THE Finance ministry’s admission that it deliberately delayed the remittance of payroll-deducted loan repayments to certain financial institutions has shed light on a quiet but corrosive crisis in Zimbabwe’s labour market: the debt bondage of civil servants.
On the surface, Treasury’s intervention appears legally and morally defensible.
Evidence that some lenders have violated the Moneylending and Rates of Interest Act, the Microfinance Act and the long-established in duplum rule is deeply troubling.
Even more alarming are claims that loan deductions have consumed 100% — and in some cases more — of workers’ net salaries, in blatant defiance of regulations that cap repayments at 50%.
Yet justified outrage does not excuse a remedy that risks creating fresh harm.
By withholding remittances, Treasury interfered with private contracts to which the State is not a party.
Payroll deductions are not government revenue; they are employee funds earmarked for creditors. Once deductions are made, the State’s role is purely mechanical — to transmit, not to adjudicate.
Holding these funds, however well-intentioned, blurs legal boundaries, exposes the government to litigation and undermines confidence in the integrity of the public payroll system.
- Zimbabwe needs to rethink economic policies
- Zimbabwe needs to rethink economic policies
- Forex demand continues to fall
- Digital platforms transfer ZW$8tn
Keep Reading
A blanket suspension also punishes compliant microfinance institutions alongside rogue ones.
Not all lenders are in breach of the law and many operate within regulated margins, providing short-term credit to workers excluded from formal banking.
Undermining legitimate players risks destabilising the microfinance sector and constricting access to lawful credit.
More troubling still are the unintended consequences for borrowers themselves.
Delayed remittances can trigger penalties, arrears, blacklisting or aggressive recovery tactics against civil servants — the very group Treasury claims to be protecting.
In effect, the intervention risks shifting harm rather than eliminating it.
Crucially, this is not a matter that should be led by the Finance ministry at all.
Regulating lenders, enforcing compliance and sanctioning misconduct fall squarely within the mandate of the Reserve Bank of Zimbabwe.
The central bank licences and supervises microfinance institutions, sets prudential standards and has the technical capacity to conduct forensic audits of loan books, interest calculations and deduction structures.
In his mid-term monetary policy statement, Reserve Bank of Zimbabwe (RBZ) governor John Mushayavanhu said surveys and market conduct inspections found that microfinance institutions were largely compliant with the Microfinance Act and the Consumer Protection Framework. However, the RBZ chief said there were instances of non-compliance that were detected — including unlawful disposal of clients’ assets without court orders and excessive monthly deductions.
He said corrective supervisory action had been instituted against offending institutions and that market conduct surveillance would be intensified.
The governor also noted that most credit-only microfinance institutions were charging interest rates of between 7% and 15% per month, depending on funding sources, although some outliers charged as much as 25%. Corrective action, he said, was being taken under section 37 of the Microfinance Act.
In short, RBZ already has the instruments to discipline errant players while safeguarding borrowers and preserving financial stability.
When the fiscal authority steps into a regulatory enforcement role, institutional lines are blurred and accountability is weakened.
The result is a perception of arbitrary executive action rather than rule-based supervision — a dangerous signal in a country still struggling to rebuild trust in its financial system.
The deeper problem is structural. Microfinance institutions have flourished as "lenders of last resort" because public sector wages no longer sustain basic living standards.
If government is serious about protecting civil servants, the solution lies not in withholding remittances or muddying institutional roles, but in enforcing existing laws, strengthening regulation and confronting the wage crisis at the root of the problem.
Crackdowns are necessary. But they must be led by the right institution, using the right tools. In finance, as in medicine, misdiagnosis can be as damaging as neglect.
Treasury cannot be the complainant, prosecutor and judge.
