Women and Debt Distress Part 2
In Zimbabwe, the low domestic revenue in the midst of high gross financing needs has over the years caused the acute acceleration of borrowing from domestic and external sources to finance development expenditure. This simply means, the money that the country has been generating on its own had been so little that it could not cover the many needs that the country has. This has forced Zimbabwe to increase borrowing from stakeholders within the country, like companies and individuals (these are like the family members), and from those who are outside like other countries and money lending institutions like the African Bank and the IMF, (these are the friends and other people we are not related to).
The rate at which Zimbabwe accumulated debt, pushed it into a debt distress situation. The failure to meet debt repayment conditions forced us to try and borrow from others to repay the existing debts, while also we were trying to finance current operational costs. The pressure, ultimately suffocated economic development, making borrowing unsustainable and at the same time compromising the social safety of the citizens.
How does being in debt distress affect day to day welfare.
When the country is struggling with debt, providing for the citizens becomes hard. If we go back to the home setup we began with, when you owe so many people and you are caught up in a web of debt, you will find that even if you are working and earning a wage or salary, you will not be able to buy food in the house, or pay rent or provide for your family’s needs as you try and cover the most pressing demands of repayment from the pool of people you owe.
The country also gets into the same situation. It ends up failing to provide for the basic necessities of the people. There is no money for hospitals and medical care, no investment in food security, no infrastructure, there are poor education services and so much more. The provision of what we call public services becomes compromised. More and more people become vulnerable and succumb to poverty. Women and children often suffer the most because they are the ones who need and use public services. For example, more women and children use the public transport system compared to men. Women use more water than men because of biology and multiple household chores.
Being in debt distress therefore means the citizens of Zimbabwe fail to enjoy the privilege of access to constitutional provisions. This, however has another dimension to it. It’s not everyone who suffers this fate, some suffer more than others as inequalities rise. Inequality refers to unfairness in the distribution of available resources. In the end the poor carry the burden of debt distress both at individual and national level
What factors push us into debt distress?
- Poor priorities. When we fail to assess our need and borrow for prestige purpose
- Misappropriation of funds. We need to have financial discipline enough to ensure that the money serves its intended purpose. If we borrow money to capitalize industrial development but use the money to purchase fancy vehicles, we may not be able to generate the money needed to pay back the debt and this will force us to continue the cycle of borrowing and end up in distress. Borrowed money should be used for the intended constructive purpose.
- Lack of proper consultation. It is always important to consult all the people that will benefit from the debt, and also carry the mandate of ensuring that the debt is paid back in time, or who will be affected by the debt. At national level, the decision to borrow should be made after consultation in parliament. Members of Parliament are elected by the people and therefore represent the people’s interests. This means they can engage in the decision to borrow if they see it necessary or refuse for the debt to be taken if it will not benefit the people and will pose more financial problems for them.
- Poor management of finances. This is one of the main factors and covers a lot of aspects. Where the money or resources are being lost due to corruption, theft and other activities that are not in line with the provisions of any of our laws, this becomes a problem of management. The constitution which is the greatest law tells us how public finances should be handled, giving a list of principles that must be followed, but Zimbabwe sometimes fails to follow these and ends up failing to manage its finances. As mentioned before, contracting debt is not always a bad thing, it’s how we manage the debt that is important.
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