The phone’s ringing again. No one’s answering and it’s 3:42 PM in Lusaka. Miriam, a collections officer, is staring at her fifth missed call in under an hour. Her notebook’s a mess of red marks and circled names; missed payments, switched-off phones, stories that went cold.
Meanwhile, outside, life is moving. You can hear bus horns, lunch breaks, vendors yelling out prices. But in her office, it’s way too quiet. The loans have left the building, but the repayments? Still out there somewhere.
For many borrowers, paying back the money isn’t the priority. To them, the loan was help, not a contract. A way out and not an obligation. Once the cash lands, it’s back to survival mode and repayment becomes a tomorrow problem.
So lenders are left in the dark. They send reminders. Nothing. They call. Line’s off. They escalate. Still nothing. And the truth is, the whole process often feels built for another kind of borrower; one with stability, and a calendar that isn’t ruled by crisis.
Maybe that’s why so many collections fall flat. They don’t speak the language of daily hustle. They assume a system that doesn’t really exist. If we’re going to fix it, we need to stop thinking like lenders and start thinking like people.
This article is about just that; rethinking loan collections to actually work in Zambia, not just on paper, but on the ground.
Also read: How to start a money lending business in Zambia
Zambia’s lending space
Lately, Zambia’s credit market has flipped. In just one quarter of 2019, about 1.6 million loans went to everyday people, while businesses only got a few hundred. That’s great for financial inclusion, but it comes with challenges.
Many new borrowers don’t fully understand how to manage debt, which can lead to borrowing more than they can handle. On top of that, the kwacha’s ups and downs make paying back loans linked to the dollar difficult. Between August and September 2024, total loans dropped slightly, showing how currency swings hit borrowers hard.
There’s also an uneven spread of loans. Agriculture, which is important for Zambia, only got a handful of loans, while most money went to urban households. This leaves major sectors underfunded and makes the system risky.
The Bank of Zambia is watching the scene closely, with quarterly reports to track lending. Non-performing loans vary across banks from as low as 1.5% at Zanaco to over 3% at others. Meanwhile, mobile loans are booming, growing 23% a year, but they’re harder to regulate and keep track of.
Challenges in loan collection
When you think about why loans don’t get paid back, it’s easy to blame borrowers. But the reality goes way deeper. There are big-picture economic struggles, everyday life realities, and cultural factors all tangled up in the story.
The impact of inflation and interest rates on borrowers
Inflation sitting close to 10% means everyday expenses are rising fast, and people’s money just doesn’t stretch like it used to. This makes it tough for borrowers to keep up with loan repayments on time. At the same time, interest rates are climbing, making loans more expensive to repay.
For many, this creates a vicious cycle where they struggle to break free from growing debt. Lenders need to understand these pressures to work with borrowers better.
Also read: Effective loan collections for lenders in Ghana
Distance and seasonal income challenges
Most rural Zambians don’t live close to banks and only about 31% are within 5km of a branch. This distance slows down communication and makes it harder to send payment reminders or updates. Farmers especially deal with seasonal income swings during planting or lean seasons; they might not have money to repay, even if they can pay after harvest.
Lenders often overlook this reality, expecting steady repayments year-round. This gap causes many rural borrowers to fall behind unintentionally.
Navigating traditional authority and collateral issues
In Western Zambia and other regions, traditional leaders like Lozi chiefs often step in to settle debt disputes outside of formal courts. For lenders, this means they can’t just rely on legal systems, they need to build relationships with these authorities. Plus, many small businesses don’t have official land titles, so they use movable assets like livestock as collateral.
That makes it difficult to enforce loan agreements, since seizing movable property is complicated. Recognizing these cultural and legal factors is important for effective loan collections.
Collection strategies that fit Zambia
A well-defined strategy minimizes losses from delinquent loans and ensures the sustainability of lending. Here’s how:
Reaching borrowers where they are
Getting in touch with borrowers is way more than just sending reminders and hoping for the best. In Zambia, mobile networks like MTN and Airtel cover nearly the whole country, so SMS reminders are a no-brainer. But the follow-up doesn’t stop there; after a few days, agents make voice calls using local languages like Bemba or Nyanja, which helps break down barriers and makes borrowers feel understood, not pressured.
And if things get bad, lenders don’t just cold-call or shame people publicly. Instead, they partner with trusted community figures like church elders for respectful home visits. That personal touch makes all the difference.
Flexibility over force
When a borrower falls behind, pushing straight to court can scare people off or drag things out forever. That’s why many lenders in Zambia now try to settle things “out of court” first, using agencies like Debitura. They work with borrowers to reshape repayment plans, say, timing payments to match government pension days when cash flow is better.
Plus, family ties are strong here, so bringing guarantors and relatives into the conversation helps everyone come to an agreement. For those cases that do go to court, it’s worth noting that the Lusaka High Court tends to handle debt cases faster than rural courts six months versus 18 months. Also, when assets have to be seized, the law protects basic household items like beds and pots, so people aren’t left completely destitute.
Also read: Effective loan collections for lenders in Zimbabwe
When technology meets local realities
Technology isn’t just for the big cities anymore. Zanaco piloted some cool biometric tools that link loan terms to how active someone’s mobile money account is, meaning more trustworthy borrowers can get better rates.
They also use facial recognition on tablets during repayments to cut down on fraud, which dropped by 41% in trial runs. Then there’s Stanbic’s Agri-Ledger project, which uses blockchain to track agricultural assets digitally. This lets farmers prove ownership of crops and make partial payments even when prices are unstable.
Collections with cultural intelligence
Money matters here are deeply woven into community life. Taking a purely legal or mechanical approach misses the point. In Kitwe, some lenders host “Chilimika” gatherings where neighbors pitch in to help each other clear debts, it’s like a communal safety net. Churches also play a big role, with groups from the Zambia Conference of Catholic Bishops stepping in for spiritual mediation.
Gender matters too: ABSA Bank has female loan agents who talk to women borrowers in comfortable, private settings. Plus, they offer 30-day grace periods for mothers facing school fee emergencies, which has lowered defaults among women by almost a third.
Preparing for tomorrow
Some lenders use AI to monitor social media for signs that a borrower might be struggling before they miss payments. There are even geolocation tools that trigger loan defaults if a borrower’s phone leaves agreed farming zones for too long, helping lenders manage risks tied to seasonal work.
And with the Bank of Zambia testing its e-Kwacha digital currency, loans could soon auto-deduct repayments directly from digital wallets. This could also open doors for cross-border collections, imagine tracking diamond traders across Southern Africa through digital transaction trails.
Also read: Effective strategies to market your loan products
The real work starts after disbursement
This isn’t a policy problem. It’s a people problem. You can have the best technology, the smartest frameworks, all the dashboards in the world but if your borrower feels like just another number, you’ve already lost.
The real collections don’t happen in boardrooms or backend systems. They happen in the quiet stuff; an agent who knows the borrower’s payday, a reminder that doesn’t sound like a threat, a system that bends without breaking. It’s just what works when you stop treating loans like numbers and start treating people like people. Let’s redesign the collection system and see how easy things become.
