Strategic Plan 2016-2019 REVISED - Bank of Zambia

1 2016 - 2019 . Strategic plan 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: Website: Regional Office Bank of Zambia , Buteko Avenue, P. O. Box 71511, Ndola, Zambia Tel: + 260 212 611633-52, Fax: + 260 212 614251. E-mail: Website: 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. Strategic plan 2016 - 2019 Excellence in Execution 1. Message from the Governor 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.

2 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.

3 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.

4 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.

5 Dr Denny H. Kalyalya Governor 2 Strategic plan 2016 - 2019 Excellence in Execution . Introduction 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.

6 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.

7 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.

8 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. Strategic plan 2016 - 2019 Excellence in Execution 3. This Strategic plan was developed through a collaborative process involving all departments in the Bank.

9 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. 4 Strategic plan 2016 - 2019 Excellence in Execution . Vision, Mission and Values 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.

10 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.