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“Excellence in Execution”
2016-2019 Strategic Plan
REGISTERED OFFICES
Head Office
Bank of Zambia, Bank Square, Cairo Road
P. O. Box 30080, Lusaka, 10101, Zambia
Tel: + 260 211 228888/228903-20, Fax: + 260 211 221764
E-mail: [email protected], Website: www.boz.zm
Regional Office
Bank of Zambia, Buteko Avenue,
P. O. Box 71511, Ndola, Zambia
Tel: + 260 212 611633-52, Fax: + 260 212 614251
E-mail: [email protected], Website: www.boz.zm
Table of Contents
Message from the Governor 1
Introduction 2
Vision, Mission and Values 4
Environmental Setting 6
Strategic Direction 8
What Success Will Look Like 20
Companion to the Strategic Plan 20
Strategic Risk Assessment 20
Resourcing Planned Activities 21
I am pleased to launch the Bank of Zambia Strategic Plan for the period 2016-
2019. In this Plan we have set ourselves five main objectives in the areas of
monetary policy, financial system stability, financial inclusion, gender
mainstreaming and human capital and Information & Communication
Technology (ICT) internal processes efficiency. These objectives encapsulate
our collective desire to achieve outstanding performance and deliver on our
mandate of price and financial system stability to the satisfaction of our
clients and wider stakeholders.
The need for strategic planning, in any organisation, cannot be over-
emphasised. Strategic planning is pertinent in defining a desired future state,
of an organisation, and mobilising the efforts of everyone towards
achievement of the goals and objectives. It also provides an opportunity for
objective assessment of organisational performance and helps guard
against mission drift. This need is even more imperative in an ever changing and challenging environment
which could easily sway organisational focus as a result of pressure to respond to daily challenges.
The environment at the time of formulating and launching the Strategic Plan presented significant and
unique challenges. These developments call for resilience, flexibility and responsiveness in the manner in
which the Bank discharges its mandate. This notwithstanding, we remain resolute and will seek to seize
opportunities to take advantage of the challenges by pursuing excellent execution of the identified
strategic objectives. This will also include greater liaison with the Government for the necessary and
appropriate alignment of monetary and fiscal policies. The Bank will also endeavour to increase the
country's foreign exchange reserves and look into ways of enhancing the transmission channels and
effectiveness of monetary policy.
The Bank has adopted the theme “Excellence in Execution” in this Strategic Plan to underscore our
commitment to pursue excellence in discharging our mandate. The Bank will seek to ensure that
Excellence permeates into the work culture of the organisation. The theme is also intended to motivate
staff towards higher levels of performance and commit to the full attainment of set objectives, initiatives
and activities. This is also consistent with the Bank's Vision to be Dynamic and Credible. The Bank will
explore initiatives to achieve efficiency gains in all work processes and aim for 100% implementation of all
the articulated strategies in the Plan.
Finally, I acknowledge the good guidance of the Board and distinctive contribution of all members of staff
towards the achievement of the Bank's objectives in the past. The performance of the Bank is only as good
as the passion, proficiency and integrity of its staff. To this end, I am convinced that with our collective skills
and determination we will rise to the challenges and continue to deliver outstanding performance towards
attainment of our goals.
Dr Denny H. Kalyalya
Governor
Message from the Governor
1Strategic Plan 2016-2019 – “Excellence in Execution”
This Strategic Plan is for the four-year period, January 2016 to December 2019, and is anchored on the
Bank of Zambia's mandate of maintaining and promoting price and financial system stability. The
Strategic Plan has been formulated in the context of significant challenges in the environment in which
the Bank operates. Since the third quarter of 2015 inflation spiralled to double digits for the first time
in over 5 years; notable instability was recorded in the foreign exchange market on the back of a fall in
global copper prices. The country has also been experiencing power supply shortages mainly due to
the effects of climate change. These factors culminated in a slow-down in the country's economic
growth.
Over the next four years, the Bank will strengthen and adopt new approaches to deliver on its core
objectives. On the monetary policy side, the Bank will seek to achieve average inflation of between 6% and
8% over the Strategic Plan period, in accordance with Government policy as articulated in the annual
budgets and the Medium Term Expenditure Framework. In this regard, the Bank will enhance the forward
looking monetary policy framework and improve the availability, accessibility and use of relevant
economic data. Furthermore, it will seek to deploy appropriate market based instruments and endeavour
to enhance reserves accumulation as well as deepen the domestic capital and money markets.
In the area of financial stability, oversight of financial service providers through implementation of Basel III
Standards, establishment of a deposit protection scheme and a system for electronic monitoring of
bureaux de change transactions will be enhanced. Implementation of the Basel III standards is aimed at
strengthening capital requirements and increasing bank liquidity. The Bank will also formulate and
implement a financial stability framework. These measures are expected to enhance the resilience of the
financial system to internal and external economic and financial shocks.
Initiatives have been adopted in this Plan to improve formal financial inclusion in order to enhance living
standards. This will be done by developing and implementing a financial inclusion policy and strategy as
well as scaling up digital financial services and ensuring successful implementation of the National
Financial Switch.
