MASERU — The news delivered by the High Court on October 21 was sweet music to many civil servants who for years had struggled to pay off their loans with money lenders.
The more the moneylenders took from their meagre salaries the more the civil servants and other desperate customers turned to them for help.
Each month their salaries were shrinking under pressure from interest and extra charges that went towards paying their loans.
That left financial holes in their budgets that only the moneylenders — ironically the very drillers of those holes — could plug.
Many began living in a vicious debt cycle. For years, some had tried hard but failed to free themselves from the yoke of debt.
Then in August last year some 100 civil servants decided they had paid their dues for too long.
They sued three money lending companies they accused of charging unlawful interest rates on their loans and attaching extra charges to their services to get more money from clients.
The High Court agreed with them and ordered the companies to cut their interest rates from 60 to 25 percent which the court said was permitted by the law.
The money lending sector responded by launching an appeal with the Appeal Court to seek redress.
To protect themselves the sector stopped lending until the Appeal Court made a ruling on the matter.
Four months later the companies are still closed and so is the main source of financial assistance for many civil servants.
The harsh reality of not having the usual source of bridging finance is beginning to bite.
With January upon us the situation has become dire for most families.
Some families have failed to send their children to school while others have had to resort to desperate measures like selling their property just so they can pay the fees.
Without the loans they used to get from money lenders, most households are finding it difficult to make ends meet.
What began as a huge reprieve for many families that were paying huge chunks of their incomes to the moneylenders has turned into a nightmare.
Nearly 30 000 people used to get loans from the institutions every month.
‘Manthabiseng Moiloa (not her real name), a stranded loan seeker said she desperately needs money to pay for her two High School children who are going to do Form E and Form D.
Moiloa said her children were attending a private school where students are required to pay their fees before they can be accepted.
Moiloa said she was hoping to get an education loan from one of the local money lending companies which has since stopped lending.
For the past four weeks she has been hoping that the company will resume business.
Last week they told her that they were not sure when they will start giving out loans again.
She was devastated.
“I was so disappointed when they told me that they were not sure when they will start giving loans again,” Moiloa said.
“I had relied on their education loans for my other children and it has been working well with them.
“The office assistant said they would not provide education loan services until further notice. I do not know what I am going to do this time around. They were my last hope,” she lamented.
Another loan seeker who works as a teacher at a Maseru school said unless she gets a loan quickly her child who is in college in South Africa will have to drop out.
This year her son will need R15 000 but she says she has no means of getting that kind of money.
She said most of her relatives were also experiencing the same financial problems and so could not help her.
“Everyone is dealing with their own problems. The closure of the moneylenders has destabilised many people,” she said.
“Now there is no one to lend us their money. I am so stressed. I have also failed to get a loan from the bank. I did not qualify as my salary was deemed too little,” she said.
But loan seekers are not the only people who have been affected by the closures.
Some of the companies have since told their workers to go home because they can no longer afford to pay them.
There are fears too that the longer some of the companies take to resume business the higher the chances that some will totally fold.
Yet the governor of the Central Bank of Lesotho Moeketsi Senaoana says the subsector is not on the verge of collapse.
“Currently we have an arrangement with the concerned parties to see how people can continue to get loans,” said Senaoana in an interview on Friday.
“They are trying to work with the central bank to normalise things especially at this time when schools are reopening and many people need loans.
“We are aware that mostly the unbanked community does not have access to loans in most commercial banks.”
He said he was not going to comment on the Appeal Court case because it was sub judice.
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