The Supervisory model that Zambia has adopted under Bank of Zambia to regulate financial institutions in particular the Zambian Banks

Thumbnail Image
Mulimbika, Annette
Journal Title
Journal ISSN
Volume Title
There has recently been an enormous interest around the world in the organization of the structure of financial supervision. In the last few years, a number of industrialized countries have moved to integrate their different supervisory agencies of the banking, securities and insurance sectors in a single agency by application of what is known as the integrated model of financial supervision. These integrated agencies are referred to generically as integrated financial sector supervisory agencies (IFSSAs). On the other hand, the supervisory model that Zambia uses to regulate financial institutions is loosely referred to as the fragmented or sector-specific self regulation model. This model is one in which financial institutions are organized around, and supervised by specialist agencies. Thus, the question that has been addressed is whether this model, adequately and effectively regulates the financial institutions, in particular the banks, in light of the country's current needs such as the increasing complexity and growth of the financial sector in Zambia, the underlying integration of the financial markets and the emergence of financial conglomerates in Zambia, if any. The first chapter gives an overview of the Zambian regulatory and supervisory framework since independence to date while highlighting some problems of this framework. The second chapter discusses what bank supervision and regulation entails while pointing out that the objective of supervision is to promote a safe, sound and efficient financial system which is necessary for effective financial intermediation to take place and to promote confidence in the financial sector. Also, the challenges and constraints that the Bank of Zambia faces in its supervisory role such as political pressure and interference, human and monetary capital have been highlighted. The third chapter basically examines the legal framework for banking supervision and regulation in Zambia. The fourth chapter discusses the fragmented and integrated models of supervision. Further, it has established that Zambia's supervisory model is well suited to the country's current needs such as the increasing complexity and the rise of financial business in that the current regulatory framework has performed relatively well since 2000 owing to reforms in banking law and regulations. The last chapter sums up the findings of the research which are that, the fragmented model of supervision has been adequate and efficient in as far as regulation and supervision of the financial sector, in particular the banks is concerned. It goes on^ however, to recommend several changes to this model so as to strengthen it. These involve institutional changes, particularly to the Bank of Zambia; funding to Bank of Zambia by Parliament under budgetary allocation; law reform by expediting the enactment of the draft Depositors Protection Bill into law, providing a definition for 'unsafe and unsound' bank practices and amendment to the BFSA by clearly delineating the extent to which banks can engage in activities on various financial markets; strengthening financial and prudential regulation in compliance with International Standards.
Banks and Banking--Law and Legislation---Zambia , Bank Examination--Zambia , Financial Institutions-Zambia