Money lenders hit by high per-branch fees despite turnover tax status

Economist Lubinda Habaazoka has called on the government to protect players in the financial sector from what he described as unsustainable costs.

Habaazoka raised concern over the status of money lenders in Zambia who were paying steep licensing fees for each branch while operating under turnover tax.

Speaking on the sidelines of the relaunch of Mikalo Finance in Lusaka, Habaazoka said most operators in the sector were small businesses on turnover tax but still faced multiple per-branch charges that run into thousands of Kwacha.

Habaazoka outlined the financial burden placed on money lending firms through licensing and compliance fees.

“I am not in the business of selling vehicles. My company, we do not even get white books. I deal with finance. The money is in the bank, you also pay back within there. There’s a time value of money,” he said.

Habaazoka claimed that each branch a money lender operated required its own license, with the Ministry of Finance and National Planning license costing K13,000.

He argued that the cumulative cost becomes significant for firms with multiple outlets, saying the fees were charged merely for paperwork.

“Beyond the Ministry of Finance license, other charges including fire licenses which he are higher for money lenders than for other companies,” Habaazoka stated.

He estimated that total licensing costs for a single branch could reach K15,000 before other operational expenses were factored in.

Habaazoka urged authorities to intervene, saying the sector needed protection given its tax contributions.

“So, yes please go and protect us. If I get how much taxes I’m paying or we pay you’ll be shocked,” he said.

Habaazoka also pushed back against public criticism of money lenders, saying the narrative that they exploited clients was unfair to entrepreneurs in the sector.

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