|
Small borrowers voice misgivings
2006-07-09 09:40:33
By Correspondent Nasser Kigwangallah
Entrepreneurs in the informal sector have expressed misgivings over financial lending institutions, claiming that they are exploiting them.
A survey conducted by the Sunday Observer in various parts of Dar es Salaam has shown that Small and Medium Entrepreneurs (SMEs) pay an interest fee of between 2,000/= and 4,000/= every week on loans taken from various lending financial institutions.
This, they complain, is extremely burdensome and compounds poverty rather than ease it; the ultimate result being to defeat the government’s poverty eradication drive.
Catherine Thomas, a Tabata-Matumbi resident said she is a member of Pride Tanzania who started her career as a food vendor (Mama Ntilie) with minimal capital.
According to her, she was earning a meagre income through her business which she said was not enough to sustain her family of five people, including her three children.
’’I decided to join one of the lending nstitutions in Dar es Salaam by borrowing an initial capital of 50,000/= so that I could expand my business,’’ Catherine elaborated.
She said at the initial stage she was requested to pay 10,000/= for an application form, another 10,000/= for insurance, 2,000/= as interest plus 3,800/= capital (marejesho) and 300/= for an identity card.
Catherine complained that the time-frame of seven days set by the institutions to start repaying the loan from the day one takes it is too short for a small entrepreneur to afford.
She also complained that the six month period for finalizing payments is also too short and suggested that it should be extended to one year.
Another constraint entrepreneurs face is that once membership is ceased, all the money already paid to the financial lending institution goes with the wind, she lamented.
’’In case you don’t repay the money within a three-week period, officials from these lending institutions would come to your resident to confiscate your property, such as furniture, home appliances and a house, leaving you naked,’’ Catherine lamented further.
However, she said by utilizing the loan wisely, she was able to expand her business, and was now in a position of borrowing up to 1,000,000/-.
’’I have opened a small bar at my residence, I have employed two girls to help me in my business and I afford to educate my three children, one is in class three; the second is in class seven and the third has already completed primary school education and I am planning to take her to a private secondary school’’, she explained.
Ahmed Rashid of Gerezani in Kariakoo said he has a bitter experience from financial institutions which have put him in distress.
He said he started with a 50,000/- loan from one financial institution in the city until he reached the borrowing capability of up to 500,000/-.
He however, said his business did not go well, and he had to sell all his domestic appliances in order to repay the loan he has already taken.
’’Since then I have not been able to recover from the trauma and my life is in stake,’’ he complained.
He said his children had to drop out of school for a year due to financial constraints because he failed to pay school fees and to buy uniforms for them.
He said after a struggle he has nonetheless managed to start a business from the money borrowed from one of his relatives which does not involve interest.
He appealed to the government to scrutinise the business transactions of financial institutions because they were there to exploit small and medium size entrepreneurs for their own benefit.
’’Interest is a big burden to us and the government should do something so that small businessmen were not put into distress,’’ he said.
On his part, Harun Issa Yongolo, a petty trader at Tandale Uzuri Market said he once borrowed 50,000/- from a financial lending institution, but he had to abandon it after repaying the money.
He said he didn’t benefit anything from the borrowed money, to which several conditions are attached.
Speaking to this correspondent, Hatari Malima, Deputy Manager of Pride Tanzania, said the money they lend is public money and should be protected under all circumstances.
He said many people have so far benefited from the loans his company gives and they were in a better position financially as far as one’s standard was concerned.
’’There are several people whom I know, particularly women, who are doing fine with the borrowed money. They are well off and have returned all the money without any difficulty,’’ he said.
He advised people to utilize the money they borrow from financial institutions wisely so that their standard of living can change positively.
|
