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Govt introduces loan scheme for civil servants

by Sunday Express
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. . . workers will be able to get an advance of up to months of their salaries,
. . . loan scheme attracts 10 percent interest.

Bereng Mpaki

THE government has introduced a loan scheme which will enable civil servants to get an advance of up to two months of their monthly salaries.
The loan facility, which will be administered by the Ministry of Communications, Science and Technology, will begin next month.
The loan will be repaid with 10 percent interest.
It is meant to help civil servants meet their financial obligations while generating additional revenue for the government through the interest charged upon repayment.
Communications, Science and Technology Minister, Samuel Rapapa, yesterday said in addition to the 10 percent interest, there will be a 0, 75 percent administration fee. All in all, government workers will therefore pay back the loan with a 10, 75 percent interest.
Mr Rapapa said the loan was initially introduced in 2006 but it was stopped due to “some irregularities” in the administration of the scheme.
“Following the cabinet’s recent approval of the resumption of the salary advance service for civil servants, we are proud to announce that the ministry will reintroduce it next month,” Mr Rapapa said in an interview.
“The salary advance is a loan facility administered by the Communications, Science and Technology ministry. We will be lending civil servants money up to an equivalent of their salaries for two months.
“The loan scheme will enable the government to generate additional revenue from its 44 000 employees by charging interest, while assisting them to address their urgent financial needs.
“The scheme will help boost employees’ morale thereby improving service delivery,” the minister added.
The facility is open to all civil servants starting with principal secretaries (PSs) and other categories. PSs should have a least a year remaining on their contracts to qualify. Those who are left with under a year are ineligible.
Other civil servants must have been in government service for a minimum of two years to qualify. Other requirements are a month-old pay slip and a valid bank account.
While the loan scheme is a welcome development to help civil servants meet their financial obligations, it could well land them in vicious debt trap.
Government workers have been known to borrow vast amounts of money from banks and other landing institutions including loan sharks. Some have failed to repay and ended up losing their valuable assets.
Back in 2017, the Lesotho Times broke the story of a vicious debt cycle wherein members of the Lesotho Mounted Police Service (LMPS).
At the time, the police officers were said to be hostages of loan sharks to the extent that they owed a combined M4 million for the month of April 2017 alone.
As if that was not enough, it was revealed that almost a quarter (1000) of the country’s then 4600 police officers were in this vicious debt cycle.
Police Commissioner Holomo Molibeli spoke out against the debt trap, urging police officers to choose the time-honoured way of saving instead of the easy way out of trooping off to the nearest loan shark or commercial bank.
“The time has come for us to address this problem and ensure that we instil a saving culture amongst ourselves. I think we need to revisit the programme where each police recruit was forced to save money at the end of every month,” Commissioner Molibeli said at the time.
When this was put to him yesterday, Minister Rapapa said they had come up with ways of ensuring the loan scheme would not entrench civil servants in an unsustainable debt trap.
Among other things, he said government workers whose pay slips reflected that they were taking home 20 percent or less of their gross salaries would not be allowed to apply for loans.
In the event that anyone defaulted on the loan repayments, the government would deduct the money from their pensions, Mr Rapapa said.

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