Elusive credit means Zambians build slowly

Banks are starting to offer loans, but the rates put them beyond most people's reach.

from the September 5, 2007 edition

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British-owned Barclays Bank is experimenting with a "building loan," and has chosen five individuals who will receive 90 percent financing, given in stages.

"People have realized the importance of owning homes," notes Kapoma Collins, an adviser at Barclays' new home-loan center in Lusaka. "There is a great demand, especially for building."

Last year, Barclays launched a home-mortgage program. The bank puts up 80 percent of the money, repayable over 20 years or until the loan recipient turns 55, whichever comes first, for people with permanent employment. The interest rate is 17 percent.

Between the job requirement and a minimum loan amount of about $20,000, the loan is still off limits to most. "For a 20 percent down payment … in Zambia, it's difficult," Mr. Collins acknowledges.

And in Zambia, like many other nations in the region, where 16 percent of the adult population is HIV-positive and the business sector is still developing, even the best-laid plans can change quickly.

Zambian middle-class professionals with good jobs, who in wealthy nations might easily get financing, are forced to be creative.

Some take out special short-term loans for building materials, at an interest rate of about 24 percent, offered by the Zambia National Building Society. Some borrow money from their employers.

Others start building and hope for the best, maybe getting a loan later down the line.

"We start and stop…. Anytime we have any extra money, we think about buying extra cement, buying extra blocks," says Ms. Mulila, who laid the foundation for her own house last November using her savings and a loan from a family member. "We just live for the building project."

Across town, five years after the first brick was laid, the Barak Ministries Pentacostal Church is just now approaching completion.

Open for worship, but still no floor

The congregation financed the church through weekly tithes, fundraising barbecues, and donations from neighboring branches, says Levy Nyirongo, the pastor at the church's branch across town.

The church's revivalist members want to hold a grand opening in March, but have already started worshiping and singing every weekend in the unfinished building, which still lacks paint, power, venting, and a proper floor.

"When there is a break, we are raising the funds," Mr. Nyirongo says. "When there is money, we move."

Meanwhile, Phiri, the driver, has reached window level on his home after 20 months. He's looking forward to having some space for "myself and my future wife," he says with a laugh.

For the roofing, he's thinking about applying for a loan, but he doesn't know whether he'll be able to get one. "The fact is that it's not easy," Phiri notes. "It's hard. I just saved bit by bit."

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