Marketeers need affordable loans & financial skills to grow – ZANAMACA

The Zambia National Marketeers Credit Association ZANAMACA […]

The Zambia National Marketeers Credit Association ZANAMACA has attributed the slow growth of marketeers into larger businesses to high-interest loans, inadequate financial literacy and poor collaboration between financial institutions and organizations representing informal traders.

ZANAMACA President Mupila Kameya told Zambian Business Times-ZBT in an exclusive interview that although successive governments and financial institutions have introduced empowerment initiatives over the years, many marketeers have remained trapped in small-scale trading because existing financing models do not support sustainable business growth.

Kameya said commercial banks have largely failed to design products suited to the needs of the informal sector, leaving traders with expensive loans that are difficult to repay.

 “It is very difficult for people to graduate because when they borrow money, the interest rates are very high. Very few make enough profits, and many end up borrowing again instead of expanding their businesses,” he said.

He said Zambia needed financing facilities that offer affordable interest rates to enable traders to invest in and grow their businesses while still being able to repay their loans. Kameya also stressed that financial literacy remained a major gap, saying many borrowers receive loans without fully understanding repayment obligations or how to use the money to expand their businesses.

“People should borrow money that improves their businesses. Instead, many borrow simply because they have no other option, and they end up using their own income just to service the loan,” he said.

Commenting on concerns over low repayment rates under the Citizens Economic Empowerment Commission (CEEC) loan programme, Kameya argued that the problem was not a culture of default among marketeers but weaknesses in identifying suitable beneficiaries and monitoring funded businesses.

He said institutions offering loans should work closely with market associations and other non-state actors who understand traders and can identify deserving beneficiaries. “Collaboration is very important. Associations know the traders, where they operate and the nature of their businesses. That makes it easier to identify genuine beneficiaries and monitor their progress after receiving loans,” he said.

Kameya said his organisation only lends up to half of the capital already invested by a trader, ensuring borrowers have demonstrated commitment to their businesses before accessing financing. He explained that the association also works with local market leadership to assess applicants and determine appropriate loan amounts, resulting in relatively high repayment rates.

Kameya further pointed to the long-standing “chilimba” savings system as evidence that informal traders have strong financial discipline when financial products are designed around their realities. He said banks introducing products based on the traditional rotating savings model should first engage organisations that have practical experience in the informal economy.

 “Chilimba has existed for many years and has never failed because people understand how it works. Financial institutions should partner with us so they can develop products that truly meet the needs of marketeers,” he said.

 Kameya added that strengthen ing partnerships between government, financial institutions and organisations representing informal traders would improve access to affordable finance, increase repayment rates and help more marketeers transition into successful small and medium-sized enterprises.

Article by Karen Ngulube