EDITORIAL COMMENT: Borrowing should be a last resort

AS disposable incomes for many Zimbabweans continue to shrink, there is a serious temptation for many, businesses included, to borrow from banks and micro-finance institutions secured or unsecured loans in an attempt to re-launch themselves. However, the success or failure to pay back these loans depends on many factors but history has shown that a majority of people, given the obtaining economic situation, have become heavily indebted.

To that effect, news that 81 percent of Zimbabweans are choking under serious debt cannot be ignored. We reported in yesterday’s edition that new data from the Zimbabwe Vulnerability Assessment Committee (Zimvac) 2016 Rural Livelihoods Assessment Survey showed that 81 percent of Zimbabweans are choking under serious debts.

The report argued that some people are even selling their properties to buy food owing to the prevailing economic challenges, while others were said to be selling more livestock than usual or spending savings on food.

Poor crop production was cited as one of the major reasons leading to the public seeking loans and this indeed is not sustainable. It also emerged that there is also no significant difference in the proportions of households having loans/debts in 2016 that was 81 percent, compared to 2015’s 79 percent, meaning challenges for many families continue to mount.

Coming against this backdrop, it is our humble submission that when the country is faced with a plethora of economic challenges like the ones obtaining, it is the duty of central government to establish safety nets to cushion vulnerable families.

Surely, there is a need for food relief programmes covering poor families in both rural and urban centres to minimise cases of people who end up sinking neck deep in debts.

There are over four million people countrywide requiring food assistance and Government has to update food mitigation registers in all the provinces to ensure that the people do not starve or end up in debt.

In some genuine cases where people end up defaulting on loans, the lenders should take into account the sanctions-induced economic challenges that have left many people and businesses incapacitated and failing to sustain themselves.

As such, we implore the lenders to accept some loan repayment plans as we are aware that banks and micro-finance houses use depositors’ money. Zimbabweans should also have a culture of paying back loans.

We also advise Zimbabweans not to rush to banks and micro-finance houses whenever they face challenges, but to consider other options such as borrowing from relatives and friends or practise barter trade.

All loans, both for domestic and commercial purposes, should be taken after a careful scanning of the environment, assessing the possibility of paying them back and we discourage people from borrowing money without due diligence.

Borrowing to spend on luxuries should be done by those who have thriving businesses that can take care of the loans, while others should live within their means. The cost of borrowing money in Zimbabwe is very high and people have to be careful before putting themselves into debt.

As the economic environment remains volatile, we advise Zimbabweans to live within their means, shun expensive lifestyles and where there is genuine need to borrow money to buy essentials such as food, they must not overdo it.

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