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Over 800 micro lenders go underground

Staff Writer
Over 800 micro lenders have not come forward to register with the Non Banking Financial Institutions Regulatory Authority (NBFIRA) in a bid to evade the new stringent regulations now governing their operations including licence and supervisory fees.

In a response to Business Week enquiries, NBFIRA CEO Oaitse Ramasedi said only 151 micro lenders have applied to register since the enactment of the NBIFRA Law in March this year out of an estimated 991 money lending businesses operating in Botswana.

According to the law, all micro lenders are required to register with the regulator, pay a P5, 000 licence fee and submit monthly loan book values to be used as a basis of invoicing regulatory fees and levies.

"The estimated number of micro lenders is at 991, which is based on consolidated data from Micro Lenders Association of Botswana, Bank of Botswana, Ministry of Trade and Industry and public enquiries.

"To date, the regulatory authority has received 151 applications from micro lenders who wish to be licensed with NBFIRA," said Ramasedi. During the period from September 2009 to March 2012, the NBFIRA had issued 351 exemptions to micro lenders to continue operations before the law was gazzetted.

This shows that out of the 800 micro lenders that have gone under the rudder, about 200 were previously given exemptions but have still not come forward to register with NBFIRA.

Among the new stringent regulations, micro lenders are now prohibited from withholding clients' identity documents, ATM cards and Personal Identification Number (PIN) codes. They are also banned from lending any married persons money without the consent of their spouses.

The legal instrument further stipulates that the borrower should be furnished with a detailed statement, showing how the money borrowed would attract interest. If such comprehensive paperwork is

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not availed to the borrower, the instrument says the agreement is null and void.

The legislation also bars investors with previous records of insolvency, fraud and serious crime in their countries of origin from operating cash loans in Botswana. According to Ramasedi, NBFIRA investigations in Selibe -Phikwe revealed that some micro lenders are still withholding borrowers' ATM cards or operating without licences. Six businesses in the region have been charged for various offences and paid P500 admission of guilt fines.

"Members of the general public continue to leave their ATM/Omang cards with cash loans despite NBFIRA efforts to prohibit them from doing so.   "The regulatory authority reiterates that as per the provisions of the Micro Lending Regulations, that no micro lender is allowed to retain their customer's national identity card (Omang) and ATM cards," he added.

To date, only 50 micro lenders have applied to register in Gaborone, 25 in Francistown while two lenders in each of these places, Palapye, Mahalapye, Serowe and Ghanzi have applied.

No lenders from Mochudi have come forward to register.  The CEO also said there is currently no specific regulation governing pawnshops. He said that NBFIRA is providing such businesses with exemptions until a law is put in place.

"However, we are aware that there are those pawn shops that have combined their business with micro lending hence it is necessary for NBFIRA to monitor them.

Pawn shops that have combined their businesses are required by law to hold separate licences for pawn shops and micro lending," he said.



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