Effects of salary-based Microfinance lending on Public Service Workers in selected Government Ministries of Lusaka

This dissertation sought to assess the effects of salary-based microfinance lending on public service workers (PSWs) in selected Government Ministries in the Zambian capital city, Lusaka. The study employed both qualitative and quantitative techniques to obtain data on the effects of salary-based microfinance lending on public service workers. The data collected was analysed using Statistical Package for Social Scientists (SPSS) and content analysis for secondary data. The major finding of the study was that PSWs had experienced serious problems of indebtedness due to their continuous interactions with microfinance Institutions (MFIs). The study further revealed that loans from MFIs attracted an interest rate of over 100 per cent at the end of the repayment period and that MFIs did not play a significant role in poverty reduction amongst low income workers. The study concludes that, while salary-based Microfinance lending is ideal for solving urgent problems, it is not an effective tool for poverty reduction as it forces beneficiaries into severe indebtedness thus worsening their poverty levels. Amongst the major recommendations made in the study were the following: i. Need for policy intervention on the supervision and regulation of MFIs ii. Establishment of a mechanism for effective financial provision to the PSWs. This could be in the form of a revolving fund or microcredit bank for PSWs. iii. All MFIs should be compelled to explain to their clients all the conditions associated with the loans they offer