Thursday, September 24, 2020

Loan sharks target vulnerable tertiary students

Tertiary students in Gaborone are battling with overwhelming debts as they have fallen prey to marauding loan sharks who have hooked them in by giving them instant loans to solve their monetary problems.

The students are now caught in an ever tightening web of borrowing and paying off endless loans to the loan sharks. Sunday Standard has names of loan sharks who are owed thousands by University of Botswana students. The loan sharks charge as much as 50% interest on their loans, and the students do not think twice before committing themselves to such debts.

When walking into the UB, one is met with endless flyers posted on trees, street light poles, notice boards and even walls, offering instant loans to students who are in need of cash. Others publicly declare their interests rates, while others only reveal their rates to potential clients.

It has come to Sunday Standard’s attention that most of the loan shark companies are owned by former tertiary students, who after experiencing firsthand the financial problems that off campus students are faced with, exploited the niche and lured the desperate students with soft loans.
Students are often forced to seek help from loan sharks when they are pressurised by landlords to pay rent, as the Ministry of Education does not credit their allowance on time.

The situation is not limited to the UB only, as a lot of the tertiary institutions that admit government sponsored students do not offer accommodation. As a result students who are admitted to these institutions are forced to fend for themselves and rent out houses.

To date, there are only four tertiary institutions that offer accommodation for students. But even in such cases the accommodation is not adequate, and most of the students have to fend for themselves. The UB, for example admits about 10,000 full time students every year. 4, 000 of the students are offered accommodation while about 6, 000 stay off campus.

Botswana Accountancy College (BAC) offers about 55 beds, which are strictly reserved for first year students only. The number of beds offered by Botswana College of Agriculture (BCA) and the Institute of Health Sciences (IHS) is still to be confirmed.

While the tertiary institutions can only offer accommodation to such a limited number of students, it has emerged that a majority of students admitted at tertiary institutions, whether in Gaborone or elsewhere, do not come from their places of study, such that they eventually have to fend for themselves.
At the same time landlords are generally hostile to students, as they consider them unreliable when it comes to paying rent. The situation has not been helped by the MoE’s delay in crediting off campus allowances. The MoE’s decision to withhold allowances during the three months vacation also means that the students have to vacate their rented houses during vacations. It would obviously be very difficult for the students to regain their rented accommodation when the semester starts, given the competition for accommodation in the city. Worse still, students have to incur additional expenses as they have to pay for their furniture and household appliances storage during vacations. It is a well known fact that some of the students have resorted to cajoling with working men, who, in return for sexual favours, help them with rent and other living expenses.

Having been tertiary students themselves, the loan sharks are very much aware of the calamities that off campus students face, and they are swift to move in and offer soft loans, at exorbitant interests, to “cushion”
against the financial rigors.

To desperate tertiary students who have no place to stay and study, the soft loan that they have to pay back a month later, with an additional 50% interest is the only available option.
For the loan sharks, they only have to have cash in hand all the time to satisfy the never ending queue of cash strapped students who come with cap in hand to beg for loans.

“You will be surprised by the numbers of students who call for money around from the 1st until the 5th.They are desperate and have nowhere to run.50% might seem like a lot to you, but when one is desperate there are limited options. I have never had problems with students stalling payment, because once they start borrowing money, it’s hard for them to stop, and it becomes a cycle. They pay and borrow more,” said one of the loan sharks who preferred not to be named.

Another loan shark said that he has resolved to deal with employees only as students are a hustle and have to be followed around for payment.

He said that some students have valid reasons for not being able to pay back, like the ministry delaying to credit their allowances, while others are simply dodgy characters.

“You know how difficult young people can be at times. They will ignore calls and try to dodge payment. We have at times been forced to follow them around to get them to pay. I have since decided to leave that headache and deal only with employees” he said.

A third year off campus student, Masego, confirmed that she is one of the many students who owe the loan sharks thousands of Pulas, saying that she was forced to borrow from them because she was running short of funds, as her parents could not help her out.

“The ministry was taking too long to credit our allowances, and the landlord had changed the locks to the room I was renting out. I had nowhere to go, and the loan sharks were the only alternative. We had signed agreements that we will pay rent on the first of every month. But if we can go up to the sixth without paying, what are we to do?”she said.

Unfortunately, Masego has put herself in a situation from which she has no hope of redeeming herself. Her monthly allowance from the MoE is P1, 400, while her rental in P800.On top of her rent, she also has to commute to school every day, buy food and pay utilities.

“My rent is P800, and when I borrow money at a 50% interest rate, I have to pay P1200 from my P1420 allowance. After paying back the money, I am left with no option but to borrow again. The same cycle continues every month. Maybe I will be saddled with the debts even after I graduate” she said.

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