Lending to civil servants or commonly known […]

Lending to civil servants or commonly known as government workers is said to have slowed down to 6.6% from 13.4% as reported by the Bank of Zambia and the reduction is mainly attributed due to the drop in the contribution of loans and advances to the public sector (mostly attributed to the Liquidity Management Operation conducted in the third quarter of 2025).

Despite credit to the public sector reducing, the private sector credit on the other end has seen growth moderating to 8.1 from 15.7%, largely reflecting valuation effects from the sharp appreciation of the exchange rate. With most of the civil servants depending much on credit to meet some of their social needs, how is the drop going to affect them?

Earlier, the Zambian Business Times-ZBT reported on government delayed remittance of loan deduction arrears for February and March to MicroFins and other registered microrolenders and the Secretary to the treasury Felix Nkulukusa confirmed that the delay was due to resource constraint.

Meanwhile, Economic expert Fitzgerald Witika has noted that the majority of civil servants get more credit than the private sector in most cases owing to the fact that most lending institutions perceive civil servants as individuals that are not likely to default on payment.

Speaking in an interview with Zambian Business Times- ZBT Witika noted that most civil servants tend to get loans from micro financial institutions, and MicroFins and banks have the assurance that even though payments are not made when the money is due, the government will surely make the payment sooner or later.

“ Most civil servants get more credit than those from the private sector sometimes because of the fact that they are positioned in situations whereby, if you work for the government you are most likely to be perceived as one who won’t default on payment , because lending institutions will be dealing with the government”, said Witika.

He added that banks and financial institutions find it more risk free to lend money to civil servants as they are guaranteed of payments and that gives civil servants better chances of borrowing more than the private sector.

 “ There are many civil servants that tend to borrow money from micro financial institutions, which are payroll based loans because the government gives assurance to MicroFins and banks of payment”, said Witika.

However, Witika noted that the reported decrease in terms of credit to the public sector disadvantages most of the civil servants because in most cases civil servants borrow many to promote social welfare without the intention of making profit.

“Most civil servants engage in activities that are not profit oriented, and borrow money just to promote social welfare without the intention of making profit, but now with the reported reduction it becomes hard for them to borrow money and be able to facilitate or meet their expenses”, said Witika

Article by Justine Phiri