Treasury Bills
2018K'000
1,120,968641,987
1,762,955
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
17 TheGRZconsolidated securities (Continued)
Effective 1 December 2007 a portion of the consolidated bond was converted to Treasury Bills, thereby creating a portfolio ofmarketable securities, for the purpose of enhancing the range of instruments available for implementingmonetary policy andto support theBank's strategic objective ofmaintaining price stability.
The consolidated bondwas issued on 27 February 2003 following an agreement signedwith GRZ to consolidate all the debtsowed by GRZ to the Bank. In consideration of such consolidation of debt, GRZ undertook and agreed to issue, effective 1January 2003, in favour of the Bank a 10-year long-term bond with a face value of K1,646.74million and a coupon rate of 6%.This reduced toK1,120.97million after the 2007 conversion.
Both themarketable securities and the reduced portion of the 10 year consolidated bond were rolled over on 2 January 2013for an additional period of 10 years. In accordancewith the conversion agreement between theGRZ andBank of Zambia, themarketable securities were to be rolled over uponmaturity at yield rates prevailing in themarket on the dates of rollover, whiletheK1,120.97millionwould be rolled over for another 10 years at a coupon rate of 6%.
The bond is carried at amortised cost at an original effective interest rate of 6.04%. The bond is reviewed on an annual basisfor any impairment.
The Treasury Bills are measured at amortised cost at an effective interest rate of 12.58%. The Treasury Bills are renewable inthe short term and the rolled over values will reflect fair values. However, where objective evidence of impairment exists, ameasurement of the impairment losswill bedetermined and recorded in profit or loss.
18. Other assets
Office stationery and other consumables represent bulk purchases and are held for consumption over more than onefinancial year.
20 Equity investmentsat FVOCI
The Bank designates equity investments at FVOCI when those investments are held for purposes other than to generateinvestment returns. When this election is used, fair value gains and losses are recognised in OCI and are not subsequentlyreclassified to profit or loss, including on disposal. Impairment losses (and reversal of impairment losses) are not reportedseparately from other changes in fair value. Dividends, when representing a return on such investments, continue to berecognised in profit or loss as other income when the Bank's right to receive payment is established. Dividends that areconverted to shares are recorded inOCI.
106
2017K'00010,2696,0342,49018,793(910)17,883
PrepaymentsSundry receivablesStationery and office consumables
Specific allowances for impairment (Note 8)
2018K'00055,0625,9023,66464,628(1,724)62,904
2017K'000
105,717(105,717)
-
AdvancesSpecific allowances for impairment (Note 8)
2018K'00099,669(99,669)
-
3,55026,400
29,950
Zambia Electronic Clearing House LimitedAfrican Export Import Bank
3,550134,482
138,032
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
20 Equity investmentsat FVOCI (Continued)
Zambia ElectronicClearingHouse Limited
The investment in Zambia Electronic Clearing House Limited (“ZECHL”) represents the Bank's contribution of K3.550 million,for the establishment of the National Switch to enhance ZECHL functionality, more specifically to support electronic point ofsale transactions to help minimise cash based transactions and their attendant costs and risks. The principal activity ofZECHL is the electronic clearing of cheques and direct debits and credits in Zambia for its member banks, including the Bankof Zambia. The ZECHL is fundedby contributions frommember banks. ZECHL is considered an equity investment at FVOCI.As there is no reliablemeasure of the fair value of this investment, it is carried at cost, and regularly reviewed for impairment ateach reporting date. ZECHL has a unique feature of being set up as a non-profit making concern whosemembers contributemonthly to its operating expenses andother additional requirements. Other contributionsmadeby theBankduring the year ofK0.111million (2017: K0.032million) are included in administrative expenses.
AfricaExport ImportBank
The Bank of Zambia holds an investment in the equity of Africa Export Import Bank. (“AEIB”). AEIB is a grouping of regionalcentral banks and financial institutions designed to facilitate intra and extra African trade. AEIB is a financial instrumentclassifiedas anequity investment at FVOCI.
The investment in AEIB includes dividend equivalent to K3.156million received in 2018, which was converted into equity. Thiswas in linewith AEIB's call for equity increase to strengthen its capital and enable improvedpursuanceof itsmandate.
21 IMF funds recoverable fromtheGovernmentof theRepublic of Zambia
This represents fundsdrawnby theGovernment of theRepublic of Zambia against the IMFPRGF facility (Note 34).
Loans under the PRGF carry an interest rate of 0.5 percent, with repayments semi-annually, beginning five-and-a-half yearsanda finalmaturity of 10 years after disbursement.
The Extended Credit Facility (ECF) succeeded the PRGF effective 7th January 2010 as the Fund's main tool for providingsupport to Low Income Countries (LICs). Financing under the ECF carries a zero interest rate through 2013, with a graceperiodof 5½years, anda finalmaturity of 10 years.
22 IMFsubscriptions
The IMF subscription represents membership quota amounting to SDR 489,100,000 (2017: SDR 489,100,000) assigned tothe GRZ by the IMF and forms the basis for the GRZ's financial and organisational relationship with the IMF. The financialliability relating to the IMF subscription is reflected under Note 34. The realisation of the asset will result in simultaneoussettlement of the liability. The IMFQuota subscription and the related liability have the samevalue.
Themovement on IMF subscription is on account of currency valuation adjustments between 2018 and2017. The valuation isconductedonce every 30April of the year by the IMFandadvised tomember countries to effect the necessary adjustments.
107
2017K'000
3,346,41320,753
3,367,166
Poverty Reduction and Growth Facility (PRGF)*Accrued charges - SDR Allocation
2018K'000
3,952,95089,363
4,042,313* Formerly Enhanced Structural Adjustment Facility (ESAF) obligation.
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
23. Property, plant and equipment
(a) The fair value measurement of the leasehold buildings as at 31 December 2018 were performed by Messrs R.M.Fumbeshi & Co Limited, independent valuers. Messrs R.M. Fumbeshi & Co Limited are members of the RoyalInstitute of Chartered Surveyors, and they have appropriate qualifications and recent experience in the fair valuemeasurement of properties in the relevant locations.
The fair value of business buildings was determined using the depreciated replacement cost approach that reflectsthe cost to a market participant to construct assets of comparable utility and age, adjusted for obsolescence. Otherbuildings' fair values were based on the market comparable approach that reflects recent transaction prices forsimilar properties. The valuation techniques are consistent with those applied in the past. The carrying amount of therevaluedproperties if carried under costmodelwould beZMW17.1million (2017: ZMW14.7million)
(b) Capital work-in-progress represents the expenditure to date onoffice refurbishment and software upgradeprojects.
108
Cost or valuation
At 1 January 2017AdditionsTransfersDisposals31 December 2017AdditionsTransfersRevaluationDisposals31 December 2018
Accumulated depreciationAt 1 January 2017Charge for the yearDisposalsAt 31 December 2017Charge for the yearTransfer to ReservesDisposalsAt 31 December 2018
Carrying amounts
At 31 December 2018
At 31 December 2017
Leaseholdbuildings
K'000
272,058-
11,567(319)
283,306-
2,842102,148
-388,294
16,6035,519
-22,1225,668
(27,701)-90
388,205
261,184
Motorvehicles,bulliontruck
and escortvehicles
K'000
42,1876,5342,370(3,336)47,755
---
(97)47,658
27,6294,787(2,825)29,5915,582
-(97)
35,179
12,479
18,164
Furniture,Fittings,
computers,plant,
machineryand
equipmentK'000
215,53711,5185,049(4,922)227,1827,5927,578
-(3,952)238,398
99,30519,810(4,756)114,35919,345
-(3,944)129,654
108,744
112,823
Capitalwork-in
progressK'000
58,63020,312(19,879)
-59,06352,801(11,094)
--
99,961
-
------
99,961
59,063
TotalK'000
588,41238,364(893)(8,577)617,30660,393(674)
102,148(4,049)775,123
143,53730,116(7,581)166,07330,595(27,701)(4,041)164,922
610,199
451,234
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
24 Intangible assets
25 Capital expenditure commitments
The funds tomeet the capital expenditure commitmentswill be sourced from internally generated funds.
26 Deposits fromtheGovernmentof theRepublic of Zambia
Thedeposits are non-interest bearing, are payable ondemandandaredue to theMinistry of Finance andNational Planning.
27. Deposits fromfinancial institutions
The deposits except for term deposits are non-interest bearing and are payable on demand. Term deposits from financialinstitutions arise from open market operations (OMO). These are short-term instruments with maximum maturity of up to 90days and are used as ameans of implementingmonetary policy. The instruments bear interest at rates fixed in advance forperiodsup tomaturity. No collateral was providedagainst anydeposits at 31December 2018.
28 Foreigncurrency liabilities toother institutions
These are deposits by foreign governments and institutions, are non-interest bearing and are repayable on demand.Balances at endof year relatemainly to fundsprovidedby foreign institutions in respect of project support. 109
CostAt 1 January 2017DisposalsAdditionsAt 1 January 2018AdditionsTransfer from work-in-progress (Note 23)
At 31 December 2018
Amortisation and impairmentAt 1 January 2017Amortisation charge for the yearAt 1 January 2018Amortisation charge for the yearAt 31 December 2018Carrying amounts
At 31 December 2018
At 31 December 2017
Purchased SoftwareK'000
52,741-
89353,634
-674
54,308
47,4114,52651,937205
52,142
2,166
1,697
2017K'000
118,111Authorised by the directors and contracted for
2018K'000
69,483
2017K'000
4,809,5831,372,020400,978
36134
6,582,976
Statutory minimum reserve requirementsCommercial bank current accountsTerm deposits from financial institutionsDeposits from other international financial institutionsDeposits from other central banks
2018K'000
3,774,1281,433,410
1,14213,449
34
5,222,163
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
28 Foreigncurrency liabilities toother institutions (Continued)
29 Other deposits
Staff savings bear floating-interest rates compounded on a daily basis and paid at the end of the month. They are repayableondemand.
30 Notes and coins incirculation
31 Other liabilities
Other liabilities are expected tobe settled nomore than 12months after the endof the reportingperiod.
32 Provisions
The provisions are in respect of various claims brought against the Bank in the courts of law on which it is probable that afinancial outflowwill be required to settle the claims.
110
2017K'000
167,902Staff savings, deposits and clearing accounts
2018K'000
76,041
2017K'000
184,423Donor funds
2018K'000
26,689
2017K'000
5,067,8261,542,082292,698114,70989,10028,172102,2977,236,884180,9787,417,862
Bank notes issued by denominationK100K50K2010K5K2Unrebased notesBank notes issuedCoins issued
2018K'000
5,266,7792,159,563281,914108,726120,83649,172102,2978,089,287207,7608,297,047
151,942139,515
291,457
Accounts payableAccrued expenses payable
64,020115,819
179,839
2017K'000
666,425177,063(7,155)
836,333
Balance at 1 JanuaryProvisions made during the yearPayments and reversals made during the year
Balance at 31 December
2018K'000
836,3331,006
(791,180)
46,159
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
33 Domestic currency liabilities to IMF
The above liability arises from IMF Quota subscriptions (Note 22) and has no repayment terms and bears no interest. Theincrease in value is onaccount of currency valuation adjustments between2018 and2017, as advisedby the IMF.
34. Foreigncurrency liabilities to IMF
a) The facility (formerly the Enhanced Structural Adjustment Facility (ESAF)) loan was obtained in 2002 and is repayablesemi-annually with the last payment due in 2021. The loan bears interest at one-half per cent per annum. The balance hasreducedon account of repayments and exchange ratemovements during the year.
b) The charges on theSDRallocation are levied by the IMF and repaid quarterly with full recovery from theGovernment of theRepublic of Zambia.
35 Employee benefits
A reconciliation of the net definedbenefit obligation is as shownbelow:
The Bank provides a pension scheme for all non-contract employees administered by a Board of Trustees who retainresponsibility for the governance of the plan including investment decisions and setting contribution levels. The assets of thisscheme are held in administered trust funds separate from the Bank's assets and are governed by the Pension SchemeRegulationAct, No. 26 of 1996.
The plan is a final salary pension plan, which provides benefits to members in the form of a guaranteed level of pensionpayable for life. The level of benefits provided depends onmembers' length of service and their salary in the final years leadingup to retirement. Pensions in payment are increasedat thediscretion of the Trusteesof theplan.
