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Monday, 18 May 2015

Zampost Rising

Zampost Microfinance Limited (ZML), a subsidiary of the parastatal Zampost, is planning to issue its first tranche (K40 million) of the K100 million bond on the Lusaka Stock Exchange (LuSE) by the end of this month to support expansion of its credit business. ZML provides salary-backed loans to the public. According to its parent company Zampost, there is increasing demand for loans. ZML’s loan book has grown to K10 million from mid-2013 to date.

Zampost is certainly one of the more genuine success stories of the PF government. Prior to 2011, the company was plagued by inefficiency and corruption. A 2008 Parliamentary Committee Report observed that Zampost suffered from “serious operational problems….lack of innovation…it has failed to reposition itself in the highly technologically advanced business environment….”

The MMD government responded to that report by passing the Postal Services Act 2009 which repealed the old Postal Services Act, 1994. This put in place a better regulatory framework for postal and courier services and allowed Zampost to undertake postal banking and financial services.

Unfortunately, very little progress was made due to corruption and mismanagement. In Dec 2011, new Communications Minister Yamfwa Mukanga revealed that Zampost was mired in corruption and mismanagement. For example, it had wasted K2 billion (old Kwacha) on the Postmaster General's when the company was operating at a loss. It also also owed Roraima Financial Services K12 billion (old Kwacha) for money transfer services and had other historical debts.

The minister promptly fired the then Postmaster General Paul Simfukwe, who was subsequently arrested for alleged abuse of K1.1 billion (old Kwacha) in March 2012. A new management was appointed to take forward the company under McPherson Chanda.

In April 2012 Zampost registered ZML as a microfinance company with an initial capital of K2.5 billion. The move was part of the company’s diversification process to widen its financial base. The company also reduce transmission fees on all swift cash money transfers by up to 30 per cent and post office box rates by 5- 20% across the country. These new initiatives as it sought to attract more customers. Zampost also expanded into the bus business.

These initiatives have been paying off. In 2013, the company recorded a profit of K1.35 million (rebased) for the first time since 1994. The latest move toward a bond issue for ZML will solidify this road to success and ensure that Zampost as a whole not only contribute towards deepening credit access but takes its place in improving communication.

There is certainly a lot that remains to be done. Zampost still has to clear the huge backlog of unpaid retirees and outstanding payments for some employee scheme loans contracted with other banks and financial institutions about five years go. The good news is that the general is that this is a company that is headed in the right direction. Which largely explains why government allocated K14 million in 2015 for additional “investment and business growth”.

The bigger question is whether Zampost by running ZML and other ventures is spreading itself too widely. Some have suggested that Zampost would be better concentrating on its core products, such as its postal services and its money transfer services rather than focusing on being a giant for so many thing thereby incurring huge overhead costs in the name of innovation.

Those questions aside, what is beyond dispute is that even at this early stage, there are lessons to be learnt from Zampost for other parastatals. Decisive ministerial decisions, competent management and tenure security for staff has been cardinal – Chanda will clock five years in 2016, and it is well deserved. The current strategy at Zampost is certainly working and in the process giving hope that parastatals need not be run poorly, if they start learning lessons!

Chola Mukanga
Copyright © Zambian Economist 2015


  1. There is need to map finacial services in Zambia because access to microfinacne is not for everyone....Who is being served by all these microfinance isntitutions. Which catcment areas is ZamPost serving? Are they serving the population of Zambia? Thanks for your article. Mobile money micro finance is way to go

  2. This is indeed a success story. Putting the right people in management who know what they are doing can make a huge difference. Hope this success story continues and it can be replicated.


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