Zimbabwe today said it will next month set up a savings fund to offer cheaper loans to civil servants to shield them from loans sharks.
Government will inject start-up capital of $100 million to the fund, while civil servants will be expected to contribute 2.5 percent of their salary to the fund.
Information, Publicity and Broadcasting Services Minister, Monica Mutsvangwa said at a post cabinet media briefing the initiative, dubbed, Government Employees Mutual Savings Fund (GEMS Fund) will be established in March.
“..a steering committee comprising the Public Service Commission, Ministry of Finance and Economic Development; and the Office of the President and Cabinet (will) be established to decide on the implementation modalities of the fund,” she said.
In line with the agenda of improving the lives of government employees, Mutsvangwa said government will also establish garrison shops in all army cantonment areas “to enable all members of the defence forces who will be on the GEMS Fund to have the additional benefit of accessing subsidized basic commodities that would be sold in the specialized shops located within cantonment areas”.
Finance Minister, Mthuli Ncube said the idea behind the fund was to make it easy and cheaper for civil servants to obtain concessionary loans and avoid falling prey to loan sharks charging exorbitant interests.
Interest rates under the GEMS Fund will be set at between two and seven percent, which is below market rates which can be as high as 30 percent per month.
“What we have found is that civil servants tend to borrow out there, some of them are actually in debt, serious debts with loan sharks who are charging very high interests rates and our view is providing civil servants an alternative where they can borrow money cheaply and support their day to day activities,” Ncube said.
“For them to benefit from this fund, they must also contribute to the fund. And we have established that 2.5 percent seems to be the right level and then that will allow them access, a certain level of credit.”
He said civil servants not interested in contributing would have the option to opt out of contributing.
“If you do not borrow while you contribute, what you have put in is yours, so it’s a saving that can be put out to you when you opt out,” he said.
“We think it will go a long way in assisting the civil servants.”
Ncube said part of the other 300 000 strong government workforce that will not benefit from the garrison shops will benefit from Silo shops where goods will be sold at subsidised prices.-New Ziana
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