Contributions to the defined benefit fund are charged against income based upon actuarial advice. The employer is currentlycontributing at a rate of 15% of members' total basic salaries. Any deficits are funded to ensure the on-going financialsoundnessof the fund. 111
2017K'000
12,500,06933,281252
12,533,602
International Monetary Fund:Securities accountNo. 1 accountNo. 2 account
2018K'000
13,711,59636,506276
13,748,378
2017K'000
1,344,96520,753
1,365,718
Due to the International Monetary Fund:- Poverty Reduction and Growth Facility (PRGF) (a)- Charges on SDR allocation (b)
2018K'000
743,136(13,692)
729,444
2017K'000
--
-
Net asset at 1 JanuaryRemeasurements recognised in other comprehensive income
Net asset at 31 December
2018K'000
-
-
2017K'000
477,700(440,520)(37,180)
-
Fair value of plan assetsPresent value of defined benefit obligationsImpact of asset ceilingRecognised asset for defined benefit obligations
2018K'000
438,549(427,497)(11,052)
-
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
35 Employee benefits (Continued)
The plan's investment strategy is a Liability Driven Balanced portfolio designed tomeet the plans objectives to be able to payout benefits accruing under the plan. The strategy recognises that diversification is desirable tomanage and spread risk andendeavours to invest within the prescribed asset thresholds. Over 40% of the investment portfolio is invested in governmentbonds.
Theplan is exposed to a number of risks; themain ones being
(a) Asset volatility
The plan liabilities are calculated using a discount rate set with reference to Zambian government bond yields; if planassets underperform this yield, thiswill create a deficit.
(b) Changes in bondyields
A decrease in government bond yields will increase plan liabilities, although this will be partially offset by an increase inthe value of the plans' bondholdings.
(c) Life expectancy
The plan provides benefits for the life of the member, so increases in life expectancy will result in an increase in the plans'liabilities.
The defined benefit obligation is calculated by independent actuaries using the projected unit credit method after everythree years. However, the directors retain discretion to alter the timing of reviews to enable provision of reasonableestimates and more relevant information that achieves the fairest presentation. The latest actuarial review and valuationwas carried out byQuantumConsultants andActuaries on4March2019 in respect of results as at 31December 2018.
Remeasurements to be recognised in other comprehensive income:
The charge due to impact of asset ceiling arises due to the fact that even though the fund recorded an actuarial surplus, theBank as sponsor will not enjoy any break in contributions and should, therefore, not recognise an actuarial asset in its books.The asset stays in the fund to improve members' benefits. The most significant changes resulting in the gains highlightedabove are change in retirement age from55 years to 60 years for normal retirement and change in discount rate from18.5% in2017 to 17.0% in 2018.
112
2017K'00037,18063,7042,733
135,527(239,144)
-
Charge due to impact of asset ceilingReturn on plan assets (excluding amounts in net interest)Experience (gains)/lossesGain from change in financial assumptionsGain from change in demographic assumptions
Remeasurements
2018K'00011,05279,942(16,731)(30,865)(43,398)
-
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
35 Employee benefits (Continued)
Planassets comprise:
Actuarial assumptions
Principle actuarial assumptionsat the reportingdatewere:
Average life expectancy at normal retirement age60
Sensitivity of thedefinedbenefit obligation to actuarial assumptions
113
2017K'000
267,54226,23318,75752,972112, 197
477,700
276,64864,8749,1022,733
(53,364)135,527440,520
470,881114,0465,30916,925(12,392)(53,364)(63,704)477,700
Investment properties and equityTreasury billsFixed assets and corporate bondsOther assetsGRZ bonds
Total plan assets
Movement in the present value of the defined benefit obligationsover the period
Defined benefit obligations at 1 JanuaryInterest costCurrent service costExperience (gains)/lossesBenefits paid by the planGains from change in financial assumptionsDefined benefit obligations at 31 December
Movement in the present value of plan assetsFair value of plan assets at 1 JanuaryInterest income on plan assetsEmployee contributionsEmployer contributionsAdministration expensesBenefits paid by the planReturn on plan assets, excluding interestFair value of plan assets at 31 December
2018K'000
237,44833,74625,76731,045110,543
438,549
440,52082,9758,506
(16,731)(56,908)(30,865)427,497
477,70085,2825,29616,693(9,573)(56,908)(79,941)438,549
2016K'0008.0%10.0%18.5%18.5%8.0%
Future pension increaseSalary increase (p.a)Discount rate (p.a)Expected return on plan assetsInflation rate
2018K'0008.0%8.0%17.0%17.0%8.0%
2017K'00018.320.5
MaleFemale
2018K'00018.320.5
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
35 Employee benefits (Continued)
The sensitivity of the defined benefit obligation to significant actuarial assumptions has been calculated based on samemethod (present value of the defined benefit obligation calculated with the projected unit credit method at the end of thereportingperiod) usedwhen calculating the pension liability recognisedwithin the statement of financial position.
The sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice,this is unlikely to occur, and changes in someof the assumptionsmaybe correlated
36 SDRallocation
This represents Special Drawing Rights allocated by the IMF amounting to SDR 469,137,515, 2017: SDR 469,137,515. Thepurpose of the allocations is to improve an IMF member country's foreign exchange reserves assets. The amount is notrepayable to IMF except in the event that (a) the allocation is withdrawn or cancelled; (b) themember country leaves the IMF;or (c) the SDR department of the IMF is liquidated. The translation rate for end of year was ZMW16.5835 per SDR (2017:ZMW14.187)
37 Capital
The GRZ is the sole subscriber to the paid up capital of the Bank and its holding is not transferable in whole or in part nor is itsubject to any encumbrance.
38. Reserves
General reserve fund
The General Reserve Fund represents appropriations of profit in terms of Section 8 of the Bank of Zambia Act No. 43 of1996.
Under Section 8 of theBankof ZambiaAct, No 43of 1996, if theBankof ZambiaBoard ofDirectors certifies that the assets ofthe Bank are not, or after such transfer, will not be less than the sum of its capital and other liabilities, then the followingappropriation is required to bemade to the general reserve fund:
(a) 25% of the net profits for the year, when the balance in the general reserve fund is less than three times the Bank'sauthorised capital; or
(b) 10% of the net profits for the year, when the balance in the general reserve fund is equal to or greater than three times theBank's authorised capital.
114
2017K'000
-36,647+42,291
+16,441-15,222
+27,718-24,582
-5,286+4,625
Discount rate- increase by 1%- decrease by 1%
Salary- increase by 1%- decrease by 1%
Future pension- increase by 1%- decrease by 1%
Life expectancy- increase by 1%- decrease by 1%
2018K'000
-34,045+39,069
+14,761-13,745
+26,190-23,293
-5,214+4,652
2017K'000
500,020
500,020
Authorised capital
Issued and fully paid up capital
2018K'000
500,020
500,020
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
115
38. Reserves (Continued)
The balance of the net profits after the above transfers should be applied to the redemption of any outstandingGRZ securitiesissuedagainst losses incurredby theBank.
Section 7 of the Bank of Zambia Act, provides that the remainder of the profits after the above transfers should be paid to theGRZwithin sixty days following the auditor's certification of theBank's financial statements.
Property revaluation reserveThis represents effects from the periodic fair value measurement of the Bank's properties. Any gains or losses are notrecognised in the profit or loss until the property has been sold or impaired. On derecognition of an item of property, therevaluation surplus included in equity is transferred directly to retained earnings. A portion of the revaluation surplusrepresenting the difference between depreciation based on the revalued carrying amount of the property and depreciationbasedon the asset's original cost as the property is usedby theBank is transferred to retained earnings.
Retained earningsRetained earnings or losses are the carried forward income net of expenses of the Bank plus current year profit or lossattributable to equity holders. This is a holding account before the residual income is remitted to GRZ in accordance with theprovisionsof Section 7 of theBankof ZambiaAct, No43of 1996.
AppropriationofprofitsIn accordance with Sections 7 and 8 of the Bank of Zambia Act 43, 1996 Management has proposed appropriation of profitsresulting in a transfer of K332.4 million to the general reserve fund and declaration of a dividend K1,693.3 million toGovernment in respect of theperformance recorded in theBankof Zambia Financial Statements for the 2018 financial year.
39 Related party transactions
TheBank is ownedandcontrolled by theGovernment of theRepublic of Zambia.
In the context of theBank, relatedparty transactions include any transactions entered intowith any of the following:
! TheGovernment of theRepublic of Zambia;! Government bodies;! KwachaPensionTrust Fund;! ZambiaElectronicClearingHouse;! Members of theBoard ofDirectors including theGovernor;! Keymanagement personnel;! Close familymembers of keymanagement personnel including themembers of theBoard ofDirectors.
Themain servicesduring the year to 31December 2018were:! Provisionof banking services includingholding theprincipal accounts ofGRZ;! Provision and issueof notes and coins;! Holding andmaintaining the register ofGovernment securities;! Implementationofmonetary policy; and! Supervisionof financial institutions.
Commitments on behalf of the GRZ arising from the issue of Treasury Bills and bonds are not included in these financialstatements as theBank is involved in such transactionsonly as an agent.
During the year, the nature of dealings with GRZ included: banking services, sale of foreign currency and agency services forthe issuanceof securities culminating in the incomeandbalances stated in (a) and (b) below:
a) Listed below was income earned in respect of interest, charges or fees on the transactions with GRZ for the year up to 31December:
All transactionswith related partiesweremadeon anarm's lengthbasis.
2017K'000
267,6951,259,95096,69426,629
1,650,968
Interest on GRZ securities at FVOCIInterest on advances to GRZFees and commission income on transactions with GRZProfit on foreign exchange transactions with GRZ
Total
2018K'000
337,952411,46684,32382,247
915,988
BANKOFZAMBIA
STATEMENT OF CHANGES IN EQUITYFORTHEYEARENDED31DECEMBER2018
116
39 Related party transactions (Continued)
b) Listedbelowwereoutstandingbalances at closeof businesson 31December:
The GRZ securities holdings comprise of various balances outstanding from GRZ (see note 16) secured by predeterminedpayments basedon securities issuedby theGovernment of theRepublic of Zambia. The remuneration ismarket based.
Deposits fromGRZ Institutions are unremunerated andattract no interest expense.
No provisionswere recognised in respect of balances due fromGRZ and neither was any expense recorded in respect of baddebts.
Transactionsandbalanceswithdirectorsand keymanagement personnel
Remunerationpaid toDirectors' and keymanagement personnel during the yearwas as follows:
a) Short-termbenefits
The terms and conditions on the loans and advances to key management personnel are determined by the directors, fromtime to time,with reference to theprevailingmarket interest rates andmay vary for different classesof loans andmaturities.
No impairment hasbeen recognised in respect of balancesdue fromdirectors andkeymanagement personnel.
40 Contingent liabilities
The Bank is party to various litigation cases, whose ultimate resolution, in the opinion of the Directors, is not expected tomaterially impact the financial statements.
41 Eventsafter the reportingdate
There havebeenno significant events subsequent to 31December 2018 to bedisclosed.
