Credit Financing

IT IS a great shame that youth in the Southern Province are not accessing the youth fund, probably because they are not well informed about it and perhaps because the formalities of securing funds are beyond them.
Whatever the case, the issue of project financing has been vexing for a long time starting with the Credit Organization of Zambia which was disbanded very early in the 1970’s following huge losses as the people who borrowed considered it as an independence gift rather than the recycling fund from which more borrowers could benefit.
The issue of debt repayment and the negative Zambian culture in this regard is not new.
Most commercial banks have been accused of discrimination and at worst lending to the wealthy leaving the desperate and real needs of small and medium enterprises who more often than not resort to predatory loan sharks who have been the ruin of many a business venture.
Entrepreneur experts have recommended a system of insurance to ensure that any money lent out is securely insured with an organization that will follow up and make good any losses that may arise from poor management or indeed poor business environment.
At the moment none of the major lending institutions particularly the Citizens Economic Empowerment Commission, Youth Fund, and other ad hoc project funding schemes have a regular appraisal and business management advisory system with the result that projects often fail, even before they start.
Instead of investing borrowed funds in businesses extraneous expenses take precedence. A perpetuation of this culture has forced most financial houses to establish very stringent conditionalities including stiff collateral to provide a fallback position that avoids losses.
Our proposal is that Government together with Zambia Development Agency should create an intermediate organization whose immediate mandate would be to provide consultancy expertise and practical insurance programme that will keep borrowers on a short leash and therefore fully accountable for the funds they borrow.
This may cost money but it will be money well spent because with greater supervision, repayment rates will rise and therefore provide additional capital for other entrepreneurs to borrow.
The eastern tigers have grown from such finance and supervision. Small basement businesses have grown to global conglomerates because of constant and dedicated supervision which we as a nation are lacking.
The ZDA must also take on the function of identifying bankable projects in the various fields which projects can be linked with multi-national business houses from which they can gain, nurture support. It is only through well guided credit supported by efficient project supervision that this country has any hope of developing to a middle income country.
The private sector made up of individual entrepreneurs are the key and the sooner this reality is accepted the better.