The Citizen (Dar es Salaam)
Bernard James
27 August 2008
The government announced yesterday that it was assessing activities of private money lending companies to see how they can be put under the control of the Bank of Tanzania (BoT).
The announcement came following complaints by an MP who sought BoT intervention in its supervisory role "to save thousand of civil servants deceived to take loans from the firms at unaffordable interest rates."
The high interest rates charged by the firms came up for strong criticism from MPs yesterday. They castigated the companies as 'capitalistic' for "mercilessly milking civil servants."
Their presence, they said, has only served to cause misery instead of helping people out of poverty.
Godfrey Nzambi (Mbozi West-CCM) said on Tuesday that the high interest rate charged by the mushrooming lending institutions have adversely affected civil servants, especially teachers.
Finance Minister Mustafa Mkulo replied that interest rates charged on loans were not regulated by the government, with prevailing market rates and operational costs of the firms determining the rates.
Under the Banking and Financial Institutions Act of 1991 lending institutions are not placed under the supervision of BoT as they don't take deposits.
"According to the Act, 1996 institutions like Bayport Financial Services, Blue Financial Services or Easy Finance are not under the control of BoT," he specified.
However, he said, due to rising complaints from ordinary people and MPs the government in collaboration with BoT was assessing activities of private money lending institutions to see how the wider act can be applied to their activities.
He advised civil servants an any other individuals to exercise caution when seeking loans from lenders, or seek advice from bank officials before concluding to loan transactions.
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