2017K'000
(3,070,560)2,047,8287,474,994
2017K'000830
31,4041,734
33,968
5,659
GRZ - year end balancesDeposits from GRZ InstitutionsHoldings of GRZ securitiesBudgetary advances to the Government
Directors' feesRemuneration for key management personnel- Salaries and allowances- Pension contributions
Loans and advances to key management personnelBalance at 31 December
2018K'000
(1,840,715)3,994,0856,912,233
2018K'0001,230
39,9591,794
41,753
3,924
2017K'000
12,632b) Post-employmentpensionbenefits
2018K'000
6,659
BANKOFZAMBIA
NOTESTOTHEFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2018
2018 Annual Statistical Annexures9.0
9.0 2018 ANNUALSTATISTICALANNEXURES
TABLENO. DESCRIPTION PAGE
Table 1 119
Table 2 Central Bank Survey (K'Millions), Dec 2016 - Dec 2018 120
Table 3 Other Depository Corporations Survey (K'Millions), Dec 2016 - Dec 2018 121
Table 4 Banking SystemClaims onGovernment (K' Millions), Dec 2010 - Dec 2018 122
Table 5 Currency in Circulation (K' Million), Dec. 2010 - Dec. 2018 123
Table 6A Commercial Banks' Deposits by Institution-Domestic Currency (K' Million),
Jan 2016 - Dec 2018 124
Table 6B Commercial Banks' Deposits by Institution-Foreign Currency (K' Million),
Jan 2016 - Dec 2018 125
Table 7A Commercial Banks' Loans andAdvances - Local Currency (K' Million),
Dec 2016 - Dec 2018 126
Table 7B Commercial Banks' Loans andAdvances - Foreign Currency (US $' 000),
Dec. 2016 - Dec. 2018 127
Table 8 Structure of Interest Rates (Percent perYear), Dec 2011 - Dec 2018 128
Table 9 Commercial Bank Interest Rates (Percent PerYear), Dec 2010 - Dec 2018 129
Table 10 Kwacha/US Dollar Exchange Rates, Dec 2011 - Dec 2018 130
Table 11 Commercial Banks Foreign Exchange Rates, Jan 2016 - Dec 2018 131
Table 12 Foreign ExchangeTransactions (US $Million), Dec 2010 - Dec 2018 132
Table 13 PercentageChanges in the Consumer Price Indices
( 2009 weights - Base 2009 = 100), Jan 2016 - Dec 2018 133
Table 14 Treasury Bill Transactions (K' Million), Dec 2010 - Dec 2018 134
Table 15 GRZ BondsOutstanding (K' Million), Jan. 2016 - Dec. 2018 135
Table 16 Metal Production and Exports (MetricTonnes), 2010 - 2018 136
Depository Corporations Survey (K'Millions), Dec 2016 - Dec 2018
118
119
NET
FOREIGNASSETS
CLAIMSON
NON
RESIDENTS
LIABILITIESTO
NON
RESIDENTS
DOMESTICCLAIMS
NET
CLAIMSON
CENTRAL
GOVERN
MEN
TCLAIMSON
CENTRAL
GOVERN
MEN
TLIABILITIESTO
CENTRAL
GOVERN
MEN
TCLAIMSON
OTHER
SECTOR
SCLAIMSON
OTHER
FINA
NCIAL
CORPOR
ATIONS
CLAIMSON
STATEAN
DLOCALGO
VERN
MEN
TCLAIMSON
PUBLICNON
FINA
NCIAL
CORPOR
ATIONS
CLAIMSON
PRIVATESECTOR
BROA
DMON
EYLIABILITIES
CURREN
CYOU
TSIDEDEPOSITORY
CORPOR
ATIONS
TRAN
SFERABLE
DEPOSITS
OTHER
DEPOSITS
SECURITIES
OTHER
THAN
SHARES
DEPOSITS
EXCLUD
EDFROM
BROA
DMON
EYSECURITIES
OTHER
THAN
SHARES
EXCLUD
EDFROM
BROA
DMON
EYLOAN
SFINA
NCIAL
DERIVATIVES
INSURANCE
TECH
NICAL
RESERVES
SHARES
ANDOTHER
EQUITY
OTHER
ITEM
S(NET)
IFSVerticalCheck
Dec-16
21,895
36,519
-14,624
41,339
14,606
22,287
-7,681
26,733 284 74 223
26,152
44,567
4,782
24,510
15,275 0 47 0
2,767 0 0
Dec-17
21,990
35,611
-13,621
53,587
25,323
33,613
-8,290
28,264 289 36 412
27,527
54,100
5,669
28,393
20,037 0 47 0
2,589 0 0
18,412 429 0
Jan-18
20,010
33,431
-13,422
54,794
26,814
33,923
-7,109
27,980 277 32 387
27,284
53,133
5,179
27,947
20,006 0 36 0
2,450 0 0
17,885
1,299 0
Feb-18
20,060
34,061
-14,001
54,705
26,682
34,822
-8,139
28,023 268 39 363
27,354
53,391
4,948
27,577
20,866 0 36 0
2,467 0 0
18,167 704 0
Mar-18
17,848
31,307
-13,459
54,998
27,093
34,144
-7,051
27,905 250 35 335
27,286
51,471
5,242
26,046
20,183 0 36 0
2,502 0 0
17,953 885 0
Apr-18
18,822
32,339
-13,517
54,093
25,629
34,532
-8,902
28,463 255 50 399
27,759
52,795
5,394
27,002
20,399 0 36 0
2,361 0 0
17,525 197 0
May-18
20,776
34,574
-13,797
56,276
26,743
34,493
-7,750
29,532 261 49 403
28,820
55,835
5,787
28,750
21,298 0 36 0
2,411 0 0
18,073 696 0
Jun-18
21,901
34,670
-12,770
54,716
25,405
34,578
-9,173
29,311 253 49 368
28,641
55,252
6,169
28,443
20,641 0 36 0
2,530 0 0
17,698
1,100 0
Jul-1
820,964
33,220
-12,257
55,431
26,058
34,418
-8,361
29,373 300 67 333
28,673
55,093
5,813
29,530
19,750 0 36 0
2,749 0 0
17,777 739 0
Aug-18
20,919
33,667
-12,748
57,193
27,149
34,492
-7,343
30,044 263 59 367
29,355
55,654
6,097
30,133
19,424 0 36 0
2,524 0 0
18,492
1,405 0
Sep-18
25,071
40,330
-15,259
62,432
28,935
36,712
-7,778
33,497 305 50 399
32,744
62,433
6,208
34,500
21,725 0 36 0
2,871 0 0
20,865
1,298 0
Oct-1
823,503
37,792
-14,289
59,076
26,404
37,376
-10,972
32,672 315 56 447
31,854
58,044
6,362
31,594
20,088 0 36 0
2,500 0 0
20,672
1,328 0
Nov-18
23,895
38,064
-14,169
62,237
29,088
38,743
-9,655
33,149 455 68 507
32,119
60,828
6,177
33,304
21,347 0 36 0
2,466 0 0
20,611
2,192 0
Depository
Corporations
Survey
(K'Millions),De
c201
6-D
ec20
18Table1
Source:BankofZambia
Dec-18
24,810
39,325
-14,515
62,219
28,998
37,926
-8,928
33,222 549 67 489
32,117
62,997
6,500
34,886
21,611 0 36 0
2,423 0 0
20,591 982 0
120
NET
FOREIGNASSETS
CLAIMSON
NON
RESIDENTS
LIABILITIESTO
NON
RESIDENTS
CLAIMSON
OTHER
DEPOSITORY
CORPOR
ATIONS
NET
CLAIMSON
CENTRAL
GOVERN
MEN
TCLAIMSON
CENTRAL
GOVERN
MEN
TLIABILITIESTO
CENTRAL
GOVERN
MEN
TCLAIMSON
OTHER
SECTOR
SCLAIMSON
OTHER
FINA
NCIAL
CORPOR
ATIONS
CLAIMSON
STATEAN
DLOCALGO
VERN
MEN
TCLAIMSON
PUBLICNON
FINA
NCIAL
CORPOR
ATIONS
CLAIMSON
PRIVATESECTOR
MON
ETARYBASE
CURREN
CYINCIRCULATION
LIABILITIESTO
OTHER
DEPOSITORY
CORPOR
ATIONS
LIABILITIESTO
OTHER
SECTOR
SOTHER
LIABILITIESTO
OTHER
DEPOSITORY
CORPOR
ATIONS
DEPOSITS
ANDSECURITIES
OTHER
THAN
SHARES
EXCLUD
EDFROM
MON
ETARYBASE
DEPOSITS
ExCLUD
EDINBROA
DMON
EYSECURITIES
OTHER
THAN
SHARES
INCLUD
EDINBROA
DMON
EYDEPOSITS
EXCLUD
EDFROM
BROA
DMON
EYSECURITIES
OTHER
THAN
SHARES
EXCLUD
EDFROM
BROA
DMON
EYLOAN
SFINA
NCIAL
DERIVATIVES
SHARES
ANDOTHER
EQUITY
OTHER
ITEM
S(NET)
IFSVerticalCheck
Dec-16
15,230
23,304
-8,074 290
9,940
11,547
-1,606 92 0 0 0 92
18,324
6,551
11,742 32 0 0 0 0 0 0 0 0
6,886
343 0
Dec-17
12,712
20,804
-8,093 225
10,130
13,201
-3,071 89 0 0 0 89
14,037
7,415
6,583 40 0 15 15 0 0 0 0 0
8,116
989 0
Jan-18
10,819
18,716
-7,897 215
11,370
13,329
-1,959 88 0 0 0 88
13,470
6,736
6,682 51 0 0 0 0 0 0 0 0
7,971
1,051 0
Feb-18
10,394
18,275
-7,882 223
9,831
13,441
-3,609 89 0 0 0 89
11,418
6,427
4,918 73 0 0 0 0 0 0 0 0
8,058
1,062 0
Mar-18
8,821
16,564
-7,743 232
11,552
13,474
-1,922 91 0 0 0 91
12,106
6,720
5,306 79 0 0 0 0 0 0 0 0
7,827
763 0
Apr-18
9,646
17,777
-8,131 231
8,853
12,426
-3,573 93 0 0 0 93
11,066
6,804
4,212 50 0 0 0 0 0 0 0 0
7,298
459 0
May-18
10,111
18,143
-8,032 225
10,382
12,598
-2,216 94 0 0 0 94
12,283
7,283
4,956 44 0 0 0 0 0 0 0 0
7,788
741 0
Jun-18
10,498
18,110
-7,612 249
10,396
12,548
-2,152 92 0 0 0 92
13,064
7,784
5,231 49 7 0 0 0 0 0 0 0
7,412
752 0
Jul-1
810,146
17,690
-7,544 215
9,899
12,618
-2,719 90 0 0 0 90
12,544
7,673
4,823 48 13 0 0 0 0 0 0 0
7,516
276 0
Aug-18
10,143
17,890
-7,747 218
11,510
13,003
-1,493 93 0 0 0 93
13,239
7,726
5,471 41 10 0 0 0 0 0 0 0
7,985
731 0
Sep-18
10,955
20,236
-9,281 224
13,805
15,382
-1,577 93 0 0 0 93
13,826
7,617
6,166 43 8 0 0 0 0 0 0 0
10,271 972 0
Oct-1
810,340
18,988
-8,648 191
12,258
15,540
-3,281 92 0 0 0 92
12,198
7,949
4,201 48 17 0 0 0 0 0 0 0
9,859
807 0
Nov-18
10,613
19,277
-8,664 200
12,964
15,542
-2,578 93 0 0 0 93
13,084
7,692
5,346 46 9 0 0 0 0 0 0 0
10,026 752 0
Dec-18
10,256
18,827
-8,571 131
13,204
15,044
-1,841 94 0 0 0 94
13,557
8,292
5,209 56 0 0 0 0 0 0 0 0
10,248
-120 0
CentralB
ankSurvey
(K’Millions),De
c201
6-D
ec20
18Table2
Source:BankofZambia
121
NET
FOREIGNASSETS
CLAIMSON
NON
RESIDENTS
LIABILITIESTO
NON
RESIDENTS
CLAIMSON
CENTRAL
BANK
CURREN
CYRESERVEDEPOSITS
ANDSECURITIES
OTHER
THAN
SHARES
OTHER
CLAIMSON
CENTRAL
BANK
NET
CLAIMSON
CENTRAL
GOVERN
MEN
TCLAIMSON
CENTRAL
GOVERN
MEN
TLIABILITIESTO
CENTRAL
GOVERN
MEN
TCLAIMSON
OTHER
SECTOR
SCLAIMSON
OTHER
FINA
NCIAL
CORPOR
ATIONS
CLAIMSON
STATEAN
DLOCALGO
VERN
MEN
TCLAIMSON
PUBLICNON
FINA
NCIAL
CORPOR
ATIONS
CLAIMSON
PRIVATESECTOR
LIABILITIESTO
CENTRAL
BANK
TRAN
SFERABLE
DEPOSITS
INCLUD
EDINBROA
DMON
EYOTHER
DEPOSITS
INCLUD
EDINBROA
DMON
EYSECURITIES
OTHER
THAN
SHARES
INCLUD
EDINBROA
DMON
EYDEPOSITS
EXCLUD
EDFROM
BROA
DMON
EYSECURITIES
OTHER
THAN
SHARES
EXCLUD
EDFROM
BROA
DMON
EYLOAN
SFINA
NCIAL
DERIVATIVES
INSURANCE
TECH
NICAL
RESERVES
SHARES
ANDOTHER
EQUITY
OTHER
ITEM
S(NET)
IFSVerticalCheck
Dec-16
6,665
13,215
-6,550
14,092
1,769
12,323 0
4,666
10,741
-6,075
26,641 284 74 223
26,060 177
24,479
15,275 0 47 0
2,767 0 0
9,253 67 0
Dec-17
9,278
14,807
-5,529
8,921
1,746
7,175 0
15,193
20,412
-5,219
28,174 289 36 412
27,437 339
28,354
20,022 0 47 0
2,589 0 0
10,297 -80 0
Jan-18
9,191
14,715
-5,524
9,243
1,557
7,686 0
15,444
20,594
-5,150
27,891 277 32 387
27,195 384
27,896
20,006 0 36 0
2,450 0 0
9,913
1,083 0
Feb-18
9,667
15,786
-6,119
7,534
1,479
6,054 0
16,851
21,381
-4,530
27,934 268 39 363
27,264 97
27,504
20,866 0 36 0
2,467 0 0
10,109 905 0
Mar-18
9,027
14,742
-5,716
7,493
1,479
6,014 0
15,542
20,671
-5,129
27,814 250 35 335
27,195 114
25,967
20,183 0 36 0
2,502 0 0
10,126 948 0
Apr-18
9,176
14,562
-5,387
6,080
1,409
4,671 0
16,776
22,106
-5,330
28,371 255 50 399
27,666 709
26,952
20,399 0 36 0
2,361 0 0
10,226
-281 0
May-18
10,665
16,431
-5,765
7,233
1,496
5,737 0
16,361
21,896
-5,534
29,439 261 49 403
28,726 187
28,706
21,298 0 36 0
2,411 0 0
10,286 775 0
Jun-18
11,402
16,560
-5,158
7,612
1,616
5,996 0
