Inside Edgar Lungu’s “Kelenka Debt Swap”

By Elias Munshya

Just days before the general elections, the Patriotic Front government has suddenly got a brilliant idea. They will stop the public service division that administers payroll for most civil servants from deducting loan payments that government employees owe to various small scale tuntemba lending and microfinance companies. According to the geniuses who came up with this brilliant idea, they need to take a few months to figure out what is really going on. Their end game is to do what they are calling a “debt swap”. To date, no one has provided a clear articulation of what this really means for the 210 000 civil servants. More like what used to happen during the Bill 10 debates – the debt swap becomes anything that the speaker thinks. Some are saying the debt swap is a loan forgiveness program for civil servants. Others are claiming it is a program aimed at government workers who borrowed from microfinance institutions. Yet still, some believe that GRZ will stop banks from deducting loan payments beyond these microfinance institutions.

We are calling it the kelenka debt swap because that is precisely what it is. The government is lying to the people of Zambia, and the good civil servants that it will do something about their debt situation when in fact, what GRZ seems to be proposing to do is first of all illegal, secondly, unclear, and thirdly will continue to perpetuate government’s fraud on the unsuspecting civil service.

According to some information we have gathered from the various sources, including the current apologists of the PF don’t kubeba regime – Amos Malupenga, the government, owes civil servants a lot of money. However, instead of paying civil servants their due, GRZ proposes that it will swap what government owes civil servants with the kaloba that civil servants owe the microfinance institutions such as Bayport. The only problem with this kelenka story is that it covers glaring irregularities and lies. First, the government should pay GRZ workers what it owes them without the veneer of lies and exaggerations. Since the government has accepted that it owes these civil servants – the rational thing is to pay them directly. The civil service is 210,000 vital, and paying these civil servants their due is the right thing. We are appealing to State House to help facilitate this direct and complete payment of civil servants arrears. Only after the civil servants have been paid their dues can we now escalate the story to something else, such as the kelenka debt swap. In any case, why should the government be making plans with money that is not theirs? It is pretty unfair that instead of paying the poor teacher their rural and hardship allowances directly, GRZ wants to introduce too many explanations about the money, thereby complicated straightforward things. If there is money to spend – GRZ better spend on the civil servants, capwa.

However, we are reliably informed that GRZ is broke. And all this thing they are saying that they have money to start a new bank is all false and deceptive. This perhaps explains why they cannot settle the civil servants’ arrears directly and use the debt swap gimmicks. And so, since they have no money – they will just cause the civil service to “default” on the July payments and pretend as if they have “deferred” the payments. Of course, the only thing we hear now is from the government’s side of the story. None of the affected financial and micro-finance institutions has told us exactly what is going on. But from the look of things – GRZ is willing to cause civil servants to default on their July payments by deliberately withholding the remittances to the lending institutions. That way, GRZ will give the impression that civil servants’ loans have been addressed, when in fact, that is not the case. The stunt that GRZ wants to pull is deceptive at the most and fraudulent at the worst.

In law, there is a basic idea known as privity of contract. This concept simply means that a contract affects parties to it. Bayport lent money to individual civil servants. The loan contracts are between Bayport and other lenders and the individuals. GRZ is not a party to it, except perhaps to act as the intermediary when collecting the loan payments from civil servants’ salaries. How can GRZ claim that it can unilaterally amend the individual loan contracts and then make three-month deferrals on loan payments? This does not make sense at all. It cannot be the role of government as one lacking the standing to make such a far-reaching amendment to the contracts. This can only mean one thing – the government is a kelenka government and what it is doing is a typical kelenka way of doing things. It will illegally stifle the lending institutions from collecting their dues, just as it perpetuates a fraud on the civil servants by making them believe that their loan contracts have been amended when in fact, not.

Every lawyer in Zambia knows that if Bayport and other lenders were to sue – they would sue each borrower and the only effective contract is the one the lenders signed with the borrowers. Where then does GRZ come in?

What will end up happening, of course, is that GRZ will have its way this month-end. It will force civil servants to default on their payments. And instead of remitting what is due to the lenders – GRZ will forward that payment back to the civil servants. The civil servants will see that their monthly remittances have not gone through – but in reality, after August, the lenders will come back for it and more. The contracts are still valid, and GRZ cannot unilaterally cancel or amend contracts that it has no privity to.

What compounds the kelenka debt swap is that it applies to only a few civil servants. GRZ has been caught in its lies, and they have no explanation for the other civil servant loans paid through DDAC by the banks. Common sense tells us that to apply this kelenka policy correctly across the service – the same rules must apply to all civil servants. But because GRZ is a government of kelenkas and liars – they will do nothing about most servants.

But lies have a way of growing legs and brains. This week, we heard the President say that he likes this kelenka debt swap idea that he is now considering expanding it to the private sector. I know we should not say this about the President as he is the Head of State – but what else can we say if our head of state is lying and saying things that do not make sense? It is not like the position of President has helped the gentleman become a little truthful about stuff, no. As far as this debt swap idea is concerned, he claims that he will expand it to the private sector. How much will that cost? How will government extend the July default to the private sector? What are the implications of taking such draconian measures to undermine one’s economy? Further, what will this President explain to the Chinese when they come knocking to collect their Kaloba? That he has added another $3 billion of debt from both the public and private sectors?

There is only one solution to this – GRZ should pay civil servants what it owes them immediately. As for the debt situation, we still have a few more months to think about what we can do about it. It certainly cannot be through the kelenka debt swap, though, because no matter how you cut it – this debt swap makes no sense, and everybody knows it!

The author, Elias Munshya, can be reached at

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