Selection of banker of Govt is done transparently-Ndalamei

Lusaka, 27th December 2010. Over the last few weeks, there has been some speculation originated by uninformed sections of society and of the media, on matters surrounding the non-inclusion of Finance Bank Zambia Limited, from offering banking services to the Government of the Republic of Zambia for the Financial Year 2010.

 

The background to the selection of banks to provide banking services to the Government emanated from the 2009 budget speech in which Government made a commitment to streamline financial management systems aimed at reducing idle balances held across hundreds of accounts in Commercial Banks. Most of the idle balances were also accruing unnecessary bank charges, thereby making the cost of banking expensive for the Government.

 

In accordance with the measures agreed in streamlining financial management systems, participation in the provision of banking services to the Government is determined through a transparent and inclusive process involving the Central Government Spending Agencies, Watchdog Institutions and the Central Bank. Further, in keeping with the principles of fairness, accountability, transparency and promotion of efficiency in the financial sector, the Government invites registered Commercial Banks to submit bids and necessary supportive information, to facilitate planning for Government’s annual banking arrangements.

 

Eighteen [18] Commercial Banks submitted bids to provide banking services to the Government in 2010. Seven [7] banks met the criteria and were successfully selected. However, Finance Bank, along with ten [10] other Commercial Banks, was non-responsive to the tender criteria set at the time of selecting the 2010 Banking Services Providers and it is for this reason that the bank has not been participating in 2010.

 

The identification process of banking service providers for the Financial Year 2011 is currently underway. In this regard, I wish to disclose that Finance Bank, like all other interested Commercial Banks, has submitted a bid with supportive information in its quest to be selected as a provider of banking services to the Government in the Financial Year 2011.

 

A fully qualified team comprising Central Government Spending Agencies, Watchdog Institutions and the Central Bank is currently evaluating the Commercial Banks that have expressed interest and submitted bids to offer banking services for the 2011 Financial Year, in line with the measures instituted by the Government of the Republic of Zambia to streamline financial management systems. The results of successful bidders will be communicated when the evaluation and capacity assessment process is duly completed.

 

The Ministry of Finance and National Planning also takes this opportunity to dispel assertions that it is the source of some of the information that has been published in the media. We believe that the burden lies on the publishers of the information to prove beyond reasonable doubt that the source being quoted in the media is indeed from this Ministry. Clearly, the source[s] identified with this Ministry is/are certainly not our employee[s], because apart from the misleading and incoherent information being provided to the media, what the public and the media needs to know is that this Ministry does not deal with Commercial Banks to the level and depth of the detail being published.

 

I wish to assure the public that the Ministry remains committed to strengthening policy measures that will enhance strict adherence to principles of good corporate governance and sound banking and financial services practices. In this regard, we remain fully supportive of the decision by the Bank of Zambia to take possession of Finance Bank. This is because we strongly believe that the measure was taken to protect depositors and creditors from unsound banking practices.

This Ministry is glad that the unwarranted panic created by certain sections of the media is now fading. Evidently, Finance Bank is steadily returning to stability and normal operation due to the arrangements that have been put in place to ensure that the interests of depositors and creditors are prioritized and that once more, the bank stands on its feet as a viable, stable, and uncompromised commercial entity.

/Signed/

Likolo Ndalamei

Secretary to the Treasury

Ministry of Finance & National Planning

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