15,009
22,030
-7,021
29,219 253 49 368
28,549 97
28,394
20,641 0 36 0
2,530 0 0
10,286
1,258 0
Jul-1
810,818
15,531
-4,713
7,240
1,860
5,379 0
16,159
21,800
-5,641
29,283 300 67 333
28,583 566
29,482
19,750 0 36 0
2,749 0 0
10,261 655 0
Aug-18
10,776
15,777
-5,001
7,910
1,630
6,281 0
15,639
21,489
-5,850
29,951 263 59 367
29,262 108
30,092
19,424 0 36 0
2,524 0 0
10,507
1,584 0
Sep-18
14,116
20,094
-5,978
8,460
1,409
7,051 0
15,130
21,330
-6,200
33,404 305 50 399
32,651 240
34,457
21,725 0 36 0
2,871 0 0
10,594
1,188 0
Oct-1
813,163
18,804
-5,641
6,566
1,586
4,980 0
14,146
21,837
-7,691
32,580 315 56 447
31,763 178
31,545
20,088 0 36 0
2,500 0 0
10,813
1,295 0
Nov-18
13,282
18,787
-5,505
7,749
1,515
6,234 0
16,124
23,201
-7,077
33,056 455 68 507
32,026 111
33,258
21,347 0 36 0
2,466 0 0
10,584
2,409 0
OtherD
eposito
ryCorporations
Survey
(K'Millions),De
c201
6-D
ec20
18,
Table3
Dec-18
14,554
20,498
-5,944
7,744
1,792
5,952 0
15,794
22,881
-7,087
33,128 549 67 489
32,024 360
34,831
21,611 0 36 0
2,423 0 0
10,343
1,617 0
Source:BankofZambia
122
Treasury
Bills
2,307,851
4,090,179
4,394,320
6,566,195
6,572,940
6,184,432
5,053,719
4,686,619
5,099,797
4,644,970
4,594,730
4,934,451
4,692,281
4,736,525
4,622,724
4,619,419
4,942,188
5,471,395
5,471,395
7,577,534
9,293,325
9,754,453
9,559,622
11,159,372
11,451,834
11,758,641
13,172,302
13,172,302
11,348,072
12,035,101
11,966,282
12,345,859
12,298,107
12,030,059
12,571,494
11,927,786
11,029,420
11,215,479
10,492,695
10,784,961
13,098,757
12,117,440
GRZ
Securities
1,901,191
2,694,134
2,726,082
2,653,511
2,362,441
1,568,434
1,500,345
1,443,653
1,476,754
1,597,703
1,844,184
1,822,452
1,770,125
1,801,004
1,904,953
1,856,030
2,196,271
2,249,459
2,249,459
2,174,704
2,731,099
2,851,161
2,658,382
2,584,524
2,909,810
2,985,571
3,787,870
3,787,870
3,591,417
4,348,929
4,692,282
4,368,459
4,894,516
5,406,954
5,361,194
5,403,384
5,443,940
5,541,946
5,520,105
5,270,662
5,955,483
6,202,396
Loans&
Advances
269,535
441,975
10,136
120,598
661,321
457,566
469,811
470,611
468,415
448,429
741,239
740,257
726,350
719,947
727,362
846,758
834,479
819,317
815,451
813,878
828,939
973,151
957,769
932,026
930,291
902,682
905,744
902,171
885,124
844,388
839,347
880,591
919,599
873,310
839,585
1,058,357
1,066,092
1,040,784
1,153,965
1,257,202
1,576,097
1,576,097
Deposits
-479,455
-823,616
-1,150,580
-1,158,763
-1,573,725
-1,539,557
-1,394,082
-813,755
-1,142,627
-1,282,845
-1,561,770
-1,258,766
-935,571
-618,343
-1,196,583
-896,635
-1,095,530
-1,762,939
-1,317,548
-1,324,221
-1,213,304
-1,164,823
-1,387,937
-1,342,808
-1,811,915
-1,454,005
-1,439,466
-1,323,839
-1,418,161
-1,631,315
-1,570,645
-1,361,107
-1,546,782
-1,486,291
-1,685,619
-1,509,087
-1,245,300
-1,420,623
-1,596,075
-1,947,060
-1,395,959
-1,395,959
(b)
Total
4,019,602
6,402,671
5,979,958
8,181,540
8,022,977
6,670,875
5,629,794
5,787,129
5,902,339
5,408,257
5,618,383
6,238,395
6,253,185
6,639,133
6,058,457
6,425,571
6,877,408
6,777,232
7,218,756
9,241,895
11,640,059
12,413,941
11,787,835
13,333,113
13,480,020
14,192,890
16,426,451
16,538,504
14,406,452
15,597,104
15,927,267
16,233,801
16,565,440
16,824,031
17,086,654
16,880,439
16,294,152
16,377,586
15,570,689
15,365,766
19,234,379
18,499,975
(a+b)
TOTAL
CLAIMS
2,349,954
4,427,063
4,929,512
8,843,168
7,106,630
8,988,120
6,798,749
8,572,921
7,937,414
7,447,477
8,341,003
9,497,047
11,951,839
12,884,940
11,372,098
12,296,697
11,795,824
12,735,195
12,476,888
15,312,478
15,802,988
14,746,082
16,191,572
16,316,683
16,153,958
18,087,610
22,191,960
20,805,485
19,494,731
20,124,988
20,154,418
20,326,988
21,574,822
20,745,122
20,644,910
21,741,728
19,539,233
21,284,458
22,954,633
21,397,911
25,871,423
26,207,577
NetB
ankofZambiaClaims
NetCom
mercialBa
nksC
laim
sTreasury
Bills
625,812
655,064
537,014
625,775
710,826
1,277,346
1,121,835
957,715
900,970
724,248
652,407
664,845
655,466
655,466
648,184
648,184
647,468
647,468
647,468
629,182
142,212
514,590
534,890
296,810
116,376
625,775
761,976
761,976
774,836
625,775
765,661
692,578
542,290
1,031,139
771,158
657,894
966,592
625,775
761,824
1,173,953
625,775
642,938
GRZ
Stock
188,983
1,310,989
1,310,989
1,800,989
1,714,918
1,650,173
1,489,339
1,444,323
1,444,323
1,444,323
1,444,323
1,444,323
1,444,323
1,444,323
1,444,323
1,444,323
1,444,323
1,444,323
1,444,323
1,314,323
1,292,448
1,314,323
1,314,323
1,314,325
1,314,325
1,314,323
1,309,956
1,309,956
1,314,325
1,314,325
1,314,325
1,314,325
1,314,325
1,314,325
1,314,325
1,314,325
1,394,219
1,314,325
2,879,596
3,137,582
3,193,863
3,960,458
GRZ
Position(3)
-2,369,565
-4,154,662
-3,535,450
-3,595,676
-4,739,630
-2,607,813
-3,439,765
-1,613,787
-1,381,818
-1,943,353
-1,960,125
-1,571,531
-1,722,150
-1,174,998
-2,099,881
-1,542,396
-2,494,390
-1,454,843
-2,154,691
-1,193,938
-2,592,747
-4,817,787
-2,766,491
-3,948,580
-4,077,779
-3,366,392
-1,627,438
-3,125,966
-2,321,896
-2,733,231
-3,173,850
-3,234,731
-2,168,248
-2,831,088
-2,933,944
-1,517,653
-3,522,457
-1,439,955
-664,204
-2,686,121
-1,589,309
-1,302,509
Loans&
Advances 0
213,000
637,000
1,830,539
1,397,539
1,997,539
1,997,546
1,997,540
1,071,600
1,814,002
2,586,015
2,721,015
5,321,015
5,321,015
5,321,015
5,321,015
5,321,015
5,321,015
5,321,032
5,321,015
5,321,015
5,321,015
5,321,015
5,321,015
5,321,015
5,321,015
5,321,015
5,321,015
5,321,015
5,321,015
4,406,715
4,406,715
4,406,715
4,406,715
4,406,715
4,406,715
4,406,715
4,406,715
4,406,715
4,406,715
4,406,715
4,406,715
(a)
Total
-1,554,770
-1,975,608
-1,050,447
661,628
-916,347
2,317,245
1,168,955
2,785,792
2,035,075
2,039,220
2,722,620
3,258,652
5,698,654
6,245,806
5,313,642
5,871,126
4,918,416
5,957,963
5,258,132
6,070,582
4,162,928
2,332,140
4,403,737
2,983,570
2,673,937
3,894,721
5,765,509
4,266,981
5,088,280
4,527,884
4,227,151
4,093,187
5,009,382
3,921,091
3,558,256
4,861,289
3,245,081
4,906,872
7,383,944
6,032,145
6,637,044
7,707,602
Bank
ingSystem
Claimso
nGo
vernment(K'Millions),De
c201
0-D
ec20
18Table4
December
December
December
December
December
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source:BankofZambia
123
Issued
Atbanks
Outsidebanks
Endofperiod
December
December
December
December
December
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
Total
2,750
3,408
3,843
4,601
5,728
6,450
5,558
5,165
5,574
5,500
5,621
6,216
6,503
6,274
5,870
5,829
5,791
6,452
5,737
5,579
5,644
5,776
6,044
6,597
6,349
6,479
6,615
6,753
6,722
7,315
6,638
6,329
6,622
6,706
7,185
7,687
7,576
7,627
7,518
7,851
7,594
8,195
Notes
2,750
3,408
3,843
4,551
5,620
6,318
5,422
5,026
5,433
5,358
5,477
6,069
6,353
6,122
5,716
5,672
5,633
6,292
5,575
5,413
5,478
5,608
5,874
6,432
6,182
6,309
6,441
6,577
6,543
7,135
6,454
6,143
6,437
6,522
7,000
7,499
7,378
7,425
7,316
7,646
7,388
7,987
Coin 0 0 0 50 107
132
136
139
141
142
144
147
150
152
154
157
159
159
162
165
166
167
169
165
167
171
174
176
179
181
183.5
185.4
184.9
184.2
185.5
188.8
198.0
201.9
202.6
204.8
205.8
207.5
Total
506
598
801
1,130
1,508
1,699
1,419
1,216
1,564
1,343
1,349
1,427
1,393
1,351
1,361
1,300
1,181
1,714
1,341
1,359
1,359
1,382
1,556
1,686
1,460
1,536
1,422
1,548
1,602
1,716
1,490
1,408
1,436
1,369
1,438
1,569
1,810
1,586
1,354
1,539
1,468
1,757
Notes
506
598
801
1,094
1,504
1,693
1,411
1,211
1,556
1,332
1,335
1,415
1,377
1,339
1,348
1,287
1,169
1,706
1,329
1,346
1,347
1,367
1,541
1,674
1,447
1,524
1,409
1,535
1,589
1,702
1,475
1,392
1,421
1,355
1,424
1,555
1,797
1,573
1,339
1,523
1,452
1,740
Currency
inCirculation(K'M
illion),Dec.201
0-D
ec.201
8Table5
coin 0 0 0 36 4 6 8 6 8 11 14 12 16 12 13 13 12 8 12 13 12 15 15 12 12 13 13 12 12 13 15 16 15 14 14 13 13 13 15 16 16 17
Total
2,244
2,810
3,042
3,471
4,220
4,751
4,139
3,948
4,010
4,157
4,273
4,789
5,109
4,923
4,509
4,529
4,610
4,737
4,396
4,220
4,284
4,394
4,488
4,911
4,889
4,943
5,193
5,206
5,120
5,600
5,148
4,921
5,186
5,337
5,747
6,119
5,767
6,041
6,164
6,312
6,126
6,438
Notes
2,244
2,810
3,042
3,457
4,117
4,625
4,011
3,815
3,877
4,026
4,142
4,654
4,976
4,784
4,368
4,385
4,464
4,587
4,247
4,067
4,131
4,241
4,333
4,759
4,735
4,785
5,032
5,042
4,954
5,432
4,979
4,752
5,016
5,167
5,576
5,943
5,582
5,852
5,977
6,123
5,936
6,247
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source:BankofZambia
Coin 0 0 0 14 103
126
128
133
133
131
130
135
134
140
141
144
147
151
149
153
154
153
154
152
154
158
161
164
166
167
169
169
170
170
172
175
185
188
187
189
190
191
124
EndofPeriod
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
Statutory
Bodies
1,925
1,890
2,036
1,968
1,917
2,308
2,106
2,104
1,905
1,863
1,830
2,738
2,980
2,434
1,845
2,077
1,990
2,113
2,172
1,769
1,703
2,211
1,856
1,353
1,363
1,281
1,721
1,601
1,724
3,097
2,022
1,861
1,648
2,340
2,651
2,766
Parastatal
Bodies
566
578
782
278
408
244
269
765
1,814
684
764
599
545
608
1,070
662
753
821
931
910
857
879
938
1,102
1,286
1,174
1,021
1,083
996
813
801
828
1,129
798
843
834
Privatecorporations
andpartnerships
8,643
8,764
8,567
8,892
9,065
8,373
8,283
8,487
7,763
8,311
9,000
7,768
6,788
8,292
8,599
8,157
8,609
8,196
8,480
8,829
8,336
8,803
9,010
9,953
9,401
9,424
9,144
9,561
10,478
10,300
11,413
11,812
11,640
10,049
11,161
11,540
Individu
alsa
ndhouseholds
6,277
6,526
6,182
6,610
7,106
7,114
7,415
7,231
7,183
7,804
7,340
8,136
8,094
7,083
8,627
8,874
9,037
8,577
9,192
9,686
9,820
9,249
9,423
9,591
9,571
9,182
9,118
9,501
9,815
8,388
9,273
9,305
9,930
9,850
10,297
10,328
OtherF
in.