Measures to achieve greater operational efficiency and effectiveness will be pursued through the
development and implementation of an Enterprise Architecture and improved Human Resource policies
and practices. This will include activities that will enhance the Bank's employee value proposition in areas
such as recruitment, talent management, and remuneration. The Bank will also nurture a culture of
performance and excellence across all activities which will be achieved by, among others, reinvigorating
our value system summarised by the slogan “The BoZ Way Means ACTIONE.”
The Bank recognises that gender equality is a fundamental ingredient for inclusive and sustainable
economic development. To this effect, strategies to mainstream gender across all Bank operations and use
the Bank's vantage position to promote gender equality in the Zambian financial services industry will be
implemented.
Introduction
2 Strategic Plan 2016-2019 – “Excellence in Execution”
This Strategic Plan was developed through a collaborative process involving all departments in the Bank.
Therefore, every member of staff has a stake in the success of the Plan. It articulates the Bank's vision,
mission and values as well as the strategic objectives. The Plan will inform the formulation of annual
departmental operational plans and budgets as well as form a basis for determining employee
performance contracts under the Performance Management System.
3Strategic Plan 2016-2019 – “Excellence in Execution”
Vision“To be a Dynamic and Credible Central Bank that contributes to the Economic Development of Zambia.”
The Bank strives to be vibrant and responsive to the changes in the operating environment, as well as,
engendering confidence and trust among its stakeholders in discharging its mandate. The Bank seeks to
play a key role in the economic development of Zambia by pursuing appropriate monetary and financial
stability policies that will enable the country to become a Prosperous Middle Income Country by 2030.
Mission“To Achieve and Maintain Price and Financial System Stability to foster Sustainable Economic
Development”
The Mission is drawn from the Bank's mandate which is established by article 213 of the Constitution
(Amendment) Act No. 2 of 2016 and the Bank of Zambia Act, Chapter 360 of the Laws of Zambia, and is
anchored on the responsibilities of price and financial system stability.
Why Price Stability?
Price stability contributes to achieving high levels of economic activity and employment through
increased investor and consumer confidence in the economy.
Why Financial System Stability?
Financial system stability facilitates the smooth transformation of savings into investments, efficient
settlement of payments and ensures that risks are managed in a satisfactory and proactive manner.
Values The Bank's Value system is underpinned by the slogan “The BOZ Way Means ACTIONE'' as demonstrated
in Figure 1 below.
Figure : The BoZ Way
Vision, Mission and Values
4 Strategic Plan 2016-2019 – “Excellence in Execution”
The word “ACTIONE” stands for:
Accountability - We will take responsibility for the decisions and actions that we take.
Commitment to excellence - We will always identify, agree and meet the requirements of both internal
and external stakeholders and honour the commitments we make
efficiently and to the highest quality standards.
Timeliness - We will always be on time in attending to Bank business.
Integrity - We will be honest, transparent, professional and sincere in all our
dealings.
Objectives - We will set ourselves challenging, specific, measurable, achievable,
realistic and time bound (SMART) objectives and will work diligently
towards achieving them.
New Ideas - We will be innovative and open to new ideas and develop for ourselves
and our colleagues the skills to meet current and future challenges.
Equity - We will be fair and impartial in all our dealings.
The BoZ
Way -
ACTIONE
Accountability
Commitment to
Excellence
Timeliness
Integrity Objectives
New ideas
Equity
5Strategic Plan 2016-2019 – “Excellence in Execution”
An Environmental Scan was conducted which revealed a number of challenges in the Bank's operating
environment.
External challenges include the following:
1. Global commodity price shocks and slow growth of major economies:
The global economy has recently suffered major setbacks owing to a slowdown in major economies
such as China. This has had negative implications for the growth prospects of Zambia. This has been
compounded by weak fiscal performance, high debt levels, declining levels of foreign exchange
reserves, exchange rate volatility and high inflationary pressures, among others;
2. Vulnerability of the Zambian financial system to economic and financial shocks: The quality and
quantity of capital of financial service providers (FSPs) and resilience of the Zambian financial
system to shocks were found to be inadequate and relatively weak, respectively. It was also
established that there were inadequate arrangements for crisis management and resolution of
financially distressed FSPs;
3. Constrained supervisory capacity of the bureaux de change sector: The Bank currently has in place a
manual system for monitoring bureau de change transactions resulting in inadequate oversight of
this sector;
4. Low access to formal financial services and low financial literacy levels: Access to financial services
and financial literacy levels in Zambia are low, especially in rural areas;
5. Absence of a common switch and interoperability among the payment systems: Despite the
presence of several payment systems operating in the Zambian market, there is no common switch
to facilitate interoperability;
6. Inadequate consumer protection arrangements for the financial sector: The current consumer
protection arrangements do not adequately cater for the Zambian Financial Sector thus exposing
consumers to exploitation and unfair business practices; and
7. Underdeveloped secondary market for financial instruments: Zambia has an underdeveloped
secondary market for financial instruments. This has a negative impact on the primary market by
making securities less attractive.
