Zambia's financial landscape is set for a major transformation with the introduction of the new Banking and Financial Services Act of 2026. This landmark legislation repeals the outdated Money Lenders Act (Cap. 398), ushering in a new era of stricter regulation, enhanced consumer protection, and greater transparency within the lending industry. Under the provisions of this new act, lenders are now mandated to fully disclose all interest rates and associated charges, eliminate any hidden fees, and adhere to rigorous fair debt collection standards.

Economist Lubinda Haabazoka lauded the reform as a significant turning point, emphasizing its role in bringing all lenders under more stringent supervision and fully integrating them into Zambia's formal financial system. Haabazoka highlighted that "money lenders will no longer operate under a standalone legal framework but will instead fall under the supervision of the Bank of Zambia (BoZ) as part of the wider financial sector." This change effectively abolishes the term "money lender," with such entities now being classified as financial service providers, specifically those offering credit services without taking deposits.

The Act introduces a more stringent licensing regime, making it a criminal offense to operate without explicit approval from regulatory authorities. Offenders found in violation of this requirement face severe penalties, including fines of up to three million penalty units or imprisonment for up to 30 years. These stringent measures, according to Haabazoka, are strategically aimed at eradicating informal lending practices and instilling a greater sense of discipline across the financial sector.

Beyond licensing, the new law significantly strengthens regulatory oversight. It mandates minimum capital requirements for financial service providers, establishes robust governance standards, and imposes compulsory reporting obligations to the central bank. Crucially, the authorities have been granted powers to directly regulate lending interest rates, a move that is anticipated to profoundly reshape existing business models within the industry. Furthermore, all lenders are now required to comply with international anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, which include stringent customer verification processes and the mandatory reporting of suspicious transactions.

Haabazoka observed that while these comprehensive new compliance requirements may lead to increased operational costs, potentially causing some smaller, informal lenders to exit the market, larger and more structured financial institutions are poised to benefit from enhanced credibility and expanded opportunities. Ultimately, the reforms are projected to significantly improve overall transparency, bolster consumer protection, and strengthen the stability of Zambia's entire financial sector.