institu
tions
3,509
3,322
3,604
3,253
2,499
3,199
3,591
3,401
3,178
3,637
3,902
4,169
4,010
6,230
4,740
5,130
5,419
6,082
5,313
5,428
6,177
6,344
6,113
5,659
6,205
5,773
5,952
5,551
5,809
5,707
5,490
5,171
5,532
5,125
5,108
5,475
CommercialBa
nks'De
positsby
Institu
tion-Do
mestic
Currency
(K'M
illion),Jan
2016
-Dec
2018
Table6A
Non-resident
273
242
224
159
197
163
201
233
236
266
270
223
349
259
266
288
347
280
413
362
784
380
329
365
369
361
321
237
194
176
167
323
136
148 76 82
Total
22,983
22,575
22,882
22,807
23,092
23,048
23,225
23,153
23,554
23,728
24,542
25,853
24,399
26,601
26,802
26,685
27,896
27,768
28,815
28,930
29,659
29,809
29,641
30,273
30,343
29,161
29,408
29,503
31,093
30,526
31,035
31,916
32,459
31,156
32,190
32,897
Government
1,791
1,252
1,488
1,647
1,900
1,646
1,361
934
1,474
1,164
1,436
2,220
1,632
1,694
1,655
1,498
1,742
1,698
2,315
1,946
1,983
1,943
1,972
2,250
2,148
1,964
2,131
1,970
2,076
2,045
1,869
2,617
2,445
2,845
2,054
1,872
2016
2017
2018
Source:BankofZambia
125
EndofPeriod
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
StatutoryBo
dies
105
218
117 98 101 89 88 81 88 91 112 88 98 380
281
123
243 49 140
177
188
380
486
491
430
210
187
170
192
326
339
474
715
880
721
593
Parastatal
Bodies
690
520
393
1,192
915
778
557
1,090
579
427
377
320
426
550
551
503
559
608
539
643
595
631
768
646
678
583
413
530
419
381
369
427
473
402
550
602
Privatecorporations
andpartnerships
14,543
15,427
14,618
13,099
15,936
12,984
14,624
11,179
12,277
11,813
13,210
12,282
12,840
11,651
12,133
12,254
11,785
11,775
10,911
12,208
12,553
12,851
13,382
14,202
13,282
14,475
13,248
13,680
15,016
14,406
14,044
13,836
17,385
15,342
16,498
17,483
Individu
alsa
ndhouseholds
2,775
2,767
2,794
2,693
2,961
2,746
2,497
2,476
2,841
2,722
2,917
2,538
2,931
2,752
2,688
2,592
2,505
2,764
2,426
2,434
2,146
2,406
2,610
2,701
3,043
3,308
3,131
3,207
3,112
4,522
3,099
3,187
3,962
4,214
3,910
3,953
OtherF
in.
institu
tions
3,517
2,991
2,851
2,349
1,164
2,422
2,499
2,607
2,521
2,551
2,562
2,619
2,863
2,503
2,246
2,142
2,107
2,064
2,184
2,262
2,347
2,319
2,525
2,364
2,381
2,593
2,324
2,835
2,802
2,921
2,942
3,283
3,965
3,927
4,074
3,967
CommercialBa
nks'De
positsby
Institu
tion-ForeignCurrency
(K'M
illion),Jan
2016
-Dec
2018
Table6B
Non-resident
1,360
1,069
890
816
1,136
1,112
1,293
2,621
3,124
2,227
2,015
2,548
2,757
2,649
3,612
3,558
3,574
3,647
2,746
2,911
2,578
2,179
2,403
2,389
2,395
2,556
2,704
2,457
2,828
2,425
1,837
1,907
2,445
1,929
885
699
Total
23,328
23,294
22,208
20,569
22,529
20,635
22,114
20,523
21,835
20,325
22,037
21,007
22,494
21,096
22,198
21,839
21,461
21,716
19,494
21,116
20,721
21,162
22,706
23,641
23,127
24,369
22,655
23,648
25,102
25,830
23,468
23,860
29,888
27,576
27,616
28,563
Government
337
303
545
323
316
504
556
469
406
495
845
611
578
611
687
666
689
809
547
480
315
395
533
848
917
645
648
770
734
850
839
744
942
881
978
1,266
2016
2017
2018
Source:BankofZambia
126
CommercialBa
nks'Loansa
ndAd
vances
-LocalCurrency
(K'M
illion),Dec
2016
-Dec
2018
Table7A
Aug-18
4,091
1,409
2,007
685
1,052
3,299
304
1,223
829
1,044
947 0
8,676
25,566
Sep-18
5,077
2,303
2,194
826
1,057
3,549
372
1,819
1,047
1,139
1,195 0
8,568
29,145
Oct-1
84,838
1,883
2,119
1,052
1,019
3,707
364
1,934
977
1,054
948 0
8,623
28,519
Nov-18
5,041
2,001
2,570
1,013
924
3,228
363
1,763
1,126
1,256
1,004 30
8,815
29,134
Jan-18
4,828
1,401
2,007
698
998
2,741
355
1,173
550
992
844 1
7,645
24,233
Feb-18
4,650
1,425
1,909
672
1,046
2,732
341
1,187
571
1,002
830 1
7,771
24,139
Mar-18
4,667
1,413
1,772
625
1,059
2,685
332
1,225
697
960
816 0
7,756
24,008
Apr-18
4,632
1,663
1,919
649
1,108
2,410
328
1,189
793
962
843 0
7,957
24,453
May-18
4,693
1,745
2,137
738
1,130
2,612
339
1,201
770
946
901 1
7,790
25,003
Jun-18
4,684
1,673
1,970
693
977
2,798
335
1,165
756
1,054
931 0
7,924
24,960
Jul-1
84,361
1,520
2,161
629
1,048
2,817
338
1,143
940
1,035
918 0
8,046
24,958
Dec-18
4,933
2,048
2,669
874
874
3,232
368
1,796
1,205
1,392
1,008 0
8,737
29,135
Source:BankofZambia
Dec-16
4,035
1,483
2,983
516
907
2,412
376
1,087
420
407
829 0
8,062
23,517
Sector
Agriculture,forestry,Fishing
andhunting
Miningandquarying
Manufacturing
Electricity,gas,waterandenergy
Construction
Wholesaleandretailtrade
Restaurantsand
hotels
Transport,storageandcommunications
Financialservices
Community,socialand
perconalservices
Realestate
Credit/debitcards
Othersectors
TOTA
LS
Dec-17
4,968
1,543
1,907
748
1,073
2,781
359
1,139
544
1,013
859 0
7,499
24,434
127
CommercialBa
nks'Loansa
ndAd
vances
-Foreign
Currency
(US$'00
0),Dec.201
6-D
ec.201
8Table7B
Aug-18
234,038
127,760
125,696
28,115
66,037
176,348
18,138
66,950
29,611
10,509
62,567
86,877
1,03
2,64
5
Sep-18
290,389
179,501
120,436
35,504
56,575
163,543
19,559
75,136
30,900
10,620
71,666
54,525
1,10
8,35
4
Oct-1
8283,410
150,953
120,040
56,015
55,762
167,177
20,014
80,207
31,883
9,092
54,412
54,924
1,08
3,88
9
Nov-18
300,572
159,560
141,147
52,524
48,075
134,170
20,216
73,605
34,119
6,442
57,251
51,977
1,08
2,14
2
Jan-18
290,089
131,645
113,628
26,745
56,688
134,343
25,505
66,883
15,200
7,851
57,926
64,328
990,831
Feb-18
284,877
134,698
111,131
27,449
64,836
137,495
24,615
64,255
14,840
7,859
57,181
66,297
995,53
5
Mar-18
286,666
137,577
109,345
26,092
68,029
136,421
24,395
62,262
25,693
8,184
56,915
66,310
1,00
7,88
9
Apr-18
280,431
156,810
111,309
31,767
69,778
104,849
22,508
60,719
26,053
11,194
56,519
65,011
996,94
8
May-18
283,399
157,341
121,430
31,212
67,234
113,495
22,047
62,453
27,322
12,462
60,876
49,332
1,00
8,60
4
Jun-18
290,514
157,512
110,032
28,263
52,944
125,849
21,967
63,015
27,285
9,451
65,792
53,534
1,00
6,15
7
Jul-1
8268,464
141,484
122,860
28,757
60,391
134,395
22,191
62,769
31,188
10,445
63,285
54,375
1,00
0,60
5
Dec-18
294,386
162,736
147,387
53,790
47,960
133,433
19,661
73,785
33,650
8,540
58,079
48,563
1,08
1,97
1Source:BankofZambia
Dec-16
236,845
138,696
108,383
12,137
44,867
78,271
27,203
55,406
7,479
9,011
57,979
49,796
826,07
3
Sector
Agriculture,forestry,Fishing
andhunting
Miningandquarying
Manufacturing
Electricity,gas,waterandenergy
Construction
Wholesaleandretailtrade
Restaurantsand
hotels
Transport,storageandcommunications
Financialservices
Community,socialand
perconalservices
Realestate
Othersectors
TOTA
LS
Dec-17
288,809
143,992
92,005
36,620
63,602
133,201
25,671
63,593
16,154
7,723
58,773
68,851
998,99
4
128
Savings
4.3
4.3
3.6
3.4
3.3
3.1
2.8
2.7
2.7
2.8
2.7
2.6
2.6
2.7
2.8
2.7
2.8
2.8
2.8
2.8
2.8
2.8
2.8
3.0
