Zanaco is burdened by huge debts

A report from the Zambia Privatisation Agency obtained by Reuters shows there has been no response so far to an international advertising campaign in December.

The privatisation of Zanaco is a key condition for Zambia to obtain $3.8bn (�2.64bn) of debt relief under the International Monetary Fund and World Bank's Highly Indebted Poor Countries (HIPC) programme.

"Few investors will be willing to go for Zanaco because of the huge liabilities it has," said Felix Masiye from the University of Zambia in Lusaka.

"No one will be looking for 35% shares as it does not make economic sense to buy shares in a bank you will have little control over," he added.

Bad debts

Zanaco made a net loss of just over 65bn kwacha (�10.7m) in 2001, due to its bad debts.

It is owed �31.4m by the Zambia National Oil Company (ZNOC), which Finance Minister Emmanuel Kasonde said had been wound up and dissolved.

The bank is also owned millions of dollars by the copper and cobalt mining firm Roan Antelope Mining Corporation which it put under receivership in 2000.

"If failures at Zanaco are caused by borrowers, then the first call must be made by government. All bad debtors, such as state agencies must be followed and the money recovered," said Muna Hantuba, president of the Lusaka think-tank Economics Association of Zambia.

The government has said it would float some Zanaco shares on the Lusaka Stock Exchange for the past two years.

Zanaco has 43 branches and employs about 1,440 people.