ZANZIBAR: THE Zanzibar government has announced new strategies to protect citizens from predatory loan sharks who charge exorbitant interest rates, commonly known as “kausha damu” loans (literally, “blood-draining” loans).
Minister of State in the President’s Office (Labour, Economy and Investment), Sharif Ali Sharif, outlined these measures during a question-and-answer session in the House of Representatives.
He said the measures being implemented through the Zanzibar Economic Empowerment Agency (ZEEA) to provide more favourable alternatives to high-interest micro loans.
The Minister said that one of the key initiatives includes the establishment of the Economic Empowerment Fund, which offers affordable loans with lenient terms.
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Unlike the “kausha damu” loans, where borrowers must pledge personal assets as collateral, this fund allows group members to serve as guarantors for each other, thereby reducing individual financial risk.
The government is also prioritising public awareness campaigns about the Economic Empowerment Fund, “Information is being disseminated through media outlets, council meetings and local government leaders (Shehas) to ensure that citizens are aware of the fund’s benefits and opportunities.”
Minister Sharif noted that the controversial “kausha damu” loans are provided by financial institutions registered under Zanzibar’s Microfinance Services Act No 9 of 2023.
The term “kausha damu” (translated as “blood-draining”) reflects the excessively high interest rates charged and the aggressive collection methods used by some lenders.
