Implications of the repeal of the Money-Lenders Act and the legal effect of the Banking and Financial Services Act, No. 9 of 2026 on money-lending and credit provision in Zambia

Executive summary • Section 214 of the Banking and Financial Services Act, No. 9 of 2026 expressly repeals the Money-Lenders Act while preserving existing licences, pending applications, accrued rights, liabilities, and extant orders, notices and directives, subject to consistency with the new Act. • The practical effect is not the extinction of existing money-lending relationships, but the migration of that activity into a wider BOZ-supervised regime grounded in licensing, prudential oversight, financial consumer protection and market conduct. • The 2026 framework materially raises compliance expectations for credit providers by emphasising governance, fit-and-proper standards, responsible finance, fair pricing transparency, anti-abusive debt collection standards and regulator-led enforcement. • Because section 1 of the Act provides for commencement on a date appointed by statutory instrument, any operative-date analysis should be read together with the relevant commencement instrument.

1. What this Article Covers:

• Whether the Money-Lenders Act has been repealed and, if so, with what legal effect.
• Whether licences, contracts, pending applications and accrued rights under the former regime remain valid.
• How the 2026 Act changes the regulatory, consumer-protection and enforcement landscape for money-lenders and other credit providers.
• What immediate legal and compliance steps affected entities should take during the transition to the new framework.

2. Sources considered

• The Banking and Financial Services Act, No. 9 of 2026.
• The Money-Lenders Act, Chapter 398 of the Laws of Zambia.
• Publicly available National Assembly material on the Banking and Financial Services Bill, 2025, including the committee report explaining the Act’s market-conduct and consumer-protection architecture.

3. Short answer

The Money-Lenders Act has been expressly repealed by section 214 of the Banking and Financial Services Act, No. 9 of 2026. However, the repeal does not invalidate existing licences, contracts, accrued rights, liabilities or pending applications. Instead, those matters are preserved and carried into the new statutory regime. The more significant legal shift is structural: money-lending is no longer treated as a narrow stand-alone activity under an older statute, but as part of the broader class of financial services now subject to BOZ licensing, prudential supervision, market-conduct regulation and financial consumer protection obligations.

4. Statutory framework and transition under section 214

Section 214 is the core transition provision. In substance, it does four things at once. First, it expressly repeals the prior Banking and Financial Services Act and the Money-Lenders Act. Secondly, it preserves licences previously issued under the repealed enactments until expiry, cancellation or surrender. Thirdly, it redirects pending applications into the new Act. Fourthly, it preserves accrued rights, benefits, liabilities and extant regulatory instruments, unless inconsistent with the new Act.

In our view, this drafting is designed to avoid a regulatory vacuum. It prevents the repeal from being misconstrued as an automatic nullification of existing lending businesses, borrower obligations, security arrangements, repayment rights, or administrative steps already taken under the former law. The transition is therefore one of legal continuity coupled with regulatory substitution.

Accordingly, pre-existing loan agreements and related obligations remain enforceable according to their terms, subject to any general rules on illegality, fairness, public policy and applicable supervisory directions. The critical change is that future supervision, renewal, licensing status and ongoing conduct are now measured against the 2026 Act and the regulatory powers of the Bank of Zambia.

5. Commencement point

The text publicly available from the National Assembly indicates that section 1 states that the Act “shall come into operation on the date appointed by the Minister by statutory instrument.” For transactional and advisory purposes, this is important. If a commencement instrument appointing 8 April 2026 has in fact been issued, the transitional consequences described in this opinion operate from that date. If not, the operative legal date will be the date set by the relevant statutory instrument.

6. The principal shift: from a stand-alone money-lending regime to a unified BOZ framework

The most important development is conceptual. The 2026 Act consolidates the regulation and supervision of financial service providers under a single statutory framework. Publicly available parliamentary materials show that the Act is intended to regulate and supervise financial service providers comprehensively, address innovative and inclusive financial services, strengthen ownership-and-control oversight, and embed financial consumer protection and market-conduct mechanisms.

