Copperbelt-based economic and policy analyst, John Ng’andu […]

Copperbelt-based economic and policy analyst, John Ng’andu has indicated that the reason why the Citizens Economic Empowerment Commission (CEEC) struggles to ensure loans achieve their intended purpose is that beneficiaries are not adequately educated on how to use borrowed funds.

Speaking in an interview with Zambian Business Times-ZBT, Ng’andu said giving out loans without ensuring beneficiaries understand how to manage and grow the funds could make repayment difficult and reduce the impact of the financing.

“If people can get loans but do not have proper knowledge on how they can use those loans, it becomes very difficult, so CEEC should not only focus on giving out the money but also take time to educate people on how best they can use a loan,” he said.

Ng’andu explained that financial literacy should be an important part of the lending process because some beneficiaries may have business ideas but lack the knowledge required to properly manage borrowed money.

He said institutions often concentrate on the financial side of lending, particularly the interest attached to loans, while giving less attention to educating borrowers on how the money can be used productively.

“Usually what happens, even in financial institutions, is we do not necessarily educate people to say this is how best you can use a loan; we focus more on interest, and although we give out loans in order to get interest, it becomes a burden if you give a loan to someone who does not know anything about financial literacy,” said Ng’andu.

 Meanwhile, the expert stated that CEEC, as part of government, should take a greater interest in understanding how beneficiaries are using the funds after receiving them rather than treating the lending process as complete once the money has been disbursed.

He said proper education should cover how beneficiaries can manage the funds, grow their businesses, and make informed decisions so that the loans become productive instead of turning into a burden.

“CEEC should take keen interest in what and how those funds have been used, because if you just give a loan and the person does not know how to manage it, how to grow, or how to expand, then the purpose of giving that loan can be defeated,” said Ng’andu.

Article by Philip Sinkala