Bank of Zambia’s decision to increase the monetary policy rate from 9% to 9.25% has been criticized by financial experts and advocacy groups for its potential detrimental impact on the country’s economic growth. Financial Advisor Kingford Kalobi expressed his concern about the increase and said that it is detrimental to private sector participation and economic growth. He stated, “With the already constrained liquidity available on the market, any slight increase in the monetary policy rate adversely affects any prospect for growth, especially for the private sector. The cost of doing business is further likely to be negatively affected; a situation that must be revisited to enable startups to remain afloat.”

Kalobi further explained that increasing the Monetary Policy Rate will increase the cost of borrowing money from financing institutions to unacceptably high rates, making it difficult for businesses to operate. He added, “The private sector is the engine of growth for any economy, and therefore it is important to create an enabling environment for the sector to thrive. The increase in the Monetary Policy Rate will not achieve this objective.”

The Advocates for National Democracy and Development (ANDD) has also expressed concern over the increase in the Monetary Policy Rate. ANDD Executive Director, Samuel Banda, noted that the increase in the monetary policy rate is a disadvantage to the business sector. Banda stated, “Liquidity in the economy is already constrained due to the reduction of forex and the high cost of doing business. Increasing the Monetary Policy Rate, which entails high costs of accessing money from banks, will downplay all efforts made to promote business growth among the small-scale businesses, who are already challenged with financial capital.”

Banda called on the central bank to put in place measures that will grow the private sector rather than shrink its potential to contribute to national development. He added, “Factors such as load shedding and floods may present future economic challenges that should be cushioned in one way or the other. It is, therefore, essential for the government to work with the central bank to address these challenges and create an enabling environment for businesses to thrive.”

Financial experts and advocacy groups have called on the Bank of Zambia to reconsider its decision and implement measures that will support business growth and development. The increase in the Monetary Policy Rate, coupled with the already constrained liquidity in the market, could have a significant impact on economic growth and private sector participation. It is essential for the government and the central bank to work together to address these challenges and create an enabling environment for businesses to thrive.