Loan sharks should be regulated - councillors

LINDIWE MOZOLA
Correspondent | Friday January 27, 2012 00:00

They said this during the first ordinary full council in Francistown on Wednesday.These councilors argued that macro-lenders are getting away with high interest rates because the demand for cash is very high. People still lack information about these macro-lenders and their interest rates, because whenever one is desperate for money they will to do everything to solve  a situation. The councillor  of Boikhutso, Robert Mosweu complained that macro-lenders are even going to the extent taking client's identification cards (Omang), ATM cards as security for the money they loaned, which is illegal. 'Macro-lenders exploit Batswana--they take their public documents something they are not supposed to do and who knows what they are going to do with these,' Mosweu pointed out.

He called for rules have to be enacted with immediate effect because many Batswana continue to leave in agony and hunger due to these loans sharks. The councillor for Ikageleng, Tabengwa Tabengwa explained that low salaries drive people to get loans especially at the beginning of the year when children need uniforms.  They usually resort to macro-lenders because in many cases, it caters for low-income people. 'They choose the macro-lenders since they cannot afford bank loans where the right procedure is followed, if the government can increase the low earners' salaries they wouldn't be widespread exploitation,' Tabengwa stated.

James Kgalajwe the councillor for Satelite North stated that the rules need to be implemented quickly to avoid driving people to poverty. The nation is headed for poverty if macro-lenders continue operating like they are at the moment, he stressed.

 'Macro-lending regulatory framework must encourage absence of abuse, more transparency, fairness and take away people's right to debt,' he said.

The chief executive officer of Non Bank Financial Institution Regulatory Authority (NBFIRA), Oaitse Ramasedi said as much as his organisation is mandated with regulating macro-lending it is not going to be easy.

'Our regulatory framework has been long written in 2009 and sent to the Ministry of Finance and Development Planning for approval. Once done and implemented the framework might put people out of business as lenders will have to apply for licenses where some will not qualify,' he said.

Ramasedi also advised the councilors to educate people about their rights when borrowing money from the macro-lenders. If the awareness is driven these people will know what to do when they are being unfairly treated. If macro-lender demands ID or ATM card, they should be reported to the police.

He also appealed to the nation to read contracts and acquire in-depth information about procedures of macro-lenders before signing to avoid long-term debts that will impoverish them.

Ramased promised that NBFIRA is also planning to launch very strong consumer awareness educational campaigns.