3.0
3.0
3.0
3.0
3.0
3.0
Treasurybillrates
Governmentbondrates
StructureofInterestRa
tes(Percentp
erYear),De
c201
1-D
ec20
18Table8
3year
15.1
12.8
15.5
16.2
23.5
23.2
23.2
22.4
20.0
20.0
20.0
19.6
17.9
17.9
16.9
16.9
18.5
18.3
18.0
18.0
17.9
17.9
17.9
18.0
18.5
18.5
18.4
19.0
20.0
20.0
5year
15.4
13.5
16.5
22.4
28.0
25.0
25.0
23.6
19.5
19.4
19.3
18.9
17.5
17.5
17.7
17.7
18.0
18.0
18.0
18.0
17.9
17.9
17.9
18.3
20.0
20.2
20.4
20.4
20.4
20.4
7year
15.0
14.5
16.9
21.5
28.0
24.8
24.8
23.8
20.9
20.7
20.0
19.7
18.5
18.5
16.0
16.0
19.5
19.5
19.5
19.5
19.0
19.0
19.0
19.0
19.0
19.0
19.0
18.8
18.5
18.5
10year
15.9
16.5
18.2
22.0
20.0
25.0
25.0
23.7
20.0
19.9
19.9
19.6
18.3
18.3
18.0
18.0
21.0
20.6
20.0
20.0
20.0
19.8
19.0
19.1
19.3
19.6
19.9
19.8
19.5
21.5
91days 7.0
9.4
8.0
13.0
15.0
20.5
20.4
17.9
14.8
14.0
14.2
13.1
12.2
11.2 9.1
9.0
9.1
9.5
9.8
9.9
10.0
10.1
10.0
10.0
10.0
11.8
13.6
14.2
14.5
15.0
182days 9.5
12.4
14.8
17.5
20.3
23.9
23.9
20.6
15.9
14.7
15.3
13.7
12.0
11.0 9.2
9.6
9.5
9.8
10.0
10.3
11.0
11.2
12.6
13.1
13.8
14.7
15.2
15.0
14.6
14.8
273days
11.4
11.4
15.0
18.0
18.7
25.0
24.7
20.7
16.6
15.3
15.9
14.1
12.0
10.3 9.1
11.3
14.0
13.6
13.0
10.2 8.5
12.1
12.9
13.0
13.0
16.3
18.3
19.9
21.1
21.0
364days
13.5
12.1
15.7
20.4
21.5
25.0
24.7
22.1
18.9
17.2
17.5
15.6
16.7
16.4
15.2
15.7
15.8
16.3
16.5
16.3
17.3
17.5
17.7
17.9
18.4
19.1
20.4
21.9
23.0
23.1
24mon
ths
14.7
11.0
14.0
15.0
23.0
25.0
25.0
23.8
20.0
20.0
20.0
19.4
17.0
17.0
16.0
16.0
16.5
16.5
16.5
16.5
16.4
16.4
16.4
16.8
18.5
18.9
19.4
19.5
19.5
19.5
15year
16.2
16.6
18.0
22.5
22.5
25.0
25.0
24.5
23.0
22.8
22.5
21.9
19.5
19.5
18.5
18.5
18.5
18.5
18.5
18.5
18.5
18.5
18.5
18.3
17.5
17.5
17.5
17.5
17.5
17.3
Source:Bank
ofZambia
1 FiguresbeforeApril2012re�lecttheCommercialBanks'weightedLendingBaseRatewhile�iguresafterthatindicatesBoZPolicyrate.
2 PenaltyRates:TheseareratesappliedwhenaBank
fallsshortonStatutoryReserveRatios.
90day
5.3
5.3
6.6
9.1
9.2
10.8
10.9
11.2
10.5
10.4
10.1 8.7
8.6
8.0
7.4
6.9
6.7
6.9
6.7
6.9
6.7
6.6
6.6
6.5
6.6
6.6
6.8
6.9
7.2
7.6
Commercia
lbankrate
Endofperiod
December
December
December
December
December
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
Weighted
Interbank
rate
10.2 8.8
9.9
12.0
26.1
16.2
15.9
15.3
14.1
13.0
13.9
12.9
12.3
12.0
10.5
10.5
11.0
10.1
10.1
10.3 9.6
9.1
9.7
9.9
9.9
10.0
10.0 9.8
9.8
9.8
Penalty
2rate
35.5
33.2
36.4
39.5
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
39.8
BoZ1
PolicyRa
te16.6 9.3
9.8
12.5
15.5
15.5
15.5
14.0
14.0
14.0
12.5
12.5
12.5
11.0
11.0
11.0
10.3
10.3
10.3 9.8
9.8
9.8
9.8
9.8
9.8
9.8
9.8
9.8
9.8
9.8
2011
2012
2013
2014
2015
2016
2017
2018
129
CommercialBa
nkInterestRa
tes(PercentP
erYear),De
c201
0-D
ec20
18Table9
60day
7.4
6.8
6.8
6.1
8.3
7.9
9.4
9.8
10.7
11.6
11.2
10.8
10.7
10.9
10.3
10.4
10.7
10.4
10.3
10.6 9.5
9.3
9.3
8.4
8.4
7.7
6.8
6.2
6.0
6.2
5.9
6.1
6.0
6.0
5.8
6.1
6.0
5.8
6.0
6.0
6.2
6.6
90day
7.4
7.0
7.0
6.6
9.1
9.2
9.8
9.9
10.9
11.9
11.3
10.9
11.0
10.6
10.6
10.9
10.8
10.8
10.9
11.2
10.5
10.4
10.1 8.7
8.6
8.0
7.4
6.9
6.7
6.9
6.7
6.9
6.7
6.6
6.6
6.5
6.6
6.6
6.8
6.9
7.2
7.6
EndofPeriod
December
December
December
December
December
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
Weighted
interbankrate 6.2
10.2 8.8
10.1
12.0
26.1
26.4
27.0
27.2
27.3
20.7
17.7
17.8
18.2
17.6
16.7
16.5
16.2
15.9
15.3
14.1
13.0
13.9
12.9
12.3
12.0
10.5
10.5
11.0
10.1
10.1
10.3 9.6
9.1
9.7
9.9
9.9
10.0
10.0 9.8
9.8
9.8
lessthan
K100 3.6
3.7
3.8
2.8
2.4
2.5
2.6
2.6
2.6
2.7
2.5
2.6
2.6
2.4
2.5
2.8
2.8
2.4
2.0
1.9
2.0
2.0
2.0
1.9
2.0
2.0
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
morethan
K100 4.7
4.3
4.3
3.5
3.3
3.3
3.5
3.3
3.3
7.5
3.2
3.3
3.2
3.0
3.2
3.4
3.4
3.1
2.8
2.7
2.7
2.8
2.7
2.6
2.6
2.7
2.8
2.7
2.8
2.8
2.8
2.8
2.8
2.8
2.8
3.0
3.0
3.0
3.0
3.0
3.0
3.0
24hrcall
2.9
2.7
2.7
1.9
2.0
1.9
2.0
2.0
2.3
2.4
2.2
2.3
2.2
2.3
2.3
2.5
2.5
2.4
2.3
2.4
2.2
2.0
2.0
2.1
2.2
2.2
2.1
1.8
1.9
2.0
2.0
2.2
2.2
2.2
2.2
2.3
2.3
2.3
2.3
2.3
2.3
2.3
7day
3.5
3.5
3.5
3.0
4.2
4.0
6.1
6.5
8.6
8.5
6.9
7.0
7.0
6.8
6.2
6.4
6.6
6.3
6.1
6.1
5.1
4.8
5.1
4.6
4.8
4.8
4.9
4.0
3.8
3.3
3.4
3.7
3.9
3.8
3.5
3.6
3.6
3.6
3.6
3.4
3.5
3.5
14day
4.0
4.0
4.0
4.1
4.3
4.2
6.6
6.5
8.6
8.8
7.2
7.6
7.7
7.4
6.7
7.0
7.0
6.7
6.6
6.6
5.2
5.5
5.9
4.5
4.5
4.8
5.2
4.1
4.4
3.5
3.0
3.5
3.3
3.3
3.3
3.4
3.5
3.5
3.5
3.3
3.3
3.3
30day
5.6
5.3
5.3
5.1
6.8
7.2
7.8
8.6
9.1
10.0 9.3
9.4
9.3
9.2
8.4
8.5
9.1
8.7
8.3
8.6
7.6
8.0
8.3
7.2
7.3
6.9
6.2
5.7
6.0
5.5
4.9
5.3
5.1
5.1
5.1
5.2
5.2
5.6
5.4
5.3
5.1
5.3
Average
LendingRates
26.4
24.0
16.1
16.4
20.5
25.8
25.8
26.0
26.5
27.5
28.0
28.6
29.0
28.8
28.9
28.7
29.4
29.5
29.2
28.9
28.8
28.2
27.7
26.6
26.3
26.6
25.4
25.4
25.5
24.6
24.5
24.3
24.1
24.1
23.9
24.1
23.7
23.5
23.0
24.4
24.0
23.6
SavingsR
ates
Depositso
verK
20,000
Source:BankofZambia
180day
7.6
6.8
6.8
8.4
10.5
10.8
11.0
11.5
12.7
13.1
13.1
12.9
13.0
13.3
12.6
12.5
12.7
12.7
12.9
12.5
11.6
11.5
11.7
11.0
10.4 9.8
9.4
8.8
8.6
8.6
8.3
8.3
8.1
8.0
8.0
8.1
8.2
8.2
8.3
8.5
8.6
9.1
2010
2011
2012
2013
2014
2015
2016
2017
2018
130
Bank
ofZambia
Bureau
Rates
Kwacha/U
SDo
llarE
xchangeRa
tes,De
c201
1-D
ec20
18Table10
Period
Mon
thlyAverage
December
December
December
December
December
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
Selling
5,127.3
5,229.0
5.5
6.3
10.8 9.9
9.9
9.8
9.6
9.5
9.3
9.3
9.0
9.0
9.4
9.8
10.1
10.1 9.9
9.8
9.6
9.5
10.1
10.1 9.9
10.1
10.9
11.9
11.9
11.9
Mid
5,117.3
5,208.5
5.5
6.3
10.8 9.8
9.9
9.8
9.6
9.4
9.3
9.3
8.9
9.0
9.4
9.8
10.0
10.0 9.9
9.8
9.6
9.5
10.1
10.0 9.9
10.1
10.9
11.9
11.8
11.9
Buying
5,068.7
5,243.3
5.1
6.3
10.6 9.8
9.9
9.8
9.6
9.5
9.3
9.2
9.0
9.0
9.3
9.7
10.0
10.0 9.8
9.8
9.7
9.5
10.0
10.0 9.8
10.0
10.6
11.9
11.7
11.8
Selling
5,153.5
5,323.6
5.1
6.4
10.8
10.0
10.0
10.0 9.8
9.7
9.4
9.4
9.1
9.1
9.5
9.8
10.1
10.2
10.0 9.9
9.8
9.6
10.1
10.2
10.0
10.2
10.7
12.1
11.9
12.0
Mid
5,111.1
5,283.5
5.1
6.4
10.7 9.9
10.0 9.9
9.7
9.6
9.2
9.3
9.0
9.0
9.4
9.8
10.0
10.1 9.9
9.8
9.7
9.6
10.1
10.1 9.9
10.1
10.7
11.6
11.8
11.8
2011
2012
2013
2014
2015
2016
2017
2018
Buying
5,107.3
5,198.5
5.5
6.3
10.8 9.8
9.9
9.7
9.6
9.4
9.2
9.2
8.9
9.0
9.4
9.7
10.0
10.0 9.8
9.8
9.6
9.5
10.1
10.0 9.9
10.1
10.9
11.9
11.8
11.9
Source:BankofZam
bia
Note:InJuly2003,theBank
ofZambiaestablishedabroad-basedforeignexchangetradingsystem
asthenewmechanism
fordeterminingtheexchangerateinZambia.ThisimpliesthatBankofZambiaceasedtoauctionforeignexchangetothemarketonbehalfofmajorforeignexchangeearners.Foreignexchangeearnerscan
nowtransactdirectlywith
commercialbanksoftheirchoice.