The environmental scan also revealed weaknesses in the internal environment as follows:
1. Burdensome bureaucratic administrative processes in Bank operations: Need to streamline the
bureaucratic administrative processes in all Bank operations and establish greater collaboration
across departments and functions;
2. Weak human capital management processes: There is need to enhance human capital
management processes in order to foster high levels of morale, engagement and performance;
3. Disconnect between individual and organisational performance: There is need to strengthen the
link between individual performance and organisational performance;
4. Inadequate governance arrangements for making technology investment decisions: Inadequate
processes currently exist for making investment decisions on the kind of technologies to adopt;
5. Cumbersome and sometimes duplicated processes: Need to optimise processes in the Bank to take
advantage of technological advances;
6. Disparate Information and Communication Technology (ICT) Systems: The abundance of disparate
Environmental Setting
6 Strategic Plan 2016-2019 – “Excellence in Execution”
ICT systems which need to be integrated to facilitated efficient use of ICT resources and information
sharing;
7. Climate Change: The threat of climate change on Bank operations; and
8. Gender Imbalances: Gender imbalances in the Bank where most positions are filled by males even
though females make up a higher proportion of the population. The ratio of male to female
employees in the Bank was 67% to 33% respectively. Imbalances were identified at all levels in the
institution.
Accordingly, the strategic direction of the Bank for the period 2016-2019 is informed by the Bank's Vision,
Mission and the results of the Environmental Scan.
7Strategic Plan 2016-2019 – “Excellence in Execution”
To
ach
ieve a
vera
ge
Infl
ati
on
of
betw
een
6%
an
d 8
% o
ver
the S
trate
gic
P
lan
peri
od
Str
en
gth
en
th
e f
orm
ula
tio
n o
f
mo
neta
ry p
olic
y
ŸEn
han
ce f
orw
ard
lo
oki
ng
mo
neta
ry p
olic
y
fram
ew
ork
ŸEn
han
ce t
he ava
ilab
ility
,
acc
ess
ibili
ty a
nd
use
of
rele
van
t eco
no
mic
data
fo
r
po
licy
an
aly
sis
an
d
rese
arc
h a
cro
ss t
he B
an
k
an
d s
tren
gth
en
stake
ho
lder
en
gag
em
en
t
Str
en
gth
en
th
e
imp
lem
en
tati
on
of
mo
neta
ry
po
licy
Ÿ E
nh
an
ce r
ese
rves
To
str
en
gth
en
th
e r
esi
lien
ce
of
the f
inan
cial
sect
or
ag
ain
st e
con
om
ic a
nd
fi
nan
cial
sho
cks
Imp
lem
en
t B
ase
l III Sta
nd
ard
s
Est
ab
lish
ele
ctro
nic
bu
reau
de
chan
ge m
on
ito
rin
g s
yste
m
Est
ab
lish
a D
ep
osi
t p
rote
ctio
n
sch
em
e
Incr
ease
fo
rmal
Fin
an
cial
Incl
usi
on
by 1
6 p
erc
en
tag
e
po
ints
in
ord
er
to c
on
trib
ute
to
en
han
ced
liv
ing
st
an
dard
s
Sca
le u
p n
on
cash
/mo
bile
/dig
ital p
aym
en
t
syst
em
s
En
sure
im
ple
men
tati
on
of
th
e
Nati
on
al Fi
nan
cial Sw
itch
(NFS
)
Imp
rove
fo
rmal fi
nan
cial
incl
usi
on
in
ru
ral are
as
En
tren
ch G
en
der
Main
stre
am
ing
wit
hin
th
e
Ban
k a
nd
th
e f
inan
cial
sect
or
so a
s to
co
ntr
ibu
te t
o
Gen
der
eq
uali
ty i
n Z
am
bia
Deve
lop
an
d im
ple
men
t a
Gen
der
Main
stre
am
ing
Str
ate
gy
for
the B
an
k
Deve
lop
an
d im
ple
men
t a
Gen
der
Main
stre
am
ing
pro
gra
m f
or
fin
an
cial se
rvic
e
pro
vid
ers
Develo
p a
nd
str
en
gth
en
th
e
Ban
k's
Tale
nt
Man
ag
em
en
t an
d T
ech
no
log
ies
so a
s to
ach
ieve o
pera
tio
nal
eff
icie
ncy
an
d e
ffect
iven
ess
Revi
ew
an
d r
est
ruct
ure
th
e
Ban
k's
reso
urc
ing
an
d
rem
un
era
tio
n p
olic
ies
an
d
pra
ctic
es
Deve
lop
sta
ff e
ng
ag
em
en
t
init
iati
ves
Re-i
nvi
go
rate
an
d e
mb
ed
th
e
Bo
Z W
ay
Valu
e S
yste
m
Tab
le 1
: Str
ateg
ies
at a
Gla
nce
6
Th
e s
trate
gic
dir
ect
ion
of
the B
an
k fo
r th
e p
eri
od
2016-2
019 is
info
rmed
by
the B
an
k's
Vis
ion
, Mis
sio
n a
nd
th
e r
esu
lts
of
the E
nvi
ron
men
tal Sca
n.
