Swazi media defends the poor, condemns usurers

Zelda Shongwe turned to a moneylender at a time of crisis ‘ like many poor Swazis with no access to formal financial institutions ‘ and was saddled with interest rates that threatened her family’s security. “My niece died, and I was faced with the funeral expenses,” said Shongwe, a 59-year-old widowed grandmother. “Her parents died, and what they left barely covered their own funerals. I had to get R2 000 [US $300] from a moneylender.” The loanshark demanded a 30 percent interest rate and because Shongwe drew out her repayments, she ended up forking over R3 000 [US $500] ‘ a 50 percent interest fee. The Swazi media has been on a month-long campaign to end usury lending. The Swazi Observer has roped in commitments from the Ministry of Enterprise and Employment and the Ministry of Finance to enforce lending laws, which stipulate a 10 percent cap on interest rates. Lenders ‘ who openly advertise their services on signboards in downtown Mbabane ‘ have struck back at the spate of negative publicity by threatening to cut off loans to Swazi Observer staff, many of whom they said are regular borrowers. Editor-in-chief Musa Ndlangamandla said he would stand firm against the threats. Amos, a moneylender in the commercial hub of Manzini, south of the capital Mbabane, said he provides a valuable service that Swazis have come to rely on. “My clients cannot get personal loans from banks. They don’t have bank accounts. They don’t have credit. They don’t own anything, even the land they live on [80 percent of Swazis reside on communal land]. Where can they go for money to pay school fees or funerals?” Like other moneylenders, Amos said high interest rates are necessary to compensate for the risk involved in lending money to people who are often unable to repay. “The default rate is very high. We deal with poor people. We are not like banks that can repossess cars and homes if borrowers default.” Drawn to comment in an Observer interview, King Mswati said he wished Swazis would draw up household budgets and stick to them. With two-thirds of Swazis living below the poverty line and formal sector employment at 45 percent, the livelihoods of the majority of Swazis depends on the informal sector ‘ where moneylenders play a prominent role. As the anti-usury media campaign continues, the pervasiveness of loansharks in all strata of society is being revealed. Enterprise and Employment Minister Lutfo Dlamini vowed to crack down on exploitative lenders ‘ just as the local press alleged that Dlamini’s wife was herself one. The Press also suggested that Swaziland’s top traditional authority, Jim Gama, the Governor of Ludzidzini Royal Village and arbiter of Swazi custom, is a moneylender. Gama defended his business as a form of assistance for people in need. He said he charges 20 percent interest, a rate one third less than what is customarily charged, but double the legal interest rate limit. Thab’sile Maziya, who runs a fruit stand at a bus stop at a Manzini residential township, feels she has had a raw deal at the hands of moneylenders. “When I opened, I borrowed money to buy stock. I ended up working for the first months with nothing to put in my pocket. All the profits went to the moneylender. Poor people who are forced to borrow money always slip deeper into poverty,” Maziya said. She called for government to set up a small lending scheme with reasonable interest rates to advance money to people who do not qualify for bank loans. John Fakudze, an assistant bank manager, said economic upliftment would reduce people’s dependency on loansharks. “People need to put a little away every month in a bank account for future emergencies. People complain about bank charges, but these are much smaller than moneylender interest rates,” Fakudze said. ‘ Irin.

April 2006
« Mar   May »