Microlenders Grapple With Surge in Loan Scams
Lewanika Timothy | Wednesday September 17, 2025 06:00
The fraudsters according to NBIFRA are taking advantage of fast-tracked loan approvals and weak verification systems.
NBFIRA’s Anti-Money Laundering Unit representative, Leonard Moeng, said the industry was under serious pressure as fraudsters exploit gaps in compliance.
“Local micro-lenders are being hard hit by fraudulent loan applications,” he said in a public interview. “There has been a rise of individuals who have their personal identity information such as pay slips as well as banking details stolen and being used for loan applications. “Fraudsters use this stolen information to apply for loans at multiple micro-lenders, and victims only realise when they start seeing unexplained deductions on their payslips.”
The micro-lending sector in Botswana has expanded rapidly over the past decade, driven by rising demand from salaried and informal workers seeking quick access to credit. The market has also become highly competitive.
To attract customers, many micro-lenders have adopted expedited loan processing, offering approvals within hours, using digital platforms that rely on fast data processing, mobile banking and automated credit scoring.
While this convenience has made loans more accessible, according to NBFIRA it has also reduced the time available for thorough verification of identity and income, creating vulnerabilities that fraudsters are increasingly exploiting
“Growing fraud is happening online where there is no physical interaction. “In most cases, it’s customers filling an application online and there is no physical verification to check whether the applicant is the owner of the documents,” Moeng said.
He further explained that the quick processing times were emanating from intense competition in the sector, which has forced lenders to slash turnaround times for loan approvals, often at the expense of compliance and verification measures.
“Competition from micro-lenders has led to shorter turnaround times for loan applications, which has compromised compliance measures and led to the rise in fraud,” he added.
Moeng stressed that it is not just stolen identity information that’s driving the crisis, as some customers themselves fuel the problem by applying for loans without disclosing existing debt obligations. “Customers apply for loans and don’t disclose existing loans to lending institutions. “This is often marked by multiple loan applications to different lenders at the same time, without disclosing their intention to borrow elsewhere.”