Stra
tegi
c D
irec
tion
Str
ate
gic
Pla
n 2
016-2
019 –
“Exc
elle
nce
in
Exe
cuti
on
”
8
Ÿ D
eep
en
th
e d
om
est
ic
cap
ital,
mo
ney
an
d f
ore
ign
exc
han
ge m
ark
ets
in
ord
er
to e
nh
an
ce t
he
tran
smis
sio
n o
f m
on
eta
ry
po
licy
ŸEn
han
ce a
nd
exp
lore
alt
ern
ati
ve in
stru
men
ts f
or
imp
lem
en
tin
g m
on
eta
ry
po
licy
in r
esp
on
se t
o t
he
eve
r ch
an
gin
g e
con
om
ic
en
viro
nm
en
t
Est
ab
lish
a F
inan
cial Sta
bili
ty
Fram
ew
ork
Revi
ew
th
e r
eg
ula
tory
an
d
sup
erv
iso
ry f
un
ctio
n t
o c
ate
r
for
mark
et
con
du
ct a
nd
con
sum
er
pro
tect
ion
En
han
ce o
rgan
isati
on
al
cap
ab
ility
Em
bed
th
e p
rin
cip
les
of
Perf
orm
an
ce M
an
ag
em
en
t
syst
em
to
en
han
ce
perf
orm
an
ce c
ult
ure
Eva
luate
an
d r
evi
ew
th
e B
oZ
org
an
isati
on
al st
ruct
ure
in
lin
e
wit
h t
he B
an
k's
op
era
tio
nal an
d
bu
sin
ess
pro
cess
es
Deve
lop
an
d im
ple
men
t an
IC
T
go
vern
an
ce f
ram
ew
ork
Ad
op
t an
d im
ple
men
t an
En
terp
rise
Arc
hit
ect
ure
(EA
)
Fram
ew
ork
Form
ula
te a
nd
im
ple
men
t a
Gre
en
Po
licy
& S
trate
gy
Strategic Initiatives:i. Implement forward looking monetary policy framework
The Bank decided to adopt a monetary policy framework that targets prices rather than targeting
monetary aggregates as the relationship between money supply and inflation had weakened. This
framework, which was adopted in 2012, requires that monetary policy decisions are forward looking
because monetary policy decisions impact the economy, and ultimately prices, over time and
through different channels. As we implement this new framework, commonly referred to as
inflation targeting, there is need to enhance all activities that support forward looking monetary
policy decisions, including modelling and forecasting, communication with stakeholders and
strengthening the advisory services to Government.
ii. Enhance the availability, accessibility and use of relevant economic data for policy analysis and research across the Bank and strengthen stakeholder engagement.
In moving to a fully-fledged inflation targeting regime, a broad range of economic data is required
for detailed and effective macroeconomic analysis and research to inform monetary policy
decisions and provide relevant and timely advisory services to the Government. This entails that the
availability, accessibility and use of this high frequency data, such as data on output, employment,
incomes, and prices, needs to be enhanced. Without this broader data availability, both the
formulation and implementation of monetary policy under the inflation targeting regime will be
ineffective. The communication of monetary policy actions and decisions, and the credibility of
monetary policy as a whole, is also compromised where there are significant data gaps.
iii. Enhance Reserves Accumulation
Zambia's Gross International Reserves position remains weak and the Bank needs to begin
positioning itself to rebuild foreign reserves to be able to settle external obligations and to prevent
a potential speculative attack on the Kwacha. While reserves accumulation is a natural product of a
strong macro-economic backdrop and buoyant external sector, the Bank will explore all possible
options for building reserves even under adverse external sector developments.
iv. Deepen the domestic capital, money and foreign exchange markets in order to enhance the transmission of monetary policy
Since the introduction of the auction system for Treasury bills and Government bonds in 1993 and
1995, respectively, the primary market has worked well with most of the auctions being well
subscribed. Despite this, the secondary market for Government securities still remains
underdeveloped and shallow. A strong primary market in government securities needs to be
supported by a liquid and efficient secondary market, as it adds greatly to the attractiveness of
Rationale
This objective addresses the Bank's primary function of price stability and seeks to reinforce the
Bank's desire to achieve and maintain low and stable inflation. Inflation is a tax that undermines
savings, investments and growth in the economy and hurts the poor the most.
Strategic Objective #1: To achieve average Inflation of between 6% and 8% over the Strategic Plan period.
10 Strategic Plan 2016-2019 – “Excellence in Execution”
government securities to investors. Thus a more liquid and efficient secondary market contributes
towards the successful sale of primary securities and subsequently towards enhancing the
effectiveness of monetary policy. In implementing monetary policy, the Bank of Zambia will rely
more on market based instruments such as open market operations and resort to direct
instruments only in exceptional circumstances.
v. Enhance and explore alternative instruments for implementing monetary policy in response to the ever changing economic environment
The economic and financial environment has changed significantly both globally and domestically.
