KELVIN MBEWE, Lusaka
IT HAS now become common sight to find people who have lost their goods for failure to fulfill conditions of borrowing money from shylocks.
When banks offer loans on more stringent conditions, shylocks are more flexible, as long as one has the ability to pay back, even when they are not on a payroll.
“I usually get money from money lenders in my township. I get the money as soon as I want it rather than from banks where it takes time to process loans,” said Richard Mwange (not real name).
But shylocks are not ‘soft’ when it comes to getting back their money and any failure to repay the loan mostly results in the seizure of one’s property.
But just like banks, individual money lenders require collateral or security to borrow money, in case a borrower fails to pay it back.
Recently a man of Freedom ownship in Chilanga lost his plot worth K40, 000 when he failed to pay back K30, 000 which he borrowed from a money lender.
The laws of the land have regulations on money lending matters and interest.
According to Joseph Kapila, a lawyer, issues of interest on money lent are governed by the Money Lenders Act Chapter 398 of the Laws of Zambia and simple interest as prescribed by the Bank of Zambia lending rate which is at 27 percent.
“All these being civil law in nature, although such agreements fall under the Law of Contract, courts usually only interfere where interest is deemed harsh and unconscionable,” he said.
But are individual money lenders putting the Money Lenders Act Chapter 398 into consideration?
John Mwewa(not real name) also lends out money at 50 percent interest rate.
Mr Mwewa whose business is yet to be registered operates at Katondo Street and claims that he has been in the business for over 5 years.
“It’s one way of making extra income because I can’t rely solely on selling phones, laptops and other accessories. I have issues that come up from nowhere and the lending money business makes me have money all the time to sort out such problems,” he says.
He says he has acquired several property from people who failed to pay back the money they borrowed.
“This Isuzu you are seeing here was obtained from a cocaine junkie that brought it as surety. We sign agreements when doing this business and that’s my protection for now,” he said.
Mr Mwewa, who is married with two children, says he is able to pay rent in Lusaka’s Chalala area and support his family through the money lending business.
The famous Katondo Street in the central business district has other money lenders.
“If you want to get a loan, we have a lot of guys who give out money here at Katongo Street, even myself. If you want money, you are just supposed to have collateral which is worth more than the money,” said Salanje Daka.
Mr Daka said the interest rate is at 50 percent, which is about two times more than the accepted rate.
He says once the borrower defaults, the interest rate keeps increasing until the money is paid back.
“There is a guy who recently got a loan worth about K30, 000 and he left his BMW as collateral and it is now in the hands of the lender,” he said
But he also describes the giving of collateral as a trick that some people use to ‘sell’ off property they do not need.
And the Bible has its own view on money lending matters.
There are multiple references to people lending money or giving money, and it is shown that it can be a great blessing in many cases.
Psalm 112:5 says “It is well with the man who is gracious and lends; he will maintain his cause in judgment.”
While the Bible does speak of lending money in a positive light, it also gives warning not to lend at interest to those who are poor or who are unable to repay.
It speaks of lending freely, but it warns against being greedy, while exhorting a lender to act with justice.
And Peter Anderson, a Christian says on his webpage, “I think that we also need to take into account how times have changed, and how borrowers have much more protection under the law today. In ancient times being in debt and not repaying could lead to becoming a slave, or completely having your freedom taken away from you. It wasn’t a pretty picture. In modern times borrowers have many more protections under the law, which mean that they won’t end up being a literal slave, not be able to eat, or be taken advantage of without any legal recourse,” he said.
Mr Anderson goes on to say, “I think the problem for Christians with lending and earning interest comes in when we lend money with the wrong heart, and we’re not lending to help people to or improve their situation, but we’re being greedy and taking advantage. In other words, we’re not acting out of compassion or to be a blessing, but simply thinking about the money.
He says, “I think that we all need to be careful about the lures of money, and examine our hearts to ensure we are not lending money for the wrong reasons, and that we are not setting our hearts on our own interests.”