He could well be a lawyer, what with his reputation for having more to do with legal affairs than most people in that profession. In fact, many people in town think he is — a label that no doubt enhances his business profile.
But Khoza is a debt collector, with clients that include a hospital, a bank, a high school and a major pharmacy.
Although he’s part of what is becoming a booming trade in Zimbabwe, his office – located in the seamier part of town – shows no signs of prosperity. Ironically, his phone lines have been disconnected because he failed to settle the last bill.
The fact that Khoza has an office doesn’t necessarily mean he is easy to locate, either. Prospective clients, or curious journalists, may find themselves at a dead end, despite several efforts to reach him.
Khoza knows how to find you, however -‒ as do other debt collectors, some of whom may be less than gentle when they track you down.
So, after numerous complaints of harassment from debtors — many of whom are battling to meet their obligations in Zimbabwe’s inflationary environment — the government has decided to act.
Through its Law Development Commission, the state is investigating the activities of debt collectors, whose operations are presently not subject to regulation or sanction.
In a recent paper on the matter, the commission said declining standards in the Zimbabwean judicial process ”may have contributed to the … growth of extra-judicial debt collectors”.
However, it placed most of the blame on a general desire to avoid costly trials, and to maintain privacy in financial matters. For those who simply wish to avoid the red tape of legal proceedings it’s also faster to enlist the services of debt collectors, despite their reputation for employing unorthodox methods to recover money.
To remain in business, the debt collector must get debtors to pay ‒- at all costs. This, says the commission, places huge pressure on the collector, while creating a climate that is conducive to malpractice.
Debt collectors often resort to ”strong arm” tactics to intimidate the debtor, or their family, into settling with their creditors. These typically include threatened or actual violence, abusive and offensive letters, frequent personal visits and unlawful dispossession of property.
A magistrate who spoke on condition of anonymity, said debt collectors base their operations on a legal procedure that allows one person to take over the claims of another.
”They get you to sign the cessation letter giving them the right over your (claim). Then they charge you a fee, take the matter to court — and whatever the outcome, you still pay them money.”
Among the biggest complaints is that collectors over-charge debtors, often demanding interest as high as 900%.
In addition, certain collectors stand accused of misrepresenting themselves to debtors as court officials or members of the legal profession.
”It is illegal for persons who are not lawyers to render legal services for a fee,” says Stanford Moyo, President of the Law Society of Zimbabwe, which has received numerous complaints in this regard. The Law Society is also part of the Law Development Commission’s sub-committee on debt collectors.
In Zimbabwe’s current political and economic environment, which Moyo describes as ”chaotic”, anyone can also claim to be a debt collector. This is because collectors operate in a completely unregulated environment where there is no way of checking who actually belongs to the profession.
Unlike legal practitioners, Moyo adds, debt collectors don’t operate a client protection fund which means their customers have no cover: ”They are fraudulent and some of their methods extortionate. That is clearly inimical to the public interest.”
The Law Development Commission says debt collectors have made representations to the Minister of Justice, Legal and Parliamentary Affairs, calling for recognition. It is likely that they will get a special status under the law — in exchange for defined responsibilities.
The drive to regulate the activities of debt collectors in Zimbabwe seems set to follow the lead taken by neighbouring South Africa, where the 1998 Debt Collectors Act was enacted after recommendations by the country’s Law Reform Commission.
The Act provides for the establishment of a Council for Debt Collectors which exercises control over the occupation of the debt collector. — IPS