The Zambian government has expressed deep concerns over the underperformance of the Community Development Fund (CDF) loan component, cautioning that the initiative could be discontinued if the trend of loan defaults continues. The warning comes amid rising concerns that many beneficiaries of the fund are failing to honor their repayment obligations, thereby threatening the sustainability of the program, which was designed to empower local entrepreneurs and boost community development.
Minister Nkombo Urges Loan Beneficiaries to Honor Repayments
Speaking this morning in Mazabuka District, Southern Province, Minister of Local Government and Rural Development, Gary Nkombo, emphasized that sustaining the CDF loan program has become increasingly difficult due to high default rates. He urged entrepreneurs and cooperatives who have benefited from the fund to take financial responsibility seriously by repaying their loans on time.
Minister Nkombo made these remarks during the handover ceremony of newly allocated CDF loans and two staff houses in Mugoto Ward of Naluama Chiefdom. He reminded the beneficiaries that the CDF loans are not grants or handouts, but rather revolving funds meant to benefit a larger number of people over time. Failure to repay, he warned, would jeopardize the program for future applicants and could lead to its complete cancellation.
“The government is doing its best to empower communities through CDF loans, but we are facing serious challenges in sustaining this program because many beneficiaries are failing to repay their loans. If this trend continues, we may have no choice but to discontinue this component of the CDF because it is not working as intended. We urge all beneficiaries to honor their repayment obligations so that others can also benefit,” he stated.
Minister Nkombo stressed that financial discipline and accountability are critical in ensuring that the CDF program achieves its intended purpose of fostering economic growth and job creation at the local level. He further cautioned that loan defaulters may face legal consequences if they continue to neglect their repayment obligations.
Government’s Commitment to Community Development
In addition to addressing concerns over CDF loan repayments, Minister Nkombo reiterated the government’s commitment to infrastructure development and service delivery in rural areas. He pointed to the newly constructed staff houses in Mugoto Ward, emphasizing their importance in improving working conditions for civil servants and enhancing public service delivery in the area.
As part of his address, Mazabuka District Commissioner, Oliver Mulomba, encouraged the staff members who will occupy the newly built houses to move in immediately and take good care of the infrastructure. He highlighted that improved staff accommodation is key to strengthening local governance and ensuring efficient service provision to communities in need.
“These houses will help improve staff retention and motivation, which is crucial for ensuring that communities receive the services they deserve. I urge the occupants to maintain these houses properly and take full responsibility for them,” Mr. Mulomba stated.
Challenges and Future of the CDF Loan Program
The Community Development Fund has been a critical tool in promoting local economic development, entrepreneurship, and community-driven projects across Zambia. However, the poor repayment rates have raised concerns about its long-term sustainability. Some financial analysts and policymakers have suggested that the loan disbursement process needs to be restructured to include stronger repayment mechanisms, financial literacy training, and stricter eligibility criteria to ensure that funds are allocated to viable business ventures with a higher chance of success and repayment.
Despite these challenges, Minister Nkombo assured the public that the government remains committed to empowering local communities and will explore alternative strategies to improve the effectiveness and financial sustainability of the CDF loan component.
As discussions on the future of the program continue, loan beneficiaries are being urged to fulfill their obligations and ensure that the CDF remains a viable resource for future entrepreneurs and communities in need.
By Helga Chibwe
