Source: IRIN (United Nations).

Original article available here.

NAIROBI, January 7 – Local NGO MFIs subcontracted by Microloans to the Poorest program are taking bribes from borrowers, according to the Program’s directors. Aboubacar Aboudou, the Program’s first director, said that a lack of oversight and the program’s rapid growth since its creation in February 2007 has left it open to “unscrupulous intermediaries” hired to process loans. The Program’s current director, Komi Koutche, said that subcontracted local community associations are benefiting from borrowers’ desperation. “Instead of taking USD 2 in processing fees, they are charging up to USD 7. As long as the borrowers pay this willingly, we cannot stop it. It is only when they protest that we can intervene.”

Benin’s Minister of Microfinance Reckya Madougou said that recent studies revealed that loan intermediaries “collect loan payments from borrowers promising to remit them to the fund’s partners, but then do not do so.” The Program’s five partner lending institutions have reported over USD 1 million in unpaid loans in 2007, according to the UN. The Microloans to the Poorest program has awarded over 500,000 loans worth USD 31 million so far. The government microcredit program took on too much, too quickly, said Aboudou. He added that the Program should handle only 50,000 loans per year.