Microfinance loan providers in Sierra Leone accused of ‘payday loan’ interest rates

Microfinance loan providers in Sierra Leone accused of ‘payday loan’ interest rates

Borrowers have actually accused NGOs of asking unfairly high interest, demanding quick payback, and reporting debts towards the authorities

The great majority of individuals taking out fully microfinance loans in Sierra Leone are females. Photograph: Kate Holt for The Guardian

The great majority of individuals taking out fully microfinance loans in Sierra Leone are ladies. Photograph: Kate Holt for The Guardian

Final modified on Thu 15 Oct 2020 14.19 BST

The world’s biggest NGO is forced to conduct an inside writeup on a money-lending scheme it operates when it comes to bad in Sierra Leone after some borrowers amassed significant debts and had been reported to police once they couldn’t repay loans.

A Guardian research in to a microfinance programme run by Brac discovered that the NGO’s staff had been neglecting to fully give an explanation for conditions for the loan to borrowers, or guarantee they are able to pay the interest that is high connected with such loans.

Brac, an NGO providing you with economic solutions for individuals located in poverty, has 5.6 million borrowers globally, very nearly 90percent of who are females.

At the time of might 2019, Brac Sierra Leone possessed a $5m (ВЈ3.9m) profile and 46,500 borrowers.

Dougherty said: “We don’t reveal investigation that is internal for outside research purposes. We now have staff training, monitoring and audit mechanisms set up throughout our operations to minimise the possibility of such incidents. We now have no further remark to include with this matter.”

Sia Mansaray* borrowed about $75 from Brac. For a long time she had struggled to feed her five young ones regarding the $2 on a daily basis she makes breaking stones during the quarry in the side of Koidu, a town in eastern Sierra Leone. Her spouse went along to find work with the main city, Freetown, rather than came ultimately back.

A Brac loan officer visited Mansaray in the office and evaluated her financial predicament. She had been told she had been qualified to receive a loan that is small. With an intention price of 30%, she encountered regular repayments of $4 for half a year.

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