Zambia’s Debt Trap: How Civil Servants and Workers Are Crushed by Payroll Loans and Kaloba

By Fred M’membe

Good leaders must be interested in the welfare of those in distress.

We expect them to feel the distress of many who are trapped in debt. This is a difficult problem for any government to face, but to solve it, we need public-spirited leaders with courage, professional competence, and moral integrity who defend the truth and demand justice for those in distress.

Today, payday is a very sad day for many of our civil servants and other workers due to debts or kaloba that are dealt with through their employers’ payroll. Many of them remain with nothing or very little money after payroll loan deductions. This goes on ceaselessly month after month, month to month. They are trapped. They are in a debt trap.

A debt trap for workers occurs when continuous, often uncontrollable borrowing is required to pay off existing debts, leading to a cycle where the debt spirals beyond their capacity to pay. This situation is driven by a combination of low wages, high living costs, and predatory financial products.

Many workers face a gap between income and expenses, as wages fail to keep pace with the rising costs of food, energy, transport, housing, utilities, healthcare, and education, and so on and so forth.

Workers in low-quality jobs often have fluctuating hours, making it difficult to manage cash flow and leading to reliance on credit for daily needs.

Sudden, unforseen events—such as funerals and medical emergencies – force workers to rely on high-interest loans. Without a financial buffer, any unexpected cost leads to immediately to debt.

Relying on credit with high interest rates of usually more 50 % or payday loans and predatory lenders (“shylocks”) with unmanageable terms has made it extremely difficult for many workers to break away from debt.

Taking on multiple loans at once, or using new, high-interest loans to pay off old ones, keeps the borrower trapped.

This is compounded by lack of financial literacy. Inadequate understanding of interest, loan terms, and financial planning can make workers vulnerable to risky borrowing.
Workers that are trapped in a cycle of debt—where income is insufficient to cover both living expenses and debt repayments, forcing further borrowing—experience severe consequences that span physical health, psychological well-being, job performance, and long-term financial stability.

Debt traps lead to extreme stress, anxiety, and depression. The chronic stress of over-indebtedness causes physical issues, including lack of quality sleep, headaches, high blood pressure, and ulcers. Borrowers often experience feelings of guilt, worthlessness, and social stigma. Employees in debt traps often lose focus, as they are preoccupied with financial worries, sometimes wasting many working hours on personal financial issues.

High stress leads to higher absenteeism, tardiness, and lower morale, which can result in termination.

Creditors, including employers, in some cases, may seize personal assets like furniture, vehicles, land, or livestock.

Workers are forced to spend any excess cash on debt servicing rather than building emergency savings or investing in the future.

Over-indebtedness often causes strain, conflict, and divorce within marriages.

Workers may damage relationships with family and friends when they cannot repay loans. Borrowers may face threats or harassment from collectors, impacting their sense of safety.

We have to a solution to this problem.

For the civil servants, the government owes them a lot of money in leave days and accrued benefits. Therefore, the government can do a debt swap. The government can pay off their loans to both government and lending institutions and set off against what they are owed by the government on the payroll. Some civil servants, for example, have as many as 800 leave days, which can be commuted and set off against their loans. There are also a number of accrued benefits that the government has not paid them, such as re-location allowances, hardship allowances, etc, which can be set off. On top of that, the government should implement a strict rule that civil servants can only borrow up to a maximum of, say, 60% of their take-home pay to protect them from over borrowing. Lending institutions should also adhere to this rule when lending to civil servants. Where lending institutions extend credit beyond the 60% threshold, they should be forced to write off excesses at their own costs. Micro finance companies breach this threshold regularly, which constitutes reckless lending without any consequences.

Clearly, there are a number of measures that the government can take to protect and save the lives of workers from the consequences of debt trap.

The Author is President of the Socialist Party and People’s Pact 2026 Presidential Candidate