Why you need to be careful before applying for that loan
A person counting money. Taking loans without financial skills has left many people counting losses.PHOTO | FILE
What you need to know:
- In a conference of financial experts that was organised by DSIK, they said many borrowers end up losing their mortgages largely due to a lack of financial discipline and skills
Mwanza. Default rates are high in Tanzania largely due to the lack of financial education, analysts said here at the weekend.
Those who took part at a conference of financial experts that was organised by the German Spark Institute for Eastern Africa (DSIK), said borrowers end up losing their mortgages largely due to a lack of financial discipline and skills to effectively manage the reason for which the loan was acquired.
“One needs to know the importance of saving before spending and why a mortgage matters,” said the chairperson for the Nyamagana District Women’s Cooperative Forum, Ms Rahel Malifedha.
The St Augustine University of Tanzania (SAUT) Vice Chancellor, Prof Costa Mahalu, said financial discipline and savings education apply to university students too, saying some of them have been spending their accommodation money arbitrarily, making their life difficult when they finish it before time.
“Some of students are misusing the money, but others use it on productive things including starting business while at college, accommodating their parents and educating their siblings. This is a good habit when someone has this education,” insisted Prof Mahalu
The Mwanza Regional Commissioner, Mr Robert Gabriel, said as of October this year more than Sh3 billion borrowed from the region’s councils as loan had not been repaid and that most borrowers were unsure of repaying it.
“Some of those who took the loan went bankrupt because they got the loans without having clear objectives of how they would use the funds,” said Mr Gabriel.
He added that in order for loans to be effectively utilised people need to be taught financial management at an early age and make it their habit.
According to the global DSIK project manager for capacity building and financial discipline of children, Oliver Schuster, the institute had offered financial savings training to 14 private secondary schools in Mwanza Region where more than 1, 000 students opened savings accounts in different financial institutions.
“This education has to extend to government schools because fighting poverty is for every Tanzanian from all institutions in the country,” said Ms Schuster
The symposium was attended by more than 100 people from different institutions marking the celebration of the world world’s savings week.