This has rendered the traditional instruments for implementing monetary policy inadequate. The
Bank of Zambia will, therefore, seek to enhance the existing instruments to make them more
effective and explore new instruments that may be more suited to the new environment.
11Strategic Plan 2016-2019 – “Excellence in Execution”
Rationale
The Bank acknowledges its mandate of maintaining financial system stability. The Bank will enhance
both micro and macro supervision in order to manage risks and ensure that the financial sector
remains resilient to shocks and supports the country's economic development goals. A stable and
resilient financial system is essential for sustainable economic growth.
Strategic Objective # 2: To strengthen the resilience of the financial sector against economic and financial shocks.
Strategic Initiatives:i. Implement Basel III Standards
The recent financial crises revealed serious weaknesses in the global financial system. Most banks
were ill prepared for the crisis due to key vulnerabilities including the lack of adequate capital to
weather the storm, weak governance systems, poorly structured bonus schemes and inadequate
risk management. In some cases, the authorities had to step in to rescue ailing banks using tax-
payers money, reiterating the need to forestall bank failures.
Many countries in Africa, including Zambia, did not cause the crisis but were affected due to the
interconnectedness of the financial system. The Basel III reforms were introduced in response to the
crises and are aimed at enhancing the resilience of banks to external shocks. At the core of the
reforms are new requirements for banks to improve the level and quality of capital as well as to
increase liquidity requirements. Other requirements involve more intensive supervision of banks.
The Bank is part of this global drive to improve the resilience of banks to external shocks and will
accordingly implement the Basel III Standards during this Strategic Plan.
ii. Establish Electronic Bureau de Change Monitoring System
Currently, Bureau de Change transactions have been monitored via manual means. This has proven
ineffective resulting in numerous breaches of the set limits, perpetrated by both the bureaus and
individuals transacting with Bureaux de Change. Bureaux de Change transactions need to be
monitored to guard against the risks of money laundering. The Bank has set a transaction limit
equal to the equivalent of USD 1,000 for an individual to transact with Bureaus per day. Under the
current regime, there have been numerous instances where this limit has been breached by
individuals moving from Bureau to Bureau. Previous onsite inspections have revealed these abuses.
The electronic monitoring system will aid the Bank to deter these abuses by detecting the breaches
in real time.
iii. Establish a Deposit Protection Scheme
Past experience has demonstrated that the heaviest brunt of banking failures is suffered by less
fortunate members of society with low financial literacy and savings levels. The importance of
banks in the economy, the potential for depositors to suffer losses when banks fail and the need to
mitigate contagion risks leads countries to establish financial safety nets. A financial safety net
usually includes: (a) Prudential regulation and supervision; (b) Lender of Last Resort; and (c) Deposit
Protection Scheme. Deposit Protection Schemes protect individuals with small deposits from loss of
their savings in the event of bank failures. The schemes, which can also be extended to Non- Bank
12 Strategic Plan 2016-2019 – “Excellence in Execution”
financial Institutions, also instill confidence in a country's financial system because of the implicit
protection it entails. The Bank seeks to implement a Deposit Protection Scheme in this Plan to
enhance the financial safety net.
iv. Establish a Financial Stability Framework
Financial Stability refers to “a condition in which the financial system – intermediaries, markets and
market infrastructures – can withstand shocks without major disruption in financial intermediation
and in the general supply of financial services .” A stable and resilient financial sector is a
precondition for a well-functioning economy. Disruptions to the financial sector affect the flow of
credit to the real economy resulting in output and income contraction, a rise in unemployment and
a loss in social welfare. It is, therefore, imperative that systemic risks to the financial sector are
identified on time and accurately measured to forestall the crystallisation of financial imbalances
into financial crises. The view is that the financial stability risks to a financial system is not simply a
sum of risks to individual banks or FSPs. Financial Stability analyses takes into account risks that may
affect all, part of, or most of the institutions as opposed to individual institutions. It goes beyond the
boundaries of the banking system, to the non-bank financial sector, the household and the
corporate sector.
The implementation of the financial stability assessment framework in Zambia will establish a
conceptual basis for analysing systemic risks or vulnerabilities to aid timely policy intervention for
the smooth operation of the financial sector. The framework will contain a number of tools which
are critical to the operationalisation of financial stability management at each and every stage
(monitoring and surveillance, financial stability analysis and reporting).
13Strategic Plan 2016-2019 – “Excellence in Execution”
Strategic Initiatives:i. Scale-up non cash/mobile/digital payment systems
The use of cash and other paper based payment instruments in Zambia remains the main means by
which people make payments. Currency in circulation has over the last 10 years increased by 21% on
a year to year basis. While the use of cash may be seen by the users as cheap, it is an expensive mode
of making payments in any economy. The cost of safeguarding cash at a micro and macro level is
high. The Bank also spends a lot of money in printing new banknotes to meet increasing demand
and to replace worn out banknotes.
