Police arrest loan sharks after MPs concerns

DODOMA: POLICE in Dodoma Region are holding several unlicensed moneylenders who charge extremely high interest rates days after lawmakers voiced concerns over thriving of loan sharking business at the expense of people in financial dire strait.

Dodoma Police Commander (RPC), Senior Assistant Commissioner of Police (SACP), Theopista Mallya said they had arrested several people who were involved in money lending with exorbitant interest rates over the rates in contravention of laws governing microfinance business in Tanzania.

According to the RPC, the police have arrested the suspects who were charging between 20 and 40 interest rates against the Microfinance Act, 2018 which requires small lenders to issue loans with interest not more than 3.5 per cent. RPC Mallya stated that the investigations were ongoing upon which the suspects would be sent to court.

“We ask all residents in the region whose properties were seized by these people to come to the central police office with evidence so that we can hand back to them,” she said.

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Members of Parliament raised concerns in the August House last week over the booming of unlicensed money lending business with extremely high interest rates.

The Finance Minister, Dr Mwigulu Nchemba was given four months until September by the House Speaker, Dr Tulia Ackson, to roll out a well-defined mechanism of interest rate control among independent creditors or loan issuers.

And in response, the Minister said that for a company, institution or individual to be able to provide loans to citizens, they must have a licence from the Bank of Tanzania (BoT) and meet the requirements of the Banking and Financial Institutions Act, 2006 and the Small Financial Services Act (Microfinance Act, 2018).

The high-interest loans are offered by some institutions and individuals, among them, are unregistered and operate without license from the country’s Central Bank.

A Special Seats Member of Parliament, Shally Raymond wanted to know about government measures to control the money lending business and interest rates given without following procedures including those which are provided through mobile phones. In her basic question, Ms Raymond demanded to know when the government will direct mobile telephone firms which provide financial services to provide education to the people before giving them loans.

This triggered a hot debate as several other legislators demanded to know what the government was doing to protect its citizens from the loans which they said had been pushing people into abject poverty.

Vunjo lawmaker, Dr Charles Kimei, who is also the former Managing Director of CRDB Bank, said that for any microfinance institution to operate, they must submit their lending policy to the Central Bank which assesses the interest rates before issuing a licence.

Special Seats MP, Ms Sophia Mwakagenda (CHADEMA) asked the Minister for Finance, to take time to look into individual loans notoriously referred to in Kiswahili as ‘kausha damu’ (blood draining loans), which are wreaking havoc because of their unfair lending terms.