150 debt-ridden families lose homes monthly

AS the economic crisis continues to dig in and disposable incomes relentlessly dwindle to unprecedented levels, an average of 150 families are losing their houses every month, and hundreds more have various properties attached by court orders due to failure to service debts. Companies have been no exception as tens of them are also being taken to the cleaners for failure to honour binding financial obligations, the Financial Gazette can reveal.

Messenger of Court and Deputy Sheriff’s departments of the Magistrate courts and the High Court, respectively, are inundated with orders to attach properties including houses, stands, vehicles, farm equipment, household properties and office furniture, among others as those who are owed move in to recover un-serviced debt.  Default rates on loans and other payments have skyrocketed due to economic hardships which have seen many succumb to debt as they fail to manage their finances.

Service providers, including lawyers among others; suppliers of various goods; banks and especially micro-finance houses and schemes are resorting to taking debtors to court to recover their monies, giving brisk business to the Messengers of Court, Deputy Sheriff’s departments, and auctioneers across the country who then dispose of these attached properties for a fee. While Messengers of Court acting on orders from the Magistrate’s court collect on debts of up to US$10 000, the Deputy Sheriff’s Department, collects on those failed debts of US$10 000 and above.

Once properties are attached they are then sold at auctions at usually ridiculously low prices. “You cannot fault those owed for getting the properties attached because they also want to recover what they lost in their investments,” said Smart Moyo, who is the Messenger of Court for Harare and is also the president of the Association of Messengers of Court and Deputy Sheriffs Zimbabwe. According to Moyo, about 150 houses are attached per month which is up from 2012 and earlier where less than 100 houses a month were sold.  And hundreds other people lose vehicles, tractors and other farming equipment, furniture and other household goods.

The affected cut across sectors and social strata to include individuals, businesses – both large and small – and even churches, among other entities. “Things worsened in 2013. And you know when you get to the point of a house being taken it is heartbreaking even for us. You look at families – the children – who are going to be left without a home and our hearts go out to them,” Moyo said, adding, “But it would not be fair to blame the courts or government because the individual got into the debt by themselves thinking and promising that they would be able to pay off the loan.”

Moyo said the baffling thing was that most of these debtors would secure loans with convincing project proposals or business plans but would still not be able to pay. “The economy might have worsened yes, but mostly such predicaments are because of mismanagement of finances. There is mismanagement somewhere within our people with many loans ending up not being used for intended purposes,” Moyo said.

Moyo said although all 34 Messengers of Court across the country were inundated by attachments of household and office, it was mainly those of the bigger cities of Harare and Bulawayo where immovable property like houses and stands were handled. “Not many houses are taken in the smaller cities,” Moyo said.

Banks and micro-finance houses have been battling with loan defaults in the country in the past few years. While for the most part, there has been genuine failure by people to service their financial obligation due to changing circumstance in other instances it has been observed that a certain culture of not honouring debt for the sake of it has developed with impunity across the country. In some instances, a certain attitude of undue entitlement has seen people not even bother to repay loans.

The youth fund Kurera/Ukondla Fund, a government initiative under the indigenisation and empowerment programme, administered to youths across the country through CABS, CBZ and Stanbic recorded a default rate of more than 50 percent. Some banks have been carrying non-performing loans of at least 15 percent which is way above the international standard of 5 percent.

According to economist, Chris Mugaga, there are a number of reasons why the loan default rate in the country has increased astronomically. “It could be a symptom of grinding poverty or a sign of stalled economic growth. It could also be symptomatic of deficiency in corporate governance where some business issue out loans to relatives, friends of other known people without conducting due diligence,” Mugaga said.

He also said that poor performance of loans could be because of what he calls ‘short-termism’, where the short tenure of the loans resulted in the inability of people to pay them off. “Most of these loans are very short-term – three months, four months – such short periods hamper people’s ability to repay them. That is short-termism,” Mugaga said.

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