In order to reduce the use of cash and paper based payment instruments the Bank, in collaboration
with key stakeholders, will actively promote the use of electronic payment methods which is in line
with the National Payment Systems Vision and Strategy 2013-17. It is expected that this will, among
others, enhance safety and efficiency of payment systems thereby reducing costs and increasing
access to electronic payments methods.
ii. Ensure implementation of the National Financial Switch (NFS)
The Bank has been working with the Bankers Association of Zambia and other stakeholders to
implement the National Financial Switch (NFS). The NFS is a shared payment system infrastructure
that is aimed at interconnecting various payment streams such as the Automated Teller Machines
(ATMs), Point of Sale (POS), and mobile payments, among others.
The implementation of the NFS will facilitate interoperability between and among various financial
service providers in Zambia thereby increasing access and reducing costs of financial services due to
the shared infrastructure. The increased access and reduced cost of financial services will in turn
contribute to the financial inclusion agenda by extending financial services to the un-banked and
under-banked adult population. To this end, the Bank will work with various stakeholders so as to
provide an enabling environment for the smooth implementation and operationalisation of the
NFS.
iii. Improve formal financial inclusion in rural areas
Access to finance provides opportunities for individuals and small businesses to manage their
personal finances more effectively and to expand their enterprises. In this strategic plan, the Bank
will undertake initiatives to scale up formal financial inclusion in rural and other unbanked areas in a
bid to enhance access to financial services and products and therefore to alleviate poverty levels.
The initiatives will include policy options for incentive mechanisms as well as other measures to
encourage financial service providers to offer quality services and products that will result in
Strategic Objective # 3: Increase formal Financial Inclusion by 16 percentage points in order to contribute to enhanced living standards.
Rationale:
This objective responds to the need to bring the unbanked and under-served populations into the
formal financial system. Further, the objective will address inefficiencies in the payment and
settlement systems by among others, exploiting technological advancements and thereby create
opportunities for expanded financial access and economic growth. In addition, increased financial
inclusion will improve the effectiveness of monetary policy.
14 Strategic Plan 2016-2019 – “Excellence in Execution”
increased access and usage.
Broad based access to financial services has remained a challenge in Zambia for many years.
Although the 2015 Finscope Survey revealed that financial inclusion in Zambia had increased
significantly to 59.3% in 2015 from 37.3% in 2009, this growth was skewed towards the urban areas.
Access to financial services has largely excluded rural areas, and high levels of financial exclusion still
exist throughout the country, which diminishes economic prospects. Urban areas recorded a higher
growth in access to financial services by the Zambian adult population to 70.3% in 2015 from 42.0%
in 2009 while access levels in rural areas grew to 50.1% in 2015 from 34.4% in 2009, respectively.
In another breadth, the increase in financial inclusion was driven by the growth in the use of formal
as well as informal financial services. The 2015 Finscope Survey found that adults accessing formal
financial services in Zambia had increased to 38.2% in 2015 from 23.1% in 2009 while adults
accessing informal financial services increased to 37.9% in 2015 from 22.2% in 2009. The proportion
of adults who used both formal and informal services increased to 16.8% in 2015 from 8.1% in 2009.
Ostensibly, the growth in the use of formal financial services was driven by the growth in the uptake
of banking as well as non-bank financial services. In 2015, adults using banking and non-bank
financial services for the first time were 24.8% and 28.5%, respectively. And the growth in the use of
non-bank financial services was on the back of an increase in the uptake of digital financial services.
iv. Review the regulatory and supervisory function to cater for market conduct and consumer protection
The financial crisis of 2008 highlighted the importance of financial consumer protection and market
conduct oversight for the long-term stability of the global financial system. Rapid increases in the
use of financial services, both globally and in Zambia, have pointed to the need for strengthened
financial regulation and consumer education to protect and empower consumers. In the absence of
strong financial consumer protection, the growth-enhancing benefits of expanded financial
inclusion may be lost or severely undermined by a loss of confidence in the financial sector.
Supervision of Consumer Protection and Market Conduct in the financial service providers has
become a key performance area in the Bank's work arising mainly from the rate of product
innovation by market players. In this regard, the Bank in collaboration with the Competition and
Consumer Protection Commission (CCPC) has prioritised the work to ensure that customers are
protected as they access banking and financial services. The Bank has, therefore, formulated this
strategic initiative to enhance the regulatory and supervisory function to cater for market conduct
and consumer protection.
15Strategic Plan 2016-2019 – “Excellence in Execution”
Strategic Initiatives: i. Develop and implement a Gender Mainstreaming Strategy for the Bank
The Bank has committed to advancing gender equality in its operations through mainstreaming
while taking into account the opportunities and challenges that women and men face. The process
of gender mainstreaming will offer an opportunity to thoroughly examine all aspects of the Bank's
operations through a gender lens in order to enhance the Bank's work, and incorporate a gender
perspective into organizational policies, strategies, and administrative functions, as well as the
institutional culture. This approach will include developing the necessary capabilities, outlining
specific responsibilities and the development of accountability mechanisms.
ii. Develop and implement a Gender Mainstreaming program for Financial Service Providers
Although gender-specific financial sector laws and regulations have not been formulated in
Zambia, there is scope in the regulatory framework to make the application/implementation of
financial sector laws, regulations and policies gender responsive. The Bank, in its policy and
regulatory function, plays a critical role in Zambia's development, and will use its strategic position
as the key Economic Advisor to the Government to ensure that inclusive economic growth is firmly
on the agenda for the banking and non-banking sectors. This will be through various approaches,
including strengthening compliance to gender monitoring as part of bank inspection; provision of
guidelines; gender sensitive data collection; monitoring and evaluation for gender mainstreaming;
capacity building and; strengthening feedback mechanism to partners and stakeholders on gender
information.
