Women Are Disproportionately Impacted By Predatory Micro-lending Practices

By Allieu Sahid Tunkara

Isha Bangura, a street vendor in Freetown, was arrested in early March 2020, after missing the most recent payment on a Le10 million loan (approximately $1,000 USD) she took out from BRAC, one of the largest money-lending institutions in Sierra Leone. Bangura applied for and acquired her loan in December 2019, and she is supposed to pay back the principal amount over 10-months with accumulating interest of Le840,000. This means, she pays back Le1,000,000 monthly plus interest of Le84,000. In March, she missed a payment, and instead of contacting her guarantor, the micro-lender used the police as their first line of redress.

Isha has re-paid Le3 million plus accumulating interest over three months and the sum of Le7 million is outstanding and should be paid within seven months. By all indications, it will be difficult or almost impossible for Isha to re-pay the loan in the face of a COVID-19 induced state of emergency, which has badly affected her business.

“I have been paying all along [before now],” she said. “This is the first payment I missed and they put me in jail.” Isha is understandably afraid of what her future holds.

In Sierra Leone, where the majority of micro-loan borrowers are women, Bangura’s story is common. Paying back loans with exorbitant interest is a struggle. They often find themselves bogged down by high interest rates or even locked behind bars. Unfortunately, there are scant statistics on the money-lending industry in Sierra Leone. But, according to a prison official at the Women’s Correctional Centre, in central Freetown, “Most of the women we see are either charged with crimes of poverty, including borrowing and not being able to repay loans, or they are victims of abuse who lash back at their attackers.”

Most money-lenders say they only call the police on clients after other methods of reclaiming their money, such as through guarantors, have been exhausted. Some loan officers claim they won’t allow people who borrow loans from micro-credit institutions to be detained at all.

Detective Assistant Superintendent of Police, S. J. Kamanda is the Crime Officer at Eastern Police Station situated in the heart of Freetown. The police station is close to Abacha Street, which hosts a great a number of traders and is a popular market area. Little wonder that the Eastern Police Station receives the greatest number of micro-credit reports. D/ASP S.J. Kamanda said he does not allow detention of people who borrow loans from micro-credit institutions.

“Debts are civil offences,” said S.J. Kamanda, “We only intervene as police assistance by mediating such matters,” he said, adding that when a lender and debtor fail to agree on a loan settlement plan, the police normally advise the lender to file a civil summons.

Both lawyers and activists, however, say that police use the Larceny Act of 1916 to charge debtors with offences like fraudulent conversion or obtaining money by false pretences, and that women debtors are often arrested without due respect for procedural correctness.

Isha Bangura assured the police through her surety that the complainant would get back their money. “I have been paying all along, and I will ensure that complainant’s get back their money,” she promised.

“The police have no business charging the debtors to court,” said Joseph Dumbuya, the Programs Officer at Sierra Leone’s Legal Aid Board, an institution that provides free-of-charge representation. Dumbuya’s claim is contrary to the crime officer’s. “The Legal Aid Board have represented most of the debtors charged to court by the police,” Dumbuya said. “Micro credits are civil matters. They are a product of civil transactions.” Dumbuya explained his institution is overwhelmed with matters relating to debts.

The Legal Aid Board Program Manager said, sometimes, magistrates throw away such matters from the courts while others uphold the charges. Dumbuya, however, alleged that the insistence of the police to charge such matters to court may be connected to the kickbacks they get from the money lenders. Dumbuya also explained that, most times, the women debtors are arrested without due respect for procedural correctness.

Dumbuya said bribes and kickbacks are common throughout the lending process and often complicate the judicial process. Isha Bangura claims she had to bribe her loan officer Le500,000 to obtain the line of credit, and Dumbuya says the occasional insistence of police to charge micro-lending issues to court, can also be inspired by such unofficial arrangements.

“Sometimes, a money-lender can give Le2 million (approximately $200 USD) to a police officer who helps them retrieve Le5 million or Le10 million,” Dumbuya said.

Detainment, however, is sometimes only the beginning of a debtor’s challenges. AdvocAid, a non-governmental organisation that advocates for the rights of women in conflict with the law, has three paralegals that monitor 15 police divisions throughout the Western Area of Freetown. Their paralegals often discover women in police custody for micro-credit matters – including at the Eastern Police Headquarters, where Kamanda claims debtors are never detained.

AdvocAid paralegal, George Sheriff, said the organization recently found a woman who was detained for four days after failing to pay back a loan. Her detention, he said, violated Sierra Leone’s Constitution, which specifies in Section 17(3) that the maximum detention period for any person who commits a minor offence is only three days.

“AdvocAid developed a payment plan with the money lender and the lady was released from police custody,” Sheriff said.

Apart from paying back the loans, obtaining them is not an easy ride. “Most times, officials of money-lending institutions collect bribes or kickbacks before issuing loans. I bribed Le500,000 to the official who gave me the loan,” Bangura alleged.

A Call To Business (ACTB), a popular lending institution founded by Freetown entrepreneur Joe Abass, issued loans to over 800 women in 2019. They charge an interest rate of 36% – a rate that borders on predatory, according to the standards set out by the US-based National Consumer Law Center.

According to ACTB’s relationship manager, Hannah Bangura (no relation to Isha Bangura), the firm independently detains debtors who have fallen behind on payments until family members can negotiate resolutions. “We usually invite the defaulting debtors to our office and detain them for a short time so that their relatives can pay the debts for them,” she said.

ACTB’s detention policy, however, appears to be illegal. The law prohibits any person to detain another without recourse to the criminal justice institutions. Only the police are legally mandated to detain people. According to Hannah, ACTB do not take police or court action in default of payments by any debtor although she cannot rule out an alternative detention system.

To ensure that women pay back loans at the right time, Hannah says, ACTB officials educate debtors about the process before loans are offered. “The debtors are also given helpful advice with regards the nature of business to be embarked upon so that they can pay back the loans,” she stressed.

The lending industry is as old as time… and so are the challenges. Women take loans in hopes of improving their businesses and lives. But, given the state of Sierra Leone’s economy, many women find it impossible to re-pay their loans and their lives take a turn for the worse. They wind up in jail or on the run. Isha Bangura’s future is on hold till she can re-pay her loan and her family will be held responsible.

This story was a collaboration with the Media and Information Bureau, in Sierra Leone, and New Narratives as part of the West Africa Justice Reporting Project. Funding was provided by Australian Aid. The funder had no say in the story’s content.

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