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Borrowers have an obligation to meet
By
Our Reporter - 05-06-2002 |
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The debate in Parliament yesterday regarding the employment of police officers in the task of grabbing property from loan defaulting farmers does not only make interesting reading, but also exposes the serious problem that exists in the country when it comes to repaying loans.
The argument by Lilongwe Kumachenga MP Demster Chikhawo that involving the police is tantamount to intimidating the defaulters would ordinarily make sense if the law enforcers were involved at the early loan recovery stages or if they used some force in the exercise.
The reality, however, is that all farmers commit themselves when they are obtaining the loan that they will undertake to repay it at the end of the growing season and, in the event that they fail for some reason or another, they will be ready to surrender some of their property.
What has been happening is that when a farmer cannot repay the loan, there is resistance to fulfil the part of the agreement which binds the farmer to surrender some property to the micro-finance institution to recover the money owed. Using the police, therefore, helps the institutions to get the property with minimal problems.
The more important point, after all, is that police involvement would not be necessary in the exercise if farmers met their part of the bargain in the first place. A loan is a loan and debtors must always make it a point not to treat it as a donation.
The embarrassing truth is that Malawians are not well-known for repaying loans. Most financial institutions have been complaining about the tendency by borrowers, including farmers, not to remember to fulfil their obligation, when the time comes. This should have worried the Honourable MP more than the involvement of the police in enforcing an agreement which is on paper.
And to suggest that farmers might fear joining loan schemes because of the involvement of the police in the loan recovery process is, to say the least, overstretching the point. Farmers who have a proven track record in loan defaulting have no business blaming those who are trying to help them meet their commitments.
While it is understandable that farmers face real problems at the end of the season and would genuinely be unable to repay the loan, it should be borne in mind that an agreement of this sort is binding and the risk is that they will have to contend with losing some of their property.
Repayment of the loan is not dependent on whether the farmer has harvested enough to spare something for the lending institution and farmers need to understand this fully when they are entering these agreements.
And rather than blame the police for the problems that may be, Honourable Chikhawo — and all MPs for that matter — ought to call upon farmers and all borrowers in the country to treat loans seriously and always see to it that they are repaid when they should.
The alternative to that can only be the pain that follows forcible recovery.
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