CEEC loan repayment crisis: Do borrowers lack financial literacy?

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.