Editor, It’s incomprehensible how MFIs, particularly SACCOs, are lending to their members at 24% well knowing the capacity of most of these members. SACCO membership is largely rural-based with minimum earnings. How are these rural folks going to make profits and pay the high interest loans? Aren’t these interest rates strangling the rural sector thereby making the rural economy stagnant if not retarding? SACCOs are assumed to be saving cooperatives which deal with (lend) members that are well known among themselves and, therefore, can easily determine who is and who is not creditworthy. SACCOs are expected to make it easy for the members to borrow at minimal interest rates and finance their development ventures without having to borrow at high costs from commercial banks. As it stands now, one is better off borrowing from commercial banks than the SACCOs. To say the least, SACCOs are exploiting their members’ limited knowledge or ignorance. This is counterproductive to the SACCO members and, by extension, to the general populace and the economy. The regulators and overseers of the financial sector should stop this trend or else we will end up with a very poor rural economy and I don’t want to think of the consequences. Rugema Ngarambe Reaction to the story, “Credit rating system will help reduce interest rates, experts say” (The New Times, May 19)
