ZANZIBAR government has been urged to investigate and take action on the alarming trend of residents turning to loan sharks for financial services despite suffering and humiliation that such borrowings often cause.

Ameir Abdallah Ameir, Mwanakwerekwe Representative, made the call in the House of Representatives yesterday, saying that such loans place a severe burden on residents, leading to seizure of valuable possessions when borrowers fail to repay hence making them poorer than before.

Ameir highlighted the necessity to conduct a comprehensive study to understand why so many people choose the high-interest options and develop sustainable solutions to the growing problem.

Speaking on behalf of the President’s Office (Labour, Economy and Investment), Acting Minister Riziki Pembe Juma, acknowledged that individuals pursue loans based on personal goals and the urgency to achieve them.

Juma, who doubles as Minister for Social Development, Elderly Gender and Children, explained that while government loans from the Empowerment Agency involve certain procedures, many people perceive the steps as obstacles that delay access, prompting them to seek alternative ‘fast’ but high-interest loans which are perceived as more accessible.

“The government is committed to educating the public on proper borrowing procedures. It is crucial to opt for loans that do not jeopardise personal assets,” she said.

She elaborated on the differences between government loans and “exploitive” loans, stating that government loans are interest-free with monthly repayments whereas “unfair” loans carry high interest and often require weekly repayments.

Juma added that collateral for government loans is typically derived from group members while exploitive loans often rely on the borrower’s personal assets.

The minister acknowledged that some people have faced delays in receiving government loans but she also noted that 254 individuals in Unguja and Pemba have received loans totalling 126,153,000/- disbursed through the Empowerment Fund.

She encouraged residents to adhere to proper loan application procedures and continue repaying their debts to ensure that funds remain available for others in need.