EFFECTS OF RIBA ON LOANS IN A SOCIETYA CASE OF ZANZIBAR URBAN WEST REGION

Abstract

This study attempted to examine the effects of Riba on loans in Zanzibar society case of residents of 
Urban West Region. It is surprising to note that although these loans charge a high interest rate the 
demand has been increasing by the day. The study had three specific objectives; first to examine 
causes of residents of Urban West Region to take loan with Riba, second to identify positive and 
negative effects of Riba on loans in residents of Urban West Region, and third to identify the 
recommendation measures to be taken in order to overcome interest on loans in the residents of Urban 
West Region.
Theory of maqaswid by Ibnu Ashur was used. Interviews and focus group discussions were conducted 
during the study, the sample used was made up of adolescents and adults who are the main borrowers.
The study found that interest on loan has numerous effects in Zanzibar society among them are 
increased poverty, bankruptcy, division of family, increasing number of street children, diseases, to 
name but a few.
Certain measures have been suggested in order to overcome the effects of interest on loans. Among 
them are to improve the wages of wage earners, to reduce tariff for imports of basic commodities, 
establish community shops, the labour force to increase productivity that will eventually lead to 
higher Gross National Product and also to reduce luxurious life styles that eventually force them to 
borrow interest-based loans.