The Impact of Personal Loans on the Livelihoods of Civil Servants in Munali Constituency
DOI:
https://doi.org/10.31033/IJEMR/16.2.2026.1880Keywords:
Personal Loans, Civil Servants, Financial Well-Being, Livelihoods, Financial Literacy, Zambia, Payroll LendingAbstract
This study investigates the impact of personal loans on the livelihoods of civil servants in Munali Constituency, Lusaka, Zambia, within the broader context of increasing reliance on payroll-based lending in developing economies. Despite improved access to credit, concerns regarding over-indebtedness, reduced disposable income, and declining financial well-being persist. Using a quantitative cross-sectional design, data were collected from 220 civil servants across key public service sectors and analysed using descriptive statistics, regression modelling, and the Relative Importance Index (RII). The findings demonstrate that personal loans significantly influence livelihoods in both positive and negative ways. While loans facilitate access to essential services such as education, healthcare, and housing, they simultaneously contribute to financial strain through high repayment obligations and multiple borrowing cycles. Regression results reveal that loan size and loan multiplicity negatively affect livelihood outcomes, whereas financial literacy and flexible repayment structures improve financial well-being. The study contributes to the financial capability and development finance literature by providing empirical evidence from a Zambian context, where such studies remain limited. The study recommends targeted financial literacy interventions, regulatory reforms in payroll lending, and the redesign of loan products to align with borrower repayment capacity. These findings have important implications for policymakers, financial institutions, and public sector employers seeking to promote sustainable financial inclusion.
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