Strategic Objective # 4: To entrench Gender Mainstreaming within the Bank and the financial sector so as to contribute to Gender equality in Zambia.
Rationale:
Research has shown that inclusive financial services that empower men and women can eradicate
poverty and promote economic growth. The Bank will ensure that gender perspectives are
increasingly taken into account and that the goal of gender equality underpins the Bank's
operational mandate, internally and externally.
16 Strategic Plan 2016-2019 – “Excellence in Execution”
Strategic Objective # 5: To Develop and strengthen the Bank's Talent Management and Technologies so as to achieve operational efficiency and effectiveness.
Strategic Initiatives:i. Review and restructure the Bank's resourcing and remuneration policies and practices.
The greatest asset that the Bank has is its employees. For this reason, the Bank shall invest in its
employees in order to achieve the envisaged operational efficiency and effectiveness. This
investment will include the re-tooling and strengthening of Recruitment and Retention policies to
ensure that they speak to the current business environment and needs. Investments will also be
directed towards attracting, hiring and developing the best talent on the market and the
development of innovative remuneration strategies to ensure talent engagement and retention.
The Bank will further, develop a compelling employee value proposition that postures the Bank as a
sought-after place to work.
ii. Develop staff engagement initiatives
Highly motivated and engaged employees are essential to foster a creative and performance driven
culture. Therefore the Bank will endeavour to implement measures to ensure that employee
satisfaction and engagement is high. This will be achieved by conducting periodical staff
engagement surveys and implementing appropriate staff engagement interventions.
iii. Re-invigorate and embed the BoZ Way Value System
In order to excel and be a dynamic and credible Central Bank, the Bank must reinforce a culture of
innovation and high productivity. We believe that the right culture for the Bank we want is espoused
in the “The BoZ Way means ACTIONE” value system which promotes accountability, commitment to
excellence, timeliness, integrity, achievement of challenging objectives, embracing new ideas and
the pursuit of equity.
This value system was first introduced in the 1990's and this Plan will include initiatives to re-
invigorate it and align it to the 7 Habits of Highly Effective People®. This process began in the year
2015 with the roll out of the 7 Habits to all staff and the adoption of the 4 Disciplines of Execution®.
The culmination of this work will be to clearly establish alignment between the 'BoZ Way' and the 7
Habits and the development and implementation of an action plan to embed the 'BoZ Way' into
every employee of the Bank.
iv. Enhance organisational capability
A dynamic workplace requires modern and responsive human capital management policies. The
Rationale:
The Bank recognises the need to ensure that it creates and maintains an organisation that is fit for
purpose with the correct level of skills and leadership capabilities to deliver its objectives. To this
end, the Bank shall endeavour to attract, develop and retain a cadre of employees that are enthused
and passionate about its Vision and Mission. This aspiration will be achieved through enhancing
human capital practices, harnessing relevant technologies and optimisation of available resources
and processes.
17Strategic Plan 2016-2019 – “Excellence in Execution”
Bank recognises that its talent management, employee career path, mentorship and coaching,
learning and development and employee resourcing and retention policies and processes need to
be revised to keep in step with the demands of a modern work place. Therefore, the Bank will
undertake a comprehensive review of these policies and their attendant procedures. Further, the
Bank realises that employees who have been working in the same kind of job for some time may
desire change. Hence the Bank will develop and implement a mid-career employee development
programme to assist employees to transition into new opportunities even while already midway
through their careers.
v. Embed the principles of performance management system to enhance performance culture
Building a high performance culture is one of the aspirations of the Bank. The Bank has accordingly
lined up initiatives to achieve this goal. These include review of the current policies relating to
performance management, conducting upskilling workshops and training of performance
management workplace business embedded champions.
At the centre of the Bank's human capital management processes is the Human Capital
Management System (HCMS) that will facilitate the automation of the end to end performance
management process. This, together with other interventions will result in achievement of greater
efficiencies and integration of human resource processes.
vi. Evaluate and review the BoZ organisational structure in line with the Bank's operational and business processes
The Bank recognises that its organisation structure needs to be dynamic in order to meet its
changing business needs. Although the Bank had undertaken an organisation review in the last
strategic plan (2012-2015), there is need to conduct a comprehensive review of the Bank's structure
to ensure that it is fit for purpose in light of the changes that have taken place in the recent past.
