LASF to Launch Microfinance

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By Kunda Kaunda and Chishimba Milongo

LOCAL Authorities Superannuation Fund (LASF) will in 2018 launch a microfinance subsidiary which will provide loans to contributing members at lending rates lower than those currently prevailing on the market.

LASF Microfinance is aimed at servicing all employees from member employers (as defined in the Investment Policy) designed to help them with personal loans to start-up or finish-up projects.

The scheme is based on salary backed loan investment with member employers recovering the repayment through payroll and remitting the installments to LASF. The scheme shall operate on a premise of revolving fund concept, with a bank account exclusively assigned for this purpose.


Member employers should have a signed Memorandum of Understanding with LASF for their employees to have access to the scheme and subject to the following;

  • The Fund shall evaluate the financial and cash flow position of each organisation in order to assess the capacity to access the loan scheme.
  • Member organisations with pension contribution arrears exceeding three months shall be disqualified due to non-remittance of pension contributions. However the Board may exceptionally consider and approve an Associated Authority’s participation on case by case basis.


The criteria for the borrower to be eligible for the loan are that:

  • The applicant/borrower be confirmed employee with the member organisation
  • The net salary shall not fall below 30% of the gross monthly earning after recovery of

the loan.

  • The applicant obtain a written guarantee confirmation from the employer to recover the loan through payroll by completing the designed application form
  • The employee must consent to recover the loan from terminal benefits upon

Separation from employment by completing the designed application form.

  • Contractual employees may obtained a loan based on tenure of the contract but in accordance with eligibility requirements


The features of the loan scheme are as follows;

  • Loan entitlement shall range from ZMW5,000.00 to ZMW 100,000.00 with minimum loan amount of K5, 000.00 and maximum loan amount of K 100,000.00
  • Minimum tenure of the loan shall be three (3) months.
  • Maximum tenure shall be twenty-four (24) months.
  • Interest rate shall be based on Bank of Zambia policy rate plus margin or adjusted commercial bank rate approved by the Board which reflects risk and anticipated profitability.
  • Computation of loans shall be amortized based on reducing balance method.
  • Insurance shall be based on contractual percentage on the principal loan amount agreed with the insurance company.
  • Insurance premium payable shall be deducted upfront from the loan amount disbursable.
  • Recovery of the loan shall begin at month end if loan was obtained at start of month and following month if loan is obtained at month end.


The following requirements are to be submitted by the borrower in order to access the loan facility. They are;

  • An Application form to be completed by the applicant
  • Two passport size photos
  • Copies of payslips for the last three months with official company’s stamp.
  • Certified copy of National Registration Card/Passport/driving licence
  • Proof of employment and confirmation of residence address.
  • Pre-assessment/certification of the application will be done by the employer
  • Applications shall be submitted to the Fund through the office of Managing Director.


The loan repayments will be recovered by the Associated Authorities on behalf of the Fund monthly through payroll remitted to the Fund by the 15th of the following month. The Fund shall allow for accelerated payments by the borrowers after three months of obtaining the loan.


The loan may be refinanced on application by the member and the amount payable shall be net after recovery of the balance relating to the initial loan. The Fund shall not refinance loans obtained outside the scheme of the LASF loans.


The choice of Insurance Company will be based on the ability of the Company to provide Credit Life Assurance Scheme on all loans issued out to clients under the scheme. The outstanding amounts or installment repayments are payable as per conditions and terms of the Policy. The events to be insured against under this policy will include:

  1. i) Death cover
  2. ii) Temporal Disability (Sickness cover)

iii) Permanent disability

  1. iv) Retrenchment (working class)

The premium will be calculate at agreed rate of the sum assured and remitted as a single premium to the Insurance Company within specified days following the end of the month in which premiums were collected.