SOME desperate Bulawayo residents are increasingly taking out personal loans from micro financial money lenders, popularly known as loan sharks, to enable them to pay school fees.
LINDA CHINOBVA /JUNIOR MOYO
The country’s banks only give loans to people that are able to service low risk loans, but the lowly paid have no choice but to use high interest lenders like loan sharks who charge them high interest rates which they always try to extend when the loan is almost paid up raising the interest up to almost 100%.
The majority of people visiting loan sharks are civil servants who are at the low end of the pay scale and cannot secure any loans from banks.
Sifiso Ndlovu, a civil servant, said he had resorted to loan sharks because they were faster than banks.
“I’m acquiring my loan from Inclusive Financial Services because it’s faster. It only takes three days to process the paperwork, unlike banks that take weeks to process,” Ndlovu said.
A Mzilikazi resident Thembisile Mlotshwa said microfinance institutions had reduced their burdens enabling them to pay school fees for their children on time.
“These loans have saved us because we are assured of paying fees on time and also take care of our families because many of us are bankrupt this month due to the festive season that milked all our finances,” Mlotshwa said.
Another civil servant from Burnside, Melvin Kamanga, said he was acquiring a loan from a microfinance lender because of the competitive interest rates they are offering.
“I find the interest rates reasonable and affordable. The FMC Financial Service offers 10% interest for their loans of which I can choose to pay within six months, nine months or 12 months, depending on the agreement made,” Kamanga said.
Sandiso Siziba from Northend said she had resorted to microlenders because of their efficiency. Siziba said it was rare for microlenders to decline loan requests at the rate which banks reject them.
An official from FMC Financial Services said the company offers loans from $50 to $1 000 which can be repaid in periods varying from six to 12 months.
The officials said when giving loans, they gave civil servants first preference because of the difficult financial situation most find themselves in.
“At the moment, our preferences favour civil servants because we know that they are most in need of financial assistance. When we are done with them, then we can offer others,” he said.
For applicants to secure a loan with FMC Financial Services, the official said they were required to provide two latest payslips, an identity document, three months’ current bank statement and proof of residence.
The public relations officer of Nissi Finance, Lorraine Phiri, said they had served quite a large number of people seeking loans to supplement their income.
She said her company expected more clients after schools open on Tuesday as that was when most desperate loan seekers thronged their offices.
“At the moment, we are dealing with people seeking business loans to start small businesses. We deal with an average of five people per day applying for business start-up loans, particularly women,” Phiri said.