News Column

District Fund Beneficiaries Refuse to Repay Loans

August 17, 2014



Some beneficiaries of the District Development Fund (FDD) in Chiure district, in the northern Mozambican province of Cabo Delgado, are now flatly refusing to repay FDD loans, on the grounds that the money was offered to them by the government and they have every intention of keeping it, reports Friday's issue of the independent newsheet "Mediafax".

The FDD is still commonly known as "the seven million" because it began in 2006 as an allocation of seven million meticais (about 230,000 US dollars) from the central state budget to each of the 128 districts.

The scheme was refined later, and ceased to be the same for all districts - instead factors such as the district's size and population were taken into account.

The money was to be lent to people with viable projects that would boost food production and create jobs. The idea was that this should be a revolving fund - as the loans were repaid, so the money would be lent out again to new beneficiaries. But the low level of repayments has made this impossible, and so each year sees new injections of state money into the FDD.

The general secretary of the Chiure district government, Maria Tauabo, told the paper "We have been explaining to the beneficiaries about the importance of repaying the money, but they say they can't give it back because, from the moment that the money was handed over, it belonged to them".

It is hard to believe that the beneficiaries in Chiure have confused loans with grants - since, on receiving the money, each beneficiary signs a contract which stipulates a repayment schedule.

This situation, Tauabo said, "creates a major constraint, because the money should be returned so that other people can have access to the fund".

Tauabo said that, since 2007, the government has provided 40 million meticais to Chiure via the FDD. To date only five million - 12.5 per cent - has been repaid.

Despite their failure so far, the Chiure authorities are continuing to urge the beneficiaries to repay their loans. "We are carrying out various awareness raising activities to convince them to return the money", Tauabo said. "Occasionally we hold community meetings. We think that, sooner or later, we shall succeed in making people understand that they have to repay".

Despite the behaviour of what she called "dishonest" beneficiaries, Tauabo claimed that the FDD has had a positive impact on Chiure through job creation.

Those who cling onto the money may feel that they enjoy impunity, since people who default on FDD loans are not chased through the courts.

Some of the beneficiaries may face genuine repayment problems in that they lack experience in business management, and there has been no systematic monitoring of the projects financed by the FDD.


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Source: AllAfrica


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