adminMost micro finance institutions target civil servants because they have stop order codes from the Salary Services Bureau which allow direct repayment of loans from the salaries, reducing default rates.
Civil servants said due to the economic hardships they were facing, they were left with no other option but to excessively borrow money from micro finance institutions to sustain their families.
Mrs Siphethangani Mlotshwa, who is in the education sector, said borrowing rates were very high such that most people were now caught in a debt trap.
“We work hard everyday only to get very little salaries by the end of the month, which makes us unable to sustain our families.
“In trying to redress this we have to constantly borrow but the rates are also beyond our reach as they are just too much,” said Mrs Mlotshwa.
Mr Msizi Ncube who is in the health sector said it was not surprising to see some workers now depending and surviving on loans from micro finance institutions.
“Most people now depend on borrowing so as to sustain and raise their standards of living but paying back always tends to be a burden. The interest rates being charged by the micro finance institutions are way too much,” he said.
Zimbabwe Association of Micro Finance Institutions (ZAMFI) executive director Mr Godfrey Chitambo said interest rates would only come down if there was development in the micro finance sector.
He said interest rates were high because of the high demand for limited funds against a background of very low supply.
“We are calling for development in the micro finance sector as the main solution to the interest rates problem. Interest rates will only probably come down if there is development in the sector.
“Last year the finance minister availed a $15 million revolving fund but we are still yet to get anything, so it’s a myriad of issues before such problems are rectified,” said Mr Chitambo.
derick.khumalo