Non-repayment of loans becoming a culture

OPINION – Makomborero Mutimukulu
There is a growing culture in Zimbabwe, cascading from Government, business, religion, sports and right through to the ordinary man on the street, of treating loans like manna from heaven.
Apply for the loan, get the money, eat, be merry and thank God for his blessings, appears to be the modus operandi under which most people are operating.

While the argument that money is expensive hence the growing number of non-performing loans holds water, there can be no denying that there are some among the country’s populace who just cannot fathom the idea of repaying a loan.

No matter the interest rates involved or not involved, there are Zimbabweans — from business, sports, politics and the church — who seem allergic to servicing loans.

The blatant, sickening abuse of the US$10 million Youth Fund, a Government initiative aimed at giving the young a springboard towards realising the goals of the indigenisation and empowerment drive, is a perfectly glaring example.

According to Infrastructure Development Bank of Zimbabwe chief executive Mr Charles Chikaura, 70 percent of the youths who accessed the interest-free facility defaulted.

Mr Chikaura last month told the parliamentary portfolio committee on Youth Development, Indigenisation and Empowerment that most of the youths did not channel the money into production as required.

While the youths can rightly be accused of being ungrateful and irresponsible, they have a placard written “We learnt from the best” to wave in their defence.

At the beginning of the year, the Reserve Bank of Zimbabwe disclosed that the percentage of non-performing loans is ballooning with each passing day.

The then acting RBZ governor, Dr Charity Dhliwayo, also noted that most of the borrowing taking place is for consumptive purposes.

“It is also notable that under-capitalised banks are saddled with high levels of non-performing loans. In addition, the ever-greening of non-performing loans has resulted in the understatement of the level of provisions for bad and doubtful debts, thereby overstating the respective institutions’ earnings and capital positions.

“In addition, we have also noted the continued abuse of loans and advances by related parties (particularly directors and shareholders) which has resulted in huge levels of non-performing insider loans.”

The Central Bank revealed that non-performing loans in the banking sector hiked from 0,32 percent in March 2009 to 15,92 percent at the end of last year.

Farmers, too, have been found wanting when it comes to repaying loans with the Agricultural Development Bank of Zimbabwe (Agribank) bearing the brunt of such grave delinquency.

Agribank suffered a US$9,2 million loss for the year ended December 31, 2013 compared to $5,6 million the previous year due to increased non-performing loans, the chief executive, Mr Sam Malaba, revealed recently.

Mr Malaba highlighted that of this $9,2 million, US$5,8 million was from impairment expenses, a figure that rose from $3,8 million the previous year.

“Going forward, we have now adopted a very aggressive debt management recovery strategy to reduce our non-performing loans, whereby we are now expanding and intensifying our pre-loan assessments, strengthening credit granting processes and we now want to ensure that we perfect the security provisions before loan granting,” he said.

Retailers who offer credit facilities are also reporting an increase in the number of defaulters.

“It’s a worrying trend,” said an official with a retail outlet in the capital.

“Most of us have now resorted to concentrating on civil servants because the stop order facility that the Salary Service Bureau operates is highly efficient and leaves no room for defaults.”

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