The creation of the Non-Bank Financial Institution Regulatory Authority (NBFIRA) in Botswana, was recently announced by MicroCapital, reportedly has disappointed microlenders in the country. As it is intended to protect borrowers, the law is expected to limit collections of late payments by microlenders. NBFIRA announced that microlenders would no longer be allowed to access and confiscate a borrower’s bankcard or national identity card in the instance of non-payment.
For many microlenders, this announcement is synonymous with future business losses and closures. Without the possibility of collecting payment from a borrower in default, many microlenders reportedly have shut down their businesses, which has spurred job losses and reduced opportunities for borrowers who do not qualify for traditional bank loans.
Ndiye Elias, the manager of an unnamed cash loan company in Francistown, Botswana, was quoted as having said, “There is a high possibility of permanently closing this month as we are only collecting our payment from our clients and stopped lending until we know the future of our business [1].”
By Amira Berrada, Research Associate
Sources and Additional Resources:
[1] The Botswana Gazette: “Micro Lenders Foresee Industry Collapse,” http://www.gazettebw.com/index.php?option=com_content&view=article&id=12…
MicroCapital.org story, April 12, 2012, “MICROCAPITAL BRIEF: Botswana Approves Microfinance Regulations, Sets Licensing Requirements, Prohibits Taking Personal Documents” https://www.microcapital.org/microcapital-brief-botswana-approves-microfi…
MicroCapital.org story, October 7, 2011, “MICROCAPITAL BRIEF: Government Botswana to Stop Facilitating Repayment of Microfinance Loans by Civil Servants” https://www.microcapital.org/microcapital-brief-government-of-botswana-to…
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