‘Pledge of debt swap not enough’ – Salivaji

…says any rescue package must tackle low incomes, predatory lending and the debt trap swallowing thousands of workers.

By NATION REPORTER

THE proposed debt swap initiative for civil servants could provide temporary relief, but it will fail to deliver lasting solutions unless government addresses the underlying causes of rising indebtedness among public workers, governance activist Charlotte Salivaji has advised.

Ms Salivaji said the debt swap conversation was important and deserved a proper national discussion because many civil servants had become heavily indebted to commercial banks and financial lending institutions.

She explained that government could use legitimate obligations owed to workers such as unpaid allowances, salary arrears and other verified dues to offset part of the debt owed by public workers to financial institutions.

“In simple terms, a responsible debt swap would mean using what government genuinely owes workers to help reduce what workers owe lenders,” Ms Salivaji said.

However, Ms Salivaji questioned why civil servants had become so heavily indebted in the first place.

“The bigger question is why the need for a debt swap has arisen at all. Is it because salaries no longer match the cost of living? Is it delayed allowances and arrears, high interest rates, weak lending controls or easy access to payroll loans?” she asked.

Ms Salivaji said many public workers were borrowing simply to survive, creating a vicious cycle of debt.

“A worker borrows because the salary is not enough. The loan is deducted from the payroll and the remaining net pay becomes too small to survive on. The worker borrows again. One loan becomes two and two loans become three. That is how debt becomes a trap,” she said.

The activist also called for closer scrutiny of unregistered lenders who may be operating outside regulatory oversight and exploiting vulnerable workers through excessive charges and aggressive debt recovery practices.

Ms Salivaji said a sustainable debt swap programme must include stronger regulation of lenders, limits on payroll deductions, financial literacy programmes and protection against exploitative interest rates and hidden charges.

“Debt swap without reform is temporary relief. Debt swap with discipline, transparency and proper safeguards can help workers breathe again without creating another problem tomorrow,” she said.

Ms Salivaji said the ultimate objective should not merely be reducing loans but restoring dignity and preventing future debt crises among workers.

ENDS