'State loan defaulters crushing govt'

HARARE - Government has been blamed for the high number of people failing to pay back State loans due to its failure to punish defaulters.

President Robert Mugabe reprimanded people who are in the habit of defaulting on their debt obligations, saying the culture was detrimental to the country’s economy.

“If you need funds, talk to the windows we created for you in your particular area, especially the small and medium enterprises,” Mugabe said during the 34th Independence celebrations in Harare last week.

“They are part of the mechanisms which add to the overall system of funding. But do not be a good borrower and a bad, bad debtor. A good borrower who is also a good debtor will repay the money.”

Economic experts said the Zanu PF-led government was now reeling from its own tactics of using loans to curry favour with the electorate.

“Historically, government has had a poor record of following loan beneficiaries and this created a misnomer in society,” said Kipson Gundani, Zimbabwe National Chamber of Commerce chief economist.

“People now view government funding as free money.”

Gundani noted that even borrowers who have the capacity to pay would be reluctant to do so knowing that no measures will be taken against them by government.

“If government was to make a follow-up on those who were given indigenisation loans, they would be surprised that not many projects were done and the people now

have no means of paying back,” he said.

This comes after Kevin Terry, the Central African Building Society managing director, told Parliament recently that over 70 percent of loans disbursed under the Youth Fund in the past four years have not been repaid, prejudicing the government of millions of dollars.

Terry said of the $4,4 million  that has been disbursed, the arrears currently stand at $2,3 million with a total of non-performing balances of just over $3,1 million.

Infrastructure Development Bank of Zimbabwe (IDBZ), which distributed over $500 000 worth of loans since 2009 recently indicated that a lot has to be done to ensure that people repay their loans.

Tawanda Mundawarara, the NMB Zimbabwe Holdings Limited (NMBZ) chairman, said the slowdown in the economy had increased the default risk.

He said impairment losses on loans and advances amounted to $16,6 million in 2013 compared to $4 million in 2012.

Mundawarara noted that NMBZ directors took a decision to write off loans and advances amounting to $1,2 million during the year under review after recovery efforts had not yielded the anticipated results.

Comments (7)

You give loans to your nephews and fellow party members and you expect them honour the paying up of the loans? You are just kidding guys. There is need to give loans to only deserving cases. The project itself must be bankable and the individual must have some form of collateral or someone else must be willing to pay up the debt in case of default by the borrower. You don't need a World Bank consultant to tell you this.

Conrad Chikanga - 23 April 2014

Agribank also went down because of the well connected people who got farm implements for free and loans that they had no intention of ever paying back right from the start.

Dr Know - 23 April 2014

I remember Dongo Margarette lambasting Mr Mugabe's henchemen, among them Shamhuyarira, Dabengwa, for bringing the German funded DDF to it's knees by manner of asking for boreholes in their properties on credit but never paying up.- the Hansard. How about the colonialists' AFC? Sorry. Mr Mugabe is wise, generally and unarguably very intelligent. Yet all that notwithstanding, he succumbs to vile hatred for a fellow Zimbabwean working with whom precipitated smiling results for all Zimbabweans. Mr Mugabe, or say Comrade Mugabe, if you could forgive Ian Smith and his murderous militia, why not Morgan? Did he charm lovely Grace?

maombo david - 23 April 2014

Surely Daily News can do better. They should have covered the President's Independence Day Speech in detail in their Saturday edition of 19 April rather than giving us piece meal stories. Since last Saturday they have been serialising the President's speech...a sure sign that they have run out of news!

Stale news - 23 April 2014

@Bob lee where are your offices in Zimbabwe and where are you based

protestor - 24 April 2014

Now you can see the problems of not paying your debts. What is the difference between Bank debt and service/utility debt?? Nil. So I ask "Mr President, why did you scap off the municipality and ZESA utility debts. This is now our culture - The Bob cullture - everything is for free - water, zesa, residential stands (Chombo, Mabamba), land (too many to mention), agric mechanisation (Made, Gideon). For as long as the Government leads by example, pple will follow suit - dont blame them

s shumba - 24 April 2014

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