Jean Damascene Nsengiyumva, a subsistence farmer from Burera District cannot easily sleep as he always thinks without an answer on his fast growing debt which he took from a loan shark.
Nsengiyumva together with 16 other fellow potato growers in a cooperative from Rugarama Sector had acquired a formal loan of Rwf 26 million from a bank to revitalise their Irish potatoes farming activities.
Unfortunately, they encountered losses due to the consequences of climate change.
“We had a very heavy rain and we harvested lower produce compared to what expected. It therefore led us to borrow some money from friends and relative so that we pay the bank loan and for God’s sake we managed to successfully settle the debt, “He said
After paying a collective loan, Nsengiyumva decided to go back to the bank to apply for a Rwf 1 million personal loan in a bid to improve his farming activities.
“As I was guaranteed a loan I proceeded with farming activities I planted hectares of Irish potatoes but later on the climate has never been good to me as the disaster completely wiped away my farms and hence another loss occurred, ” He noted
Falling into trap
Nsengiyumva testified that as He was in dilemma to pay the bank debt He met a businessman from his locality who lent him a Rwf 1.2 million through illegal condition commonly known as loan shark or Bank Lambert.
“I together with the shark had a written agreement that I sold off my plot of land to him at a Rwf 2 million yet he gave me Rwf 1.2 million, I agreed as I had to pay the bank immediately to prevent auctioning of my properties, ”Nsengiyumva said.
Nsengiyumva had to pay the lender at least Rwf 360 thousand on a monthly basis as an interest rate but he failed after paying only 3 months which lead to wrangles.
“Since then I spent several nights without sleeping as I was thinking on where I could get money to pay back the shark,” He expressed
Nsengiyumva noted that He also attempted to flee the country as he realised that he couldn’t juggling between paying loan shark and other family’s responsibilities.
He said he addressed his concern to local officials looking for mediation with the shark but “all efforts were futile,”
Trying to sue the shark at Gahunga Primary Court, Nsengiyumva lost over the contract he signed and the court ruled out that he has to pay back the later Rwf 2 million with a fine of Rwf 400 thousand.
“I do not know what to do, I am begging the help from the Government as I no longer have money. All what I had vanished through loan-sharking and my child dropped out the school as I couldn’t find his fees.” He lamented
Beside Nsengiyumva case, other loan shark victims expressed a long process and delays that banks impose to clients while applying for a loan as the prime alibi to work with loan sharks.
“Banks at some extent are the one to be blamed over loan sharks, it actually takes long to get a bank loan yet you fulfill the requirements,” said Paul Bakunzi from Musanze District, who once worked with a loan shark.
Local authorities from Northern Province express that loan shark became a rampant problem among communities mainly in Musanze and Burera Districts whereby some locals prefer to flee to neighboring countries after failing to pay loan shark’s due.
Particularly Musanze District officials record over 15 traders with big names who fled the country over breaching contracts with loan sharks while only Cyanika Sector from Burera District records 17 known loan sharks and 7 individuals who struggle to pay debts from loan sharks.
The Governor for The Northern Province, said that effectively from the end of August leaders at the grassroots level were given a period of one month to identify whoever is involved in loan-sharking activities for the justice to do its work.
“Local leaders are going to help us to identify those people who deal with lending money illegal so that we ensure that they are all arrested, prosecuted as the justice has to be applied,” he said
Commenting on those who fled the country over loan sharks, Governor Gatabazi said, “We know where they are, so we are going to mobilise them to come back in the country as we don’t want to have refugees that are linked with this illegal business. We are going to ask the Private Sector Federation to mobilise them to come back.”
Jean Paul Mbabazi, the Central Bank, Northern Province Branch manager maintained that loan sharking activities are illegal in the country and both the lender and the debtor can be prosecuted.
He however expressed that loan sharks affect the country development due to their high interest rates which many applicants fail to afford.
“Loan sharks normally ask high interest rate which varies between 20 per cent and 30 per cent on a monthly basis to mean that they ask at least an interest rate of 240 percent annual. This drives people in extreme poverty as they are asked an extra interest while a loan applicant if worked with a formal bank would only pay between 16 and 30 per cent of interest annually, “ Mbabazi explained
Mbabazi challenged the banks to improve their services in a move to prevent their clients from working with loan sharks.
“If managers of the banks manage to improve their services by mainly accelerating their loan services it can prevent the residents from working with loan sharks as mostly people never mind to wait long in case they need a loan.”He noted
Adding: “We urge the banks to study properly loan application dossiers by accelerating the procedures required for loan applicants.”