Arising from that review, a new structure may be developed and implemented before the end of the
strategic plan period.
vii. Develop and implement an ICT governance framework
Organizations worldwide have realized the strategic importance of ICT to the successful
achievement of their business objectives and missions. This has brought about the need to have a
framework of how ICTs are managed in the organization. In the same vein, the Bank adopted COBIT
4.1 (Control Objectives for IT and related Technologies) and embarked on the implementation of
ICT Governance in 2004. However, COBIT 4.1 only focussed on the operations and processes
internal to the ICT Department and not on the entire organization. A new version, COBIT 5 has been
released that looks at the enterprise governance and management of ICT, encompassing all the
stakeholders. COBIT 5 also calls for the establishment of an ICT Steering Committee at Board or
Executive Management level which should make ICT-related decisions such as which ICT
investments to make and what ICT projects to run. The Bank will implement ICT Governance based
on the new COBIT 5 in order to harness the many benefits that come with the implementation of this
framework.
viii. Adopt and implement an Enterprise Architecture (EA) Framework
The Bank in a bid to enhance operational efficiency and effectiveness will implement an Enterprise
Architecture (EA) Framework. The EA Framework will assist the Bank to respond better to its
stakeholders in this ever changing and more complex world by having a method and an organising
principle that aligns functional business objectives and strategy with an IT strategy and execution
plan. The Bank will also seek to implement greater integration among its information systems by
implementing an Enterprise Resource Planning (ERP) platform. Some of the benefits of the ERP
include reduction in complexity of the Bank's Information Architecture through the establishment
18 Strategic Plan 2016-2019 – “Excellence in Execution”
of a single platform for the Bank's business systems.
ix. Formulate and implement a Green Policy and Strategy
The Bank will seek to implement green technologies in order to become a more responsible
corporate entity and ensure the sustainability of limited natural resources. To this end, the Bank shall
develop and implement a green policy as well as a green strategy. Some of the initiatives that will be
pursued include the reduction of the Bank's carbon footprint through the use of renewable energy
and reduction in the use of paper. Other initiatives will include the use of energy efficient lighting
and appliances across the Bank and the promotion of recycling.
19Strategic Plan 2016-2019 – “Excellence in Execution”
What Success Will Look Like
What Success Will Look LikeWe envision that the successful implementation of this Strategic Plan will in future lead to:
(i) Low and stable inflation rate;
(ii) A more resilient financial sector that can better withstand economic and financial shocks;
(iii) More Zambians with access to formal financial services leading to enhanced living standards;
(iv) A better engaged, motivated and performance oriented cadre of staff;
(v) Improved mainstreaming of Gender across the financial sector; and
(vi) Efficient and effective work processes aiding the Bank to achieve its objectives.
To further drill down and articulate what success will look like, strategic objectives and related initiatives,
activities/agreed actions and measures of success (key performance indicators) have been identified.
These deliverables will assist implementation as well as monitoring of progress. Deliverables itemised for
each strategic objective include:
Strategic Initiatives: Programmes the Bank will under-take to implement its strategic objectives;
Strategic Activities: The specific key tasks to be undertaken; and
Key Performance Indicators: Measurable values that demonstrate how effectively the Bank is achieving
its strategic activities.
Companion to the Strategic PlanThe Bank has formulated an internal Companion document to this Strategic Plan which details the
implementation and on-going monitoring of the Plan. The Companion highlights the strategic activities,
key performance indicators, budgets, time lines and identified risks attached to each strategic objective.
Performance on this Strategic Plan will therefore be monitored through the use of the Companion as well
as other internal documents and tools.
Strategic Risk AssessmentA Strategic Risk Assessment was conducted for each identified strategic objective in order to clear the path
for the successful implementation of the Strategic Plan. Strategic Risk Assessment refers to the
identification, assessment and management of risks that may impact the attainment of each strategic
objective.
The Strategic Risk Assessment exercise also aided the Bank to obtain a fuller understanding of the strategic
objectives by identifying the possible impediments to the attainment of each strategic objective. Further,
the Bank was proactive and developed strategic risk action plans to manage each risk.
Strategic Risks will be monitored and managed within the context of the Bank-wide Risk Management
Framework. The detailed results of the Strategic Risk Assessment exercise are provided in the Companion
to the Strategic Plan 2016 to 2019.
20 Strategic Plan 2016-2019 – “Excellence in Execution”
Resourcing Planned ActivitiesThe Bank will allocate budgetary resources on a prioritised basis for the successful implementation of the
2016-2019 Strategic Plan. These resources shall be reflected in the Bank's Medium Term Expenditure
Framework (MTEF) from which annual budgets will be derived.
21Strategic Plan 2016-2019 – “Excellence in Execution”
REGISTERED OFFICES
Head Office
Bank of Zambia, Bank Square, Cairo Road
P. O. Box 30080, Lusaka, 10101, Zambia
Tel: + 260 211 228888/228903-20, Fax: + 260 211 221764
E-mail: [email protected], Website: www.boz.zm
Regional Office
Bank of Zambia, Buteko Avenue,
P. O. Box 71511, Ndola, Zambia
Tel: + 260 212 611633-52, Fax: + 260 212 614251
E-mail: [email protected], Website: www.boz.zm
