By Kudakwashe Matizanadzo
Intensive investigations have revealed that illegal loan sharks, known as “chimbadzo” operators are exploiting desperate Zimbabweans through predatory lending practices, often disguised as “sale agreements” to circumvent existing laws.
Investigations made by Express Mail Zim established that these illicit lenders charge exorbitant monthly interest rates, ranging from 30% to 50%, trapping vulnerable individuals in a cycle of debt that often results in the loss of their homes and livelihoods.
All is in complete negation of the law.
The Reserve Bank of Zimbabwe (RBZ) mandates that all lenders must be licensed, yet enforcement remains a significant challenge allowing these syndicates to flourish and impoverish thousands across the country.
Gogo Matsika, a 62-year-old widow from Dzivarasekwa, found herself ensnared in this predatory system after borrowing $200 for her grandson’s hospitalization.
The lender compelled her to sign a document titled “Agreement of Sale – Stand 1234 Dzivarasekwa” for the loan amount.
Despite making monthly payments of $80 (40% interest) for eight months, totaling $640, her principal debt never decreased. When she missed a payment, the lender, accompanied by police and a lawyer, claimed ownership of her house.
“He told me I sold the house. But I never saw a cent beyond the $200 loan,” Matsika recounted, highlighting the deceptive nature of these agreements.
Tafadzwa Bhakera, a commuter omnibus driver in Chitungwiza, experienced a similar ordeal.
He borrowed $500 for vehicle repairs at a staggering 50% monthly interest. As security, he was forced to sign an “Asset Purchase Agreement” for his kombi’s registration book.
For six months, Tafadzwa diligently paid $250 monthly, accumulating $1,500 in payments, yet the original loan amount remained untouched.
When he missed a payment in the seventh month, the lender seized his vehicle.
“He said he bought it from me for $500. Now I have no car, no job, and I paid him $1,500.” Tafadzwa lamented, illustrating the devastating consequences of these unregulated loans.
The modus operandi of chimbadzo operators is consistent. Individuals facing financial crises, unable to secure loans from formal institutions, turn to these informal lenders.
The process is quick, but the advertised rates quickly lead to insurmountable debt.
To circumvent the Moneylending and Rates of Interest Act, chimbadzo operators often demand borrowers sign “agreements of sale” for assets.
When borrowers struggle to repay, lenders offer “rollovers,” capitalizing the interest, violating the in duplum rule.
The Microfinance Act and Banking Act criminalize unlicensed lending, a requirement largely ignored by chimbadzo operators.
Despite clear legal provisions, enforcement remains weak.
Police often dismiss victim complaints as “civil matters,” even when criminal offenses are evident.
The persistence of chimbadzo is rooted in the “economics of desperation.”
Formal financial institutions often have stringent requirements that many low-income individuals cannot meet.
This system imposes a severe human cost, often referred to as the “poverty premium.” A 2025 study estimated that households in areas like Ushewokunze and Epworth spend 22% of their monthly income solely on rollover payments, diverting essential funds from food, education, and healthcare.
Chimbadzo has evolved into a parallel financial system with its own rules and enforcement through intimidation. It thrives due to the formal system’s slowness and high costs, coupled with inconsistent enforcement of existing laws. Until the RBZ license number becomes a commonly requested verification, and disguised “sale agreements” are treated as loans by law enforcement, a select few will continue to profit while thousands more are driven deeper into poverty, 40% at a time, month after month.