Life has never been better for civil servants. GRZ has announced a new Public Service Microfinance Institution which will be giving loans to civil servants at less than 5% interest. According to Finance Minister Alexander Chikwanda the "mini bank" will become operational soon and is intended to "trigger downward movement in interest rates". GRZ has also increased salaries for civil servants with some (not all) getting as high as 200 percent effective September 1, 2013. This follows successful conclusion of negotiations with Civil Servants and Allied Workers Union of Zambia.
Details are needed on the new "mini bank". The idea was suggested last year but now appears to be materialising. The rationale seems very poor. It certainly won’t trigger rates downward! There are many ways of getting loans to civil servants without a "mini bank". Capping it at 5% creates a large gap to current high market rates. What is to prevent a civil servant borrowing the money and then lending it to someone else at a profit? It is also wrong priorities. Why only civil servants? Surely we should be trying to widen credit access to everyone, especially the 70% living on less than $2 a day?