This means that money-lending can no longer be analysed only through the historical lens of a stand-alone licensing law administered separately from the broader financial-services framework. Entities engaged in extending credit now sit within a wider supervisory perimeter that is institution-focused, conduct-focused and risk-focused.

7. Why the reform matters

The available legislative materials indicate that the reform was driven by a view that the previous framework had become inadequate to address developments in the financial sector, including digitisation, innovation, cyber-risk and the need for stronger, harmonised supervision. In practical terms, the repeal of the Money-Lenders Act is not merely a housekeeping exercise. It reflects a policy decision to replace fragmented oversight with a more coherent and interventionist supervisory architecture.

8. Comparative position: old regime vs 2026 regime

Issue	Money-Lenders Act (Cap. 398)	2026 Act (Act No. 9 of 2026)	Practical Effect
Regulator	Licensing framework historically administered outside BOZ under a stand-alone money-lending regime.	All financial service providers are brought under BOZ regulation and supervision.	Credit activity is now assessed through a centralised prudential and market-conduct framework.
Status of existing licences	Licences existed under the repealed statute.	Section 214 preserves licences until expiry, cancellation or surrender.	Existing operators are not automatically shut down, but they transition into the new framework.
Pending applications	Applications were processed under the former regime.	Section 214 directs pending applications to be determined under the 2026 Act.	Applicants must now satisfy the new statutory and regulatory expectations.
Consumer protection	Heavily court-driven; borrowers often needed to litigate after harm occurred.	The Act adds regulator-led market conduct, responsible finance, disclosure, right of rescission, and controls on penal interest and abusive collection.	Compliance becomes proactive and supervisory rather than purely reactive.
Governance and prudential obligations	Limited compared with the new framework.	Expanded focus on ownership and control, fit-and-proper standards, governance, accountability, and prudential requirements.	Smaller lenders face a materially higher compliance burden.
Innovation and product scope	The old regime did not squarely address newer financial service models.	The 2026 Act expressly contemplates innovative and inclusive financial services and a wider licensing architecture.	Regulation is broadened to address digitisation and evolving business models.

9. Consumer protection and market conduct under the 2026 Act

The strongest practical departure from the former Money-Lenders Act lies in financial consumer protection and market conduct. Parliamentary material on the 2025 Bill explains that the consumer-protection part of the new law covers fair treatment of customers, coercive behaviour, misconduct during debt collection, disclosure of interest rates and charges, restrictions on introducing or increasing consumer charges, responsible finance, a right to rescind, controls on unfair contract terms, and a prohibition against penal interest.

This is a significant change in regulatory technique. Under the Money-Lenders Act, borrower protection was often heavily dependent on litigation after the event, for example through judicial reopening of harsh or unconscionable transactions. Under the new regime, many of the same fairness concerns are moved upstream into disclosure, product design, pricing oversight, debt-collection conduct and proactive regulatory supervision.

The result is that compliance now turns not only on what a lender may ultimately prove in court,  but also on whether its credit product, documentation, pricing architecture, communications, debt-collection practices and affordability assessments withstand BOZ scrutiny in the ordinary course of supervision.

10. Responsible finance and affordability

The reference in the new framework to responsible finance is especially important for lenders whose legacy business models may have relied on aggressive short-term lending, limited pre-contractual assessment and post-default charges. Responsible finance implies a duty to structure credit in a manner that is suitable, reasonably understandable and affordable for the relevant customer, rather than simply contractually enforceable in the abstract.

In our view, this shifts the compliance question from “Can the lender document the loan?” to “Can the lender justify the fairness, transparency and affordability of the loan at the point of origination and throughout the customer lifecycle?” That is a materially higher standard than the old reactive model.

