I am at an event being hosted by insurance company, Zimnat. The event is the Trade Finance and Trade Credit Insurance Conference. They are holding it as a way of introducing Zimnat’s new dedicated credit insurance division.
The discussions here reminded me of a discussion I had with a colleague when we were on a long drive to Botswana last year. The guy was essentially challenging my long held attitude towards debt. He had gone through an epiphany himself which resulted in him having a very different paradigm regarding ‘chikwereti.’
My long held view of debt
I have had a very bad history with debt and most of that has been with me as the guy who owes not the one who is owed. Being indebted is a very painful thing. Owing someone and having no way of repaying makes you feel like a terrible person especially if the person you owe is going through terrible personal problems and they need every cent they can get. I have been there. Indebtedness makes you both a victim and a villain (more a villain really).
Those experiences made me very averse to debt of any kind. In my head debt has a very close association with bondage. The mind picture is not helped by living in a country that cannot pay its debts which has (together with other things) brought untold suffering to its citizens.
My colleague’s epiphany
If I had hang ups about debt then my travel companion had plenty more but seated in the car with me on our way to arguably the most stable country on the continent his hang ups seemed to have varnished. I don’t know what book or blog post he had read or YouTube video he had watched but there he was telling me why debt was important and why we should embrace it as a business.
His argument
Whoever convinced this guy told him something very simple: credit is a sign that you believe in growth. It only works when both the lender and the borrower are convinced that there will be more tomorrow than there is today. Wow, the guy had a point!
Credit allows you to get to the future you are optimistic about much quicker than you can. The cliche says the early bird ndiye ane yese and if there is going to be a sweet future ahead you want to be the first one to the table. Being first requires resources, more resources than you may have at your disposal, this is where debt comes in.
Debt allows you to trade in a portion of your future profits so that you actually get to realise those future profits and realise them much more quickly.
Are there future profits in Zimbabwe?
Business leaders here at the Zimnat Trade Finance and Trade Credit Insurance Conference seem to have consensus that things are about to get better in Zimbabwe than they have been in a long while. I think so too but it’s really a good reassurance when this sentiment is coming from people who have been in business for much longer than I have been alive.
Being ready for this imminent future will require capacity. Capacity requires that we rethink our position on debt both as lenders and borrowers. As a lender (yes we have products that we provide in advance of payments at Techzim) I have to be more lenient perhaps.
In comes Zimnat
Zimnat is now making the whole tricky proposition of credit/debt more palatable. Credit insurance allows the lender to sleep well at night and allows the borrower to access the finance they need as they prepare or take advantage of an open Zimbabwe.
I am no expert but I think the timing of Zimnat’s coming out of the closet is very perfect. This is the time to look and think more long term than we have done in Zimbabwe in a while.
Just so we are clear
A Shona proverb says, “Kuudza mwana hupedzisira” meaning you have to give a child very clear instructions otherwise you may be taken literally when you didn’t mean to be literal at all. So in that vein, I am not advocating for just going out and getting credit for anything and from anyone. Stay away from loan sharks and I strongly advise against unsustainable consumer debt.
Watch it….
Share
Home
6 comments
I understand putting yourself in debt for a credible long term goal, such as a mortgage. Especially since what would have been rental payments is now going towards mortgage payments. But, in my experience most people borrow to live lifestyles that they cannot afford at the time. Live within your means. Saving money is better indication that you believe in the future.
Living in debt easily becomes a lifestyle on its own, that can be difficult to break away from. You end up borrowing bridging finance at the same point of each month, to be paid at month end, without realising that if you re-order your priorities, for one or two months, that cycle can be broken.
If you cannot afford a Mercedes Benz, then it’s probably not for you. Alas, you will sell the car, when push comes to shove, downgrading to where you belong. Besides that, with the interest rates that are currently being charged, you easily pay double or thrice what you would have paid had you just saved and been patient.
More likely than not when you fail to pay, the insurance company is still coming to recover the money from you. Credit insurance is designed to protect the lender more than the borrower. Insurance also probably increases the loan repayment amounts, adding to your burden.
I agree
Borrowing to feed a lifestyle you can’t afford is shallow and stupid
“…very perfect… ” LOL hahaha !!!
I can only agree with you. Credit is like fire. Used responsibly it provides warmth and enables us to prepare food, which is necessary for sustaining life. Mess around with fire and you will be astounded with the destructive power that it possessed.
Powerful. Hey.
Very good illustration Shepherd, I am making it mine!!!