By Paul Chilambwe
IS THE BANKING AND FINANCIAL SERVICES ACT NO. 9 OF 2026 SACRIFICING ZAMBIAN ENTREPRENEURS TO FEED FOREIGN PROFITS?
The recent enactment of the Banking and Financial Services Act, 2026, has sent shockwaves through the local financial sector. While framed as a move toward modernization and “stability,” a deeper look at the legislation reveals a disturbing reality: it is a framework seemingly designed to fortify the dominance of big, often foreign-owned banks, while systematically dismantling the local micro-finance and money-lending ecosystem that most Zambians rely on.
CASTING TOO WIDE A NET: THE ERASURE OF THE LOCAL LENDER
The Act’s predatory nature begins in its very foundation. SECTION 2 provides an expansive definition of an “advance,” covering any direct or indirect payment of money or extension of credit based on an obligation to repay. By coupling this with SECTION 3, which outlines the Act’s broad APPLICATION, the law effectively traps every local money lender and micro-finance institution (MFI) under the same regulatory umbrella as multi-national banking giants.
This “one-size-fits-all” approach is not just impractical; it is a calculated erasure of the distinction between a community-based lender and a global financial corporation. By repealing the previous Money-lenders Act, the 2026 Act forces local entrepreneurs into a regulatory arena where they are fundamentally outmatched.
PUNITIVE BARRIERS TO ENTRY
The most chilling aspect for local small-scale lenders is SECTION 10. The Act explicitly prohibits conducting banking business or providing financial services without a license. The “teeth” of this provision are truly draconian: individuals operating without such a license face fines of up to three million penalty units, imprisonment for up to THIRTY YEARS, or both. For a local lender providing small emergency loans to civil servants or marketeers, these penalties are not just regulatory they are life-destroying.
To ensure small players cannot survive, the Act introduces insurmountable hurdles through Bank of Zambia (BoZ) regulations. Under Section 59, the Bank of Zambia is empowered to determine “minimum paid-up capital” and “regulatory capital requirements”. These requirements are often set at levels that only well-capitalized foreign entities can meet, effectively pricing local Zambians out of their own financial market.
Furthermore, the Act imposes a corporate structure that is alien to small-scale operations. It mandates the appointment of a Chief Executive Officer (CEO) to manage business conduct and a Chief Financial Officer (CFO) responsible for financial management and accounts. Additionally, Section 75 demands rigorous and frequent “submission of information and returns,” including monthly statements of assets, liabilities, and income. For a local MFI, the cost of hiring such specialized senior staff and maintaining this level of reporting is a death sentence.
A BATTLE FOR THE LENDING BUSINESS
It is no secret that the traditional banking sector has been bruised in recent years, losing the lucrative money transfer business to more agile and accessible mobile money operators. Having lost that territory, big banks are now eyeing the money-lending market the last stronghold of local lenders. The 2026 Act appears to be the ultimate weapon in this territory war, using the “law” to push out small competitors who provide the flexibility that big banks refuse to offer.
THE MYTH OF THE “PREDATORY” LENDER VS. FINANCIAL DISCIPLINE
Critics often point to exploitative lending rates as a reason to crush small lenders. While these dangers exist, we must be honest: money lenders do not force credit on their clients. The real crisis in our society is a lack of financial discipline and a culture where credit is often neglected until debts reach unmanageable levels. Removing the lender does not fix a culture of poor repayment; it only removes the only source of emergency liquidity for those whom big banks have already rejected.
POSSIBLE NEGATIVE EFFECTS OF THE NEW ACT
The human cost of this Act will be staggering. Thousands of local money lenders provide essential services to civil servants, small businesses, and working individuals. Forcing these lenders out of business will lead to mass unemployment and the collapse of local capital circles.
Even more dangerously, the demand for small-scale credit will not disappear; it will simply go underground. By criminalizing local lenders through strict BoZ regulations, we are inviting a “mafia-style” of money lending. Without legal recourse, lenders will resort to underhand, perhaps violent, methods to recover funds. The problem will not go away it will simply take a more disastrous, unregulated, and violent form.
Ultimately, the borrowers the very people this Act claims to protect will suffer most. Most Zambians do not meet the “strict requirements” of big banks, such as the high-value security of collateral. Local micro-lending institutions have historically overlooked these rigid barriers to provide flexibility. Once these locals are gone, the average Zambian will find themselves locked out of the financial system entirely, left with nowhere to turn when their family faces an emergency.
The Banking and Financial Services Act, 2026 is not an act of progress; it is an act of exclusion. It favors the foreign “Goliath” at the expense of the local “David,” and in doing so, it risks the very financial inclusion it claims to promote.
ZAMBIA MUST GO BACK TO SCHOOL.