Commonly known as Shailoko in Zambia, Loan sharks are illegal or unlicensed lenders who offer loans at extremely high interest rates and often use threats, intimidation, or violence to collect repayment.
Understanding loan sharks in Zambia
Understanding how these lenders operate can give you a better choice whether or not they are right for you. Here is what Zamchat loans advisors explains about loan sharks:
What They Do
- Lend money at ultra-high interest rates – often far above legal limits.
- Target desperate borrowers – people with bad credit or no access to traditional loans.
- Skip paperwork – no contracts, no clear terms.
- Enforce repayment through fear – threats, harassment, or even physical harm.
Why People Go to Them
- No credit check required.
- Fast access to cash.
- Denied by banks or payday lenders.
The Risks
- Debt spirals: Interest builds fast (Kaloba). A small loan can double or triple quickly.
- No legal protection: You’re not covered by consumer rights laws.
- Violence and blackmail: Many loan sharks are tied to criminal organizations.
Signs of a Loan Shark
- No license or registration.
- Demands repayment with threats.
- Takes valuables like ID, bank cards, or passports as collateral.
- Doesn’t give receipts or a clear repayment schedule.
Reasons people do loan-sharking
People get into loan sharking for one core reason: profit, fast and often outside the law. But there are layers to it. Here's a breakdown of the main motivations:
1. Easy Money
- High-interest rates mean huge returns on small loans.
- No need for overhead like banks or legal compliance.
- Cash flow can be constant if borrowers are desperate and trapped.
2. Exploiting Vulnerability
- People with no access to banks or credit cards are easy targets.
- Borrowers are often too scared or ashamed to report abuse.
- Fear replaces formal contracts — it’s enforcement without red tape.
3. Lack of Opportunity
- In areas with high unemployment or limited economic options, illegal lending can look like a business opportunity.
- Especially in places with weak regulation, people build underground lending networks.
4. Power and Control
- Some loan sharks aren’t just in it for the money — they thrive on control.
- They enjoy the leverage they have over people’s lives.
- This is often tied to organized crime or gang-related operations.
5. Criminal Networks
- Loan sharking is a known part of the illegal economy — alongside drug dealing, extortion, and trafficking.
- It's a steady income stream that also pulls people deeper into criminal circles.
- Enforcement (intimidation, violence) is easier when you're already in a violent business.
6. Culture and Legacy
- In some communities, informal lending is normalized — a gray zone between legal and illegal.
- Some people inherit or grow into the role, especially where it’s seen as just “how things are done.”
The good part of loan sharks
Though loan sharks are generally a bad option, some people still prefer them for reasons such as:
