The power to licence, supervise and regulate financial service providers in Zambia is defined under two sets of legislation, namely: (i) The Bank of Zambia Act, Chapter 360 of the Laws of Zambia; and (ii) the The Banking and Financial Services Act (BFSA), Chapter 387 of the Laws of Zambia. These two sets of legislation outline the functions, responsibilities and mandate of the Bank of Zambia.
In terms of Section 4(1) of the Bank of Zambia (BOZ) Act, the primary objective of the Bank of Zambia is to “formulate and implement monetary policy and supervisory policies that will ensure the maintenance of price and financial system stability so as to promote balanced macro-economic development”. To support this function the Bank is given the responsibility, among others, to “licence, supervise and regulate the activities of banks and financial institutions so as to promote the safe, sound and efficient operations and development of the financial system.”
The BFSA supports the BOZ Act by amplifying the legal and regulatory framework of licensing, supervising and regulating financial service providers in Zambia. In its preamble, the BFSA sets out the objectives for which it was enacted, that is to say, to regulate the conduct of banking and financial services; to provide safeguards for investors in and customers of banks and financial institutions; and to provide for matters connected with or incidental to the foregoing.
The overriding objective of the BFSA is to create a comprehensive and robust regulatory and supervisory framework for conducting financial service business in Zambia. It outlines, among other things: the licensing requirements of financial service providers; their organisation and administration; their operations; their financial accountability; their supervision and regulation; insolvency, dissolution and liquidation; appeals; and other miscellaneous matters.