WE all know that children have to go back to school at the beginning of the year. We know that their uniforms, books, stationery and other items need to be bought. We also know that their school fees should be paid and so should their accommodation, transport as well as lunch.

Yet, come January and the majority of us are broke because we spent all the money for the year-end festivities. It is likely that some of us are fully proficient on business and finance matters but we still fail to be stringent when it comes to spending on non-essentials.

This old wave of consumption that outstrips affordability should come to an end or we will forever remain impoverished.  

Financial service providers such as banks and other money lenders equally have to play an effective role in educating consumers about financial matters. They should not only make it an annual ribbon cutting event, but they should be visible in our schools, communities, workplaces and other places of gatherings.

Giving a loan to a desperate person who cannot afford to pay it back, is not only a bad financial decision to the business, but it is also unfair to the borrower.

Often, borrowers are pushed into a debt trap so that they fail to pay the money lenders back. What follows next is litigation that often results in their sequestration or liquidation.

Often, it is the lack of financial literacy that makes borrowers vulnerable to exploitation by unregistered money lenders. At interest rates of up to 30 percent, it is unacceptable and the regulator needs to be at the forefront in the fight against this greed. 

Money lenders play a critical role in financial intermediation but the central bank should be able to contain them and be outspoken about their illicit activities.

So far, we know who runs the banks and how much interest they charge for their loans, but we are not sure what the central bank allows for interest rates charged by the so called micro-finance institutions.

Consumers should have access to the allowable interest rates and must have recourse in case of a dispute with the money lenders. Full disclosure by the money lenders should be enforced as well as consumer protection from their claws.