Covid hits microfinance sector

MASERU-THE microfinance business sector is reeling as the Covid-19 pandemic continues to ravage the economy. The sector, which normally assists those individuals who are generally excluded from traditional banking channels, is now almost on its knees. Setlokoane Matete the Public Relations Officer of the Lesotho Microfinance Association (LEMFA), told thepost this week that most businesses which were in their infancy in the industry had collapsed. “They had to close shop. Only those who have been in business for many years are still standing,” Matete said. He however, said things are very difficult even for those who are still open. “Generally, things are terrible business-wise and ours even more so as it is a high risk business,” Matete said. The pandemic, he said, has eroded the source of livelihoods for many people leaving them without the means to pay back loans or seek financial assistance. “The saddest part is not even having any form of relief to help these businesses survive. At the present moment there has been no assistance for the sector that has suffered so much,” Matete said. Meanwhile, ’Mamakamane Makamane, who is the chairperson of LEMFA and the owner of Blessing Financial Services, said the pandemic has increased risk tremendously in this sector. “There is a lot of uncertainty and as a result, the few microfinance companies that are still open are reluctant to issue loans,” Makamane said. “People don’t have jobs. Some are still struggling to settle loans from the previous year. Issuing loans has become a gamble, we are basically operating like newbies in the industry, issuing little loans to get by,” Makamane said. To get by, unfortunately jobs have been lost and offices closed. “I for one had to close the Mafeteng and Leribe branches because I could no longer afford their operations and many more have done the same,” Makamane said. She said the government had unfortunately failed to engage relevant stakeholders like landlords and insurance companies when the pandemic hit to ask them to bear with them. “What is worse in our case is that we panicked and closed even before we were hit by the pandemic. Unfortunately, this left most of us without the means to take care of our operations forcing us to close shop,” Makamane said. She added that the little that they now issue in loans is not only to guard themselves against the risk but to also protect their clients. “Giving people money when you do not know how they will pay it back is a risk and could potentially lead to court cases when trying to get back the money,” she said. “We understand the prevailing situation and though it might seem harsh when we do not issue people with loans it is also for their benefit.” The pandemic has also created a thriving ground for illegal microfinance activities taking advantage of the situation. “They have always been there but even much so now that people are vulnerable and in need of money,” Makamane said. Now that people have gone back to work Makamane said they are hopeful that things will improve. “Fortunately, money is like food; people are always in need of it hence we believe that after this people will come back to us,” Makamane said. Lemohang Rakotsoane