Money Lenders Act to be repealed

MASERU – THE Central Bank of Lesotho (CBL) this week told micro-lending institutions that the Money Lenders Act of 1993 will soon be repealed.
The Act will be replaced by the proposed Financial Institutions Credit Only and Deposit Taking Micro Finance Act, which is expected to be tabled before Parliament and passed into law this year.

The Lesotho Microfinance Association (LEMFA) and the CBL, in a joint press briefing yesterday said the amendment will benefit both the money lenders and the credit only institutions. CBL Head of Nonbank Supervision, Bafokeng Noosi, said they will soon meet with money lenders and credit only institutions to inform them about how the amended regulations will function.

“Six months after the amended regulation has been passed the lenders should transit to that regulation,” Noosi said.
LEMFA President ’Mamakamane Makamane said the Money Lenders and the Credit Only Institutions were not guided by the same law.
Makamane said the new amended regulation will benefit the money lenders more because they are currently guided by the Money Lender’s Act, which she said its conditions are not fair.

She complained that the Money Lender’s Act states that the interest should be 25 percent per year, which she believes was applicable at the time that the Act was passed in parliament. “That is not applicable now,” she said.

Makamane said it is different now because lenders hire offices, they hire staff and they pay them and they take their money to the banks which require them to pay bank charges. She said there is also electricity to pay.
“We sat down with the CBL to make them aware of this situation,” she said.

Makamane said they prepared to have the Act repealed and move to the Credit Only Act, which did not impose a 25 percent cap.
She said its conditions were also not satisfactory because there are three types of lenders who are small, in the middle and the others who are big.
Makamane said they talked about that and the new amended regulation is on its way which will be out anytime.

She said they are going to discuss with the lenders on what or how they will apply for their licences when the amended regulation is out.
Makamane said they have involved all the stakeholders and have consulted them in drafting this amendment adding that she hopes that everyone will be satisfied.

Noosi said the amended regulation will have no interest cap because the market will set the price based on competition.
She also mentioned that the regulation still states that it is illegal for lending companies to seize people’s identity documents like drivers licence and ATM cards and anyone who is found with those documents will face the full might of the law.

’Makhotso Rakotsoane