11. Governance, licensing and prudential implications for money-lenders

The 2026 Act is wider than a consumer statute. It also addresses licensing, ownership and control, fit-and-proper standards, financial reporting and accountability, and prudential supervision. Publicly available commentary on the Act further indicates that the licensing architecture now contemplates multiple licence categories, including community banking, alternative financial services and virtual financial services, underscoring the fact that the statute has been designed around a modern and differentiated financial-services sector.

For former money-lenders, the message is plain: preserving a licence under section 214 does not preserve the old compliance mindset. Entities should expect closer scrutiny of ownership structures, governance arrangements, internal controls, risk management processes, product governance, outsourcing, reporting and customer-facing conduct.

12. Enforcement consequences

Under the former regime, a substantial portion of borrower protection depended on court action. Under the 2026 Act, enforcement is more overtly regulator-led. The Act’s publicly described structure includes administrative supervision, directives, inspections, penalties and, where necessary, more intrusive intervention powers in relation to supervised institutions. This makes non-compliance more immediate and operationally significant.

For operators, the legal risk is therefore no longer confined to disputed recovery suits. It extends to licensing risk, supervisory sanctions, reputational exposure, product remediation, and possible restrictions on particular business practices or fee structures.

13. Effect on existing contracts and litigation

Existing contracts entered into under the Money-Lenders Act are not automatically invalidated by  the repeal. Section 214 preserves accrued rights and liabilities. That said, any future litigation, restructuring, enforcement action or regulatory engagement will now occur in the shadow of the new framework. This means that lawyers and courts are likely to distinguish between: (a) the historical validity of the original transaction; and (b) the current regulatory environment governing the provider’s conduct and continuing obligations.

In practical terms, a lender may still rely on an accrued contractual right while simultaneously needing to ensure that its current collection, disclosure, account-management and customer-treatment practices comply with the 2026 Act.

14. Immediate compliance priorities for affected entities

• Undertake a licence-status review and map each current activity to the applicable category and conditions under the new framework.
• Review customer documents, fee schedules, default clauses and recovery letters for consistency with the Act’s market-conduct and consumer-protection direction, especially in relation to penal interest, unfair terms and disclosure.
• Implement a documented responsible-finance and affordability methodology for all credit products.
• Review debt-collection scripts, agency relationships and field-recovery processes against the statutory prohibitions on coercive behaviour and misconduct during debt collection.
• Refresh governance arrangements, including board oversight, policy approval chains, complaints handling and regulatory reporting lines.
• Monitor BOZ circulars, regulations and directives that may further particularise the operational requirements of the Act.

15. Risk assessment

• Regulatory risk: continuing to operate on the assumption that a preserved legacy licence excuses non-alignment with the new Act.
• Conduct risk: retaining legacy charges, default mechanisms or collection practices that are incompatible with the Act’s consumer-protection philosophy.
• Documentation risk: using agreements that do not adequately disclose pricing, customer rights and product consequences.
• Supervisory risk: weak governance, inadequate records or poor complaints handling that become visible during BOZ inspection or follow-up.
• Litigation risk: disputes in which courts interpret legacy contracts against a backdrop of the newer fairness and conduct expectations.

16. Conclusion

In our considered view, the Banking and Financial Services Act, No. 9 of 2026 marks a decisive restructuring of the legal architecture for credit provision in Zambia. The Money-Lenders Act has been expressly repealed, but the repeal is accompanied by carefully drafted savings and transitional language that preserves licences, pending applications, accrued rights, liabilities and extant regulatory instruments. The practical consequence is continuity of existing legal relationships, but under a new supervisory order.

The larger change is normative and institutional. Money-lending has been absorbed into a modern BOZ-centred regime that emphasises licensing discipline, governance, prudential compliance, financial consumer protection, market conduct, responsible finance and proactive enforcement. Former money-lenders should therefore treat section 214 as a bridge, not a safe harbour. It preserves legal continuity, but it also ushers operators into a materially more demanding compliance environment.