*Effective1stJanuary,2013theZambian
Kwacha
wasrebasedby
K1000.
131
CommercialBa
nksF
oreign
Exchange
Rates,Jan20
16-D
ec20
18Table11
Buying
11.1
11.3
11.3 9.7
10.0
10.7 9.9
10.0
10.0 9.9
9.8
9.8
9.9
9.7
9.6
9.4
9.2
9.2
8.9
9.0
9.4
9.7
10.0
10.0 9.8
9.8
9.6
9.5
10.1
10.0 9.9
10.1
10.9
11.9
11.8
11.9
Selling
11.1
11.3
11.4 9.8
10.1
10.7 9.9
10.0
10.0 9.9
9.8
9.9
10.0 9.8
9.6
9.5
9.3
9.3
9.0
9.0
9.4
9.8
10.1
10.1 9.9
9.8
9.6
9.5
10.1
10.1 9.9
10.1
11.0
11.9
11.9
11.9
Mid-rate
11.1
11.3
11.3 9.7
10.1
10.7 9.9
10.0
10.0 9.9
9.8
9.8
9.9
9.8
9.6
9.4
9.3
9.3
8.9
9.0
9.4
9.8
10.0
10.0 9.9
9.8
9.6
9.5
10.4
10.0 9.9
10.1
11.1
11.9
11.8
11.9
Buying
16.0
16.2
16.1
13.9
14.6
15.2
13.0
13.1
13.1
12.2
12.2
12.3
12.2
12.1
11.8
11.9
11.9
11.8
11.6
11.7
12.5
12.9
13.2
13.4
13.6
13.6
13.4
13.4
13.6
13.3
13.0
13.0
14.3
15.5
15.2
15.1
Mid-rate
16.0
16.2
16.1
13.9
14.6
15.2
13.0
13.1
13.1
12.2
12.2
12.3
12.2
12.2
11.9
11.9
12.0
11.8
11.6
11.7
12.5
12.9
13.3
13.4
13.6
13.7
13.4
13.4
13.6
13.3
13.0
13.0
14.3
15.5
15.3
15.1
Buying
12.1
12.6
12.6
11.0
11.3
12.0
11.1
11.2
11.2
10.9
10.6
10.4
10.5
10.4
10.2
10.1
10.2
10.3
10.3
10.6
11.2
11.4
11.8
11.8
12.0
12.1
11.8
11.7
11.9
11.7
11.5
11.6
12.7
13.7
13.4
13.5
Selling
12.1
12.6
12.6
11.1
11.4
12.1
11.2
11.3
11.2
10.9
10.6
10.4
10.6
10.4
10.3
10.1
10.2
10.4
10.3
10.7
11.2
11.5
11.8
11.9
12.1
12.1
11.9
11.7
12.0
11.8
11.6
11.7
12.8
13.7
13.5
13.7
Mid-rate
12.1
12.6
12.6
11.1
11.4
12.0
11.2
11.2
11.2
10.9
10.6
10.4
10.6
10.4
10.3
10.1
10.2
10.4
10.3
10.7
11.2
11.5
11.8
11.9
12.0
12.1
11.8
11.7
11.9
11.7
11.6
11.6
12.8
13.7
13.5
13.6
Buying 0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.7
0.7
0.7
0.8
0.8
0.8
Selling
16.0
16.2
16.2
14.0
14.6
15.3
13.1
13.2
13.1
12.2
12.2
12.3
12.3
12.2
11.9
12.0
12.0
11.8
11.6
11.7
12.6
12.9
13.3
13.5
13.7
13.7
13.4
13.4
13.7
13.4
13.1
13.0
14.3
15.5
15.3
15.1
Selling 0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.7
0.7
0.7
0.8
0.8
0.8
INTERB
ANKUS
$UK
Pound
EURO
SAR
Mid-rate
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.7
0.7
0.7
0.8
0.8
0.8
Source:BankofZambia
Date
Mon
thlyAvg.
2016
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
2017
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
2018
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
Buying
11.1
11.3
11.4 9.8
10.0
10.6 9.8
9.9
9.9
9.8
9.7
9.3
9.8
9.7
9.5
9.4
9.2
9.2
8.9
9.0
9.3
9.7
10.0 9.9
9.8
9.7
9.5
9.4
10.0
10.0 9.8
10.0
10.8
11.9
11.7
11.8
Mid-rate
11.2
11.3
11.4 9.8
10.0
10.7 9.9
10.0 9.9
9.9
9.8
9.6
9.9
9.8
9.6
9.5
9.3
9.3
8.9
9.0
9.4
9.8
10.1
10.0 9.9
9.8
9.6
9.5
10.1
10.0 9.9
10.1
10.9
11.9
11.8
11.9
Selling
11.2
11.4
11.3 9.8
10.1
10.7 9.9
10.1
10.0 9.9
9.9
9.8
10.0 9.8
9.6
9.5
9.3
9.3
9.0
9.0
9.4
9.8
10.1
10.1 9.9
9.8
9.6
9.6
10.1
10.1 9.9
10.1
11.0
11.9
11.9
12.0
Selling
11.2
11.4
11.3 9.7
10.1
10.8 9.9
10.0
10.0 9.9
9.9
9.9
10.0 9.8
9.7
9.5
9.3
9.3
9.0
9.1
9.5
9.9
10.2
10.1 9.9
9.9
9.7
9.6
10.2
10.1
10.0
10.2
11.0
12.0
11.9
12.0
NonBanksU
S$BureauxUS
$
132
ForeignExchange
Transactions
(US$Million),Dec
2010
-Dec
2018
Table12
Other
Non-GR
Z54.0
40.4
45.6
39.7
40.1
60.6
41.3
64.1
47.4
45.8
48.0
104.9
41.6
44.3
25.2
39.4
40.4
69.4
48.5
27.5
37.3
74.7
23.7
43.3
34.6
18.1
30.9
21.6
26.2
55.3
38.6
30.7
25.9
34.0
50.3
35.7
57.4
20.8
47.8
48.5
52.2
44.8
Dono
rInflo
ws
103.4
28.3
74.2
20.0 4.0
24.5 9.0
11.6 1.1
12.5 4.6
8.7
4.7
2.7
22.2 7.6
7.9
12.8
11.6 8.5
12.6 1.0
10.7
17.9 2.6
13.6 6.7
6.7
4.0
14.4 8.2
9.1
6.7
13.0
17.4
23.9 9.7
7.4
2.3
5.4
2.5
8.5
Dealing
11.0 0.0
171.0
46.0 0.0
50.0
41.2
71.2
95.0
36.4
-82.8
-27.0
-41.0
72.5
23.0
22.5
118.2
57.3
-24.0
8.9
7.1
118.0
-45.5
-25.0
-110.5
-4.0
30.0
-31.0
0.0
115.6
4.0
-10.0
-20.0
-114.0 0.0
-52.0
-52.0
-38.0
0.0
-29.0
0.0
0.0
Other
Non-GR
Z24.8
92.8
12.3
23.1
44.9
49.8
57.4
32.0
56.1
32.3
54.7
104.2
33.5
21.4
17.9
59.5
38.4
46.1
36.1
40.7
50.5
23.9
-70.0
35.8
65.5
64.9
30.4
44.3
33.4
20.2 9.8
78.9
28.2
23.2
58.7
26.3
11.6
22.8
21.0
17.2
17.0
11.5
GRZDe
btServicing
43.9 3.2
18.4
25.3 4.6
25.5 8.7
102.1
53.6
-67.5
-26.9
36.2
41.3
75.7
33.0
81.0
-28.9
28.3
79.8
33.8
65.1
65.9
36.3
25.1
125.6
20.4
66.5
96.1
46.2
46.1
160.7
18.8
117.6
153.3
36.3
41.3
151.1
85.7 1.6
90.2
27.6
74.9
GRZ
OtherU
ses
99.9
134.3
191.5
0.1
1.5
50.0
17.0 4.8
25.9 0.0
-0.5 0.0
107.1
2.7
3.4
2.9
-0.5 7.8
23.8 0.4
-92.5
1.1
8.2
8.6
16.2 6.1
26.2
11.6 1.7
1.5
58.0 0.0
-20.0
-6.1 0.4
2.4
0.7
3.5
9.5
7.4
0.7
2.6
Gross
International
Reserves
2118.7
2347.0
3069.0
2708.8
3103.2
2973.4
2902.6
2773.8
2598.8
2569.0
2457.2
2403.8
2228.3
2247.7
2264.4
2198.2
2300.4
2366.0
2310.5
2262.6
2282.4
2403.9
2369.4
2386.1
2326.6
2271.0
2155.4
2014.2
1965.2
2092.5
1915.6
1867.8
1787.9
1778.5
1750.9
1816.0
1770.9
1725.5
1630.6
1598.6
1608.0
1569.2
Bank
ofZambiaInflows
Bank
ofZambiaO
utflo
ws
Source:BankofZambia
Period
2010
2011
2012
2013
2014
2015
2016
2017
2018
December
December
December
December
December
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
Mines 0.0
0.0
0.0
0.0
0.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
9.7
0.0
0.0
0.0
0.0
0.0
23.3 0.0
0.0
0.0
0.0
0.0
0.0
133
Percentage
ChangesintheConsum
erPriceIndices(
2009
weights-B
ase20
09=10
0),Jan
2016
-Dec
2018
Table13
Non
Food
179.7
181.8
181.9
181.4
181.8
183.6
183.5
184.9
183.6
185.3
189.6
190.8
191.6
192.9
193.8
194.9
195.1
198.4
198.4
198.5
200.1
200.6
201.7
205.1
207.1
208.1
210.8
211.4
212.4
212.8
213.4
214.0
214.6
217.3
219.1
220.7
Total
21.8
22.9
22.2
21.8
21.3
21.0
20.2
19.6
18.9
12.5 8.8
7.5
7.0
6.8
6.7
6.7
6.5
6.8
6.6
6.3
6.6
6.4
6.3
6.1
6.2
6.1
7.1
7.4
7.8
7.4
7.8
8.1
7.9
8.3
7.8
7.9
Food
25.9
26.4
26.2
26.5
25.8
25.3
24.8
24.1
23.4
15.6 9.2
7.8
7.4
7.4
6.7
6.1
5.9
5.8
5.3
5.1
5.0
4.9
4.8
4.8
4.6
4.6
5.8
6.5
6.9
7.5
8.1
8.3
8.6
8.3
8.4
8.1
Non
Food
17.4
19.1
17.9
16.7
16.5
16.5
15.3
14.8
14.0 9.0
8.3
7.1
6.7
6.1
6.6
7.5
7.3
8.0
8.1
7.7
8.4
8.2
7.9
7.5
8.1
7.9
8.7
8.4
8.9
7.3
7.6
7.8
7.3
8.3
7.0
7.6
Total
1.3
1.2
0.5
0.3
0.2
0.3
0.1
0.4
0.1
0.5
1.5
0.9
0.9
1.0
0.3
0.4
0.1
0.6
-0.1 0.1
0.3
0.4
1.4
0.7
1.0
0.9
1.3
0.6
0.4
0.2
0.3
0.3
0.2
0.7
0.9
0.8
Food 1.6
1.2
0.9
0.8
0.2
-0.2 0.2
0.3
0.0
0.6
0.8
1.1
1.2
1.2
0.2
0.2
0.1
-0.3
-0.2 0.1
-0.1 0.5
0.8
1.1
1.0
1.2
1.4
0.9
0.4
0.3
0.3
0.3
0.1
0.3
1.0
0.8
Non
Food 0.9
1.2
0.0
-0.3 0.3
1.0
-0.1 0.4
0.2
0.4
2.3
0.6
0.5
0.7
0.5
0.6
0.1
1.7
0.0
0.1
0.8
0.2
2.0
0.2
1.0
0.5
1.3
0.3
0.5
0.2
0.3
0.3
0.3
1.2
0.8
0.7
Consum
erPrice
sFood
andNo
n–Food
(2009=100)
AnnualInflatio
nMonthon
MonthInflatio
nRates
Source:CentralStatisticalOf�ice
Monthly
2016
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
2017
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
2018
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
Total
178.7
180.8
181.7
182.2
182.7
183.3
183.4
184.1
184.2
185.2
188.0
189.6
191.3
193.1
193.8
194.5
194.6
195.8
195.6
195.8
196.3
197.1
199.8
201.2
203.2
204.9
207.6
208.9
209.8
210.4
210.9
211.5
211.9
213.4
215.4
217.0
Food
177.9
179.9
181.5
183.0
183.4
183.0
183.4
183.9
183.9
185.0
186.6
188.7
191.0
193.3
193.7
194.1
194.2
193.6
193.1
193.3
193.1
194.1
195.6
197.8
199.7
202.1
204.9
206.8
207.6
208.2
208.8
209.4
209.6
210.1
212.1
213.8
134
Treasury
BillTransactions
(K'M
illion),D
ec20
10-D
ec20
18Table14
Settlement
value
644,989.3
638,117.7
0.0
1,552,661.7
871,680.8
146,913.0
616,185.6
1,084,406.1
604,678.2
570,064.6
859,766.8
