Loan sharks milk civil servants dry

SIFISO MAPURANGA

Thousands of civil servants are at the mercy of loan sharks, some of them dubious, working with the Salary Service Bureau (SSB) to milk the government workers of the little they get from their employer.

A snap survey by Business Times that involved talking to affected civil servants show that many are now constantly in a debt cycle engaging loan sharks at astronomical charges that have crippled them.

It emerged that thousands of the government workers have their bank cards in the hands of the loan sharks who withdraw their money every month and borrowing has become their norm forced onto them by the crippling economic crisis.

Business Times also learnt that most of the “legal” loan sharks are elites belonging to powerful networks that include senior government officials and are meant to exploit the civil servants.

Loan sharks are finding civil servants an easy market, getting them to sign papers permitting the Salary Service Bureau (SSB) to directly debit their salaries to service the loans and debts.

Civil servants are paid less than US$250 a month from the US$550 they were getting in 2018 and are therefore finding it difficult to survive.

Zimbabwe Confederation of Public Sector Trade Unions (ZCPSTU) Secretary General, David Dzatsunga, said loan sharks, both registered and unregistered, were prying on desperate civil servants who they view as “low-hanging fruits.”

Dzatsunga said the registered loan sharks have their ways of accessing SSB facilities to loan desperate and struggling civil servants earning very little to meet the growing cost of living in the country.

He added that civil servants are being taken advantage by loan shacks, struggling to swim out of the debt cycle.

“These loan shacks are registered through the normal registration process of financial institutions, that is the Reserve Bank of Zimbabwe (RBZ), which enables them to have access to the SSB facility,” Dzatsunga said.

“Civil servants are the preferred clients of these operating loan sharks. They can only be doing that because civil servants are a low hanging fruit when it comes to loan sharks because they have a guaranteed income, although that income is quite little; loan sharks will then get the little US$200 or $300 that civil servants earn,” said Dzatsunga.

“We have been talking about this at the levels of the union that really this is a symptom of the effects of these slave wages that our members are getting that then drive them into borrowing from loan shacks and being sucked in a cycle of debt,” Dzatsunga said.

He said civil servants become trapped in the debt cycle because they have school fees, health and some outstanding critical issues that require a substantial financial outlet.

“I am sure the interest rates are extortionate and once a civil servant gets sucked into that, they are trapped. They are being taken advantage of by these loan sharks but the civil servants go there voluntarily because of the challenges that they are facing in terms of their incomes inadequate to cover their livelihoods.”

Amalgamated Rural Teachers Union of Zimbabwe (ARTUZ) president, Obert Masaraure, said currency conversion left civil servants with meagre salaries, affecting productivity and buying power.

 “Over 90% of Zimbabwean civil servants are carrying a non-sustainable debt because at some time the government decided to reduce salaries from $540 to around $30 through currency conversions in around October 2018 and because of that crisis civil servants became so desperate and started borrowing from anyone and everyone,” Masaraure said.

“The banks at times could not accept their loan applications and they end up trading in ‘zvimbadzo’ among other means,” he added.

“We can debate on the legality of these loan sharks or not but at the end of the day it’s a crisis that emanates from very limited incomes.”

“The government should find alternative ways of assisting civil servants in settling their debts resulting from poor salaries, through benchmarking other neighbouring and regional countries.”

“What we urge the government to do is to look at other models, like in Zambia, how they managed to deal with the debt crisis, where the government assumed the debt itself and then found ways of settling it,” said Masaraure.
“Without resolving the debt crisis, production remains very low and obviously their purchasing power also remains very low,” said Masaraure.