1,044,692.7
953,106.3
901,937.5
1,152,621.5
1,528,467.0
1,215,654.9
2,077,945.7
1,837,622.7
2,159,509.3
2,112,458.2
1,742,471.3
738,772.3
2,979,719.3
1,321,605.1
1,054,921.1
922,782.0
1,646,903.5
1,584,558.5
1,581,365.6
1,661,610.1
1,839,472.4
2,646,418.3
521,988.8
715,567.3
611,701.3
879,354.3
2,072,389.4
1,857,294.3
772,896.7
1,133,815.7
2,089,999.5
Maturite
s424,009.0
471,047.0
0.0
548,794.7
710,943.0
969,945.0
903,555.0
812,670.0
1,502,825.0
728,489.0
886,515.0
841,216.0
714,125.6
1,143,693.0
991,192.0
1,088,396.0
542,342.0
762,489.0
807,822.0
751,300.0
481,912.0
453,993.0
759,287.2
1,264,552.0
821,541.0
1,485,092.6
1,833,582.1
2,140,055.4
919,390.0
1,229,304.0
993,434.0
1,663,733.0
2,453,238.0
212,511.0
875,205.0
1,340,161.0
1,315,992.0
2,575,221.0
2,054,640.0
810,990.0
1,078,740.5
335,975.0
SpecialTaps&
Off-TenderS
ales 0.0
0.0
0.0
15,850.5 0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Re-discoun
ts 0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
91Da
ys108,714.0
87,065.0
53,037.0
16,400.0
144,610.0
11,265.0
14,570.0
14,161.0
10,961.0
49,326.0
100,855.0
97,344.0
105,936.0
56,809.0
161,502.0
84,522.0
99,040.0
291,690.0
197,405.0
143,165.0
92,442.0
45,194.0
112,580.0
164,026.4
64,806.0
139,464.0
39,696.0
136,537.0
26,756.0
125,831.0
41,940.0
116,679.0
286,681.0
16,554.0
18,726.0
54,025.0
26,680.0
168,568.0
109,311.0
133,470.0
65,916.0
208,102.0
273
Days
134,845.0
164,723.0
172,174.5
318,190.0
102,920.0
179,295.0
40,200.0
169,828.3
223,300.0
125,250.0
245,036.3
345,159.0
195,921.0
226,592.0
383,550.0
285,010.0
441,495.0
555,388.8
474,614.0
613,470.0
400,940.0
453,023.0
174,850.0
613,557.0
24,345.0
112,331.0
108,578.0
127,295.0
382,720.0
305,845.0
146,030.0
1,685.0
111,215.0
4,530.0
0.0
12,725.0
150.0
622,880.0
262,770.0
159,545.0
73,150.0
408,240.0
364Da
ys306,995.0
335,239.0
374,891.7
923,695.0
579,915.0
261,361.0
696,939.0
545,759.0
341,339.0
312,935.0
486,265.2
474,765.0
514,073.0
592,222.0
687,275.0
1,351,360.0
631,100.0
1,128,459.0
865,335.0
1,483,220.0
1,711,343.0
1,230,781.0
337,081.0
1,862,731.0
1,302,000.0
1,432,592.0
1,937,890.0
1,601,195.0
1,279,436.0
1,270,172.0
1,716,550.0
1,906,099.0
2,301,762.0
524,666.0
744,850.0
640,510.0
973,305.0
1,255,727.0
1,657,132.5
615,625.0
906,372.0
1,504,949.6
TotalSales
682,400.0
697,042.0
767,399.2
1,742,990.0
1,000,598.0
564,873.0
775,027.0
756,382.4
736,497.0
683,613.0
1,023,734.5
1,233,460.0
1,115,583.0
1,081,164.0
1,372,900.0
1,861,950.0
1,444,657.0
2,455,798.8
2,154,348.0
2,538,786.0
2,440,232.0
1,988,292.0
825,485.0
3,336,956.4
1,519,250.0
1,864,900.0
2,094,814.0
1,901,843.0
1,801,852.0
1,797,278.0
1,918,512.0
2,112,457.0
3,022,353.0
604,235.0
831,912.0
712,264.0
1,033,315.0
2,380,618.0
2,192,663.5
911,805.0
1,047,108.0
2,339,177.6
182Da
ys131,846.0
110,015.0
167,296.0
484,705.0
173,153.0
112,952.0
23,318.0
26,634.0
160,897.0
196,102.0
191,578.0
316,192.0
299,653.0
205,541.0
140,573.0
141,058.0
273,022.0
480,261.0
616,994.0
298,931.0
235,507.0
259,294.0
200,974.0
696,642.0
128,099.0
180,513.0
8,650.0
36,816.0
112,940.0
95,430.0
13,992.0
87,994.0
322,695.0
58,485.0
68,336.0
5,004.0
33,180.0
333,443.0
163,450.0
3,165.0
1,670.0
217,886.0
TreasuryBillsTenderSales
Total
Outstand
ingBills
4,533,570.6
6,919,518.1
6,840,829.8
9,525,976.4
10,809,484.4
12,090,096.5
11,872,902.5
11,886,036.5
11,997,811.5
10,687,467.5
10,600,726.0
10,591,229.0
10,653,007.0
10,464,391.0
10,492,372.0
11,196,878.0
11,843,924.0
13,174,213.5
14,830,489.5
16,262,283.2
17,430,754.2
18,907,705.2
18,604,146.0
19,812,521.0
19,879,295.0
20,585,010.0
21,053,482.0
19,452,167.6
19,968,004.2
20,193,512.4
20,545,806.4
20,781,399.4
20,287,537.4
20,458,237.4
20,278,566.4
19,221,162.4
18,694,672.4
18,273,947.4
17,469,018.4
17,794,641.9
17,466,105.9
17,515,488.9
Source:Bank
ofZambia
Period
December
December
December
December
December
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
2010
2011
2012
2013
2014
2015
2016
2017
2018
135
ByHo
lder
GRZBo
ndsO
utstanding
(K'M
illion),Jan.201
6-D
ec.201
815
Table
Others
1
7,424,906.7
7,507,726.2
7,411,945.9
7,258,030.8
7,844,070.2
8,129,239.9
7,341,118.1
8,223,115.1
8,175,996.1
8,149,636.6
9,603,869.3
10,466,890.2
10,639,719.1
11,383,057.6
11,279,983.0
12,807,990.3
12,221,336.4
11,475,268.2
13,477,026.7
12,595,094.5
12,643,645.5
15,352,280.0
15,352,282.0
14,657,981.0
14,631,714.6
15,397,339.3
15,875,788.8
16,719,096.4
16,645,868.7
16,501,970.0
17,606,078.4
20,016,417.2
21,195,494.4
21,938,157.1
22,629,960.1
23,317,926.3
Commercialbank
s1,566,673.7
1,541,693.9
1,583,399.9
1,658,141.6
1,911,750.3
1,907,902.9
1,879,579.9
2,044,064.4
1,971,061.2
1,944,347.7
2,275,544.8
2,554,542.6
2,525,606.0
3,008,189.2
3,048,046.2
3,224,990.9
2,889,612.5
3,092,957.6
3,211,202.4
3,109,866.3
3,787,869.9
4,243,043.8
4,103,870.9
4,760,033.9
4,791,696.3
5,489,952.4
5,011,501.9
5,839,548.7
5,785,925.0
5,929,823.7
6,283,361.5
6,289,002.4
5,943,013.1
5,939,325.8
5,955,483.5
5,886,095.6
TotalO
utstanding
8,991,580.4
9,049,420.1
8,995,345.8
8,916,172.4
9,755,820.5
10,037,142.8
9,220,698.0
10,267,179.5
10,147,057.2
10,093,984.3
11,879,414.1
13,021,432.8
13,165,325.0
14,391,246.8
14,328,029.2
16,032,981.2
15,110,948.9
14,568,225.8
16,688,229.1
15,704,960.8
16,431,515.4
19,595,323.8
19,456,152.9
19,418,014.9
19,423,410.9
20,887,291.7
20,887,290.7
22,558,645.2
22,431,793.6
22,431,793.7
23,889,439.9
26,305,419.6
27,138,507.6
27,877,482.9
28,585,443.6
29,204,021.9
Source:Bank
ofZambia
Note:(1)O
thersincludesB
oZandNon-bankholdingsofGRZordinaryBonds
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
Endofperiod
2016
2017
2018
136
Productio
n8,648.0
7,701.6
5,434.9
5,919.4
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Copper
Cobalt
MetalProductio
nandExports(M
etricT
onnes),201
0-201
8Table16
Productio
n852,566.3
833,449.7
824,976.6
997,822.8
708,259.4
710,860.2
64,181.0
55,649.7
63,323.9
59,611.5
61,073.8
69,536.8
70,500.5
65,852.4
65,052.1
61,738.9
68,381.9
63,546.5
768,44
9.0
57,157.1
53,390.1
56,100.0
66,267.4
61,510.4
69,237.8
70,419.2
71,023.0
66,917.8
72,740.8
68,717.1
73,250.7
786,73
1.4
65,670.4
64,022.1
70,336.7
63,657.5
69,861.7
77,370.5
76,444.2
69,734.9
73,951.5
77,359.3
69,783.2
72,896.8
851,08
8.9
Exports
829,727.8
832,215.6
903,137.4
976,305.7
1,146,315.4
1,022,096.5
88,014.7
73,222.4
72,106.6
66,804.0
82,730.1
83,612.0
80,496.9
65,908.3
67,593.1
86,452.1
79,906.1
80,105.1
926,95
1.4
84,484.8
87,125.1
88,066.1
87,307.1
82,402.0
83,718.9
78,604.2
86,819.7
61,997.8
77,712.7
101,154.0
100,030.6
1,01
9,42
3.0
100,002.8
86,752.2
85,351.4
78,660.2
80,640.4
94,473.8
91,126.1
97,572.5
86,654.2
77,759.4
79,631.0
78,746.7
1,03
7,37
0.7
Exports
8,640.9
7,830.7
10,029.3
5,880.8
4,562.2
2,978.8
374.0
196.8
560.3
642.7
376.6
288.6
237.7
408.5
494.9
714.5
472.4
509.0
5,27
6.1
366.9
231.0
230.0
132.0
225.0
129.0
265.0
264.0
197.0
211.0
198.0
200.0
2,64
8.9
165.0
132.0
100.0
99.0
198.0
165.0
165.0
132.0
132.0
66.0
99.0
132.0
1,58
5.0
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
Total
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
Total
January
February
March
April
May
June
July
August
Septem
ber
October
Novem
ber
December
Total
Source:BankofZambiaandCentralStatisticalOffice
n/anotavailable
Endofperio
d
2010
2011
2012
2013
2014
2015
2016
2017
2018
137