MASERU — Blue Financial Services, one of Lesotho’s biggest money lenders, is facing serious cash flow problems that have forced it to delay disbursing loans to clients, the Lesotho Times can reveal.
The South African-owned financial institution has been struggling to get enough money to give out loans for the past two weeks because the government’s treasury department has not released funds owed to the company by civil servants.
The company says the problems have been caused by IFMIS, the new financial system that the government has installed.
Most of the company’s clients repay their loans through the stop-order system.
The majority of its clients are government employees meaning that the bulk of its money comes from treasury when they repay their loans every month.
Company officials said the problems started two months ago when IFMIS was introduced.
Because most of its clients have not repaid their loans Blue Financial Services does not have liquid cash to give more loans to both new clients and existing ones.
The company is owed millions by the government.
IFMIS replaced GOFIS, the old financial management system which the government said was a “disaster” because of its weak security controls which made it prone to manipulation for fraud and corrupt purposes by the civil servants.
Some clients who spoke to the Lesotho Times said their loan applications filed in March had not been approved because the company says it does not have enough money to lend.
Others said cheques that they received from the financial institution had been rejected because the company does not have sufficient funds in its bank account.
People get loans from money lenders to pay for school fees, finance funerals, solve family problems and cover budget shortfalls.
Money lending companies are an easier option because unlike commercial banks their conditions are not very strict and they don’t demand huge collateral security.
Their interest rates are however quite punitive.
On Monday irate customers formed a long queue at the company’s offices at LNDC Centre but they were told by officials that they could not get loans.
“I have been coming here for three days now but they still won’t give me the money,” said Mokiti Ntsónyana who is a teacher.
Ntsónyana says he has been borrowing money from the company for the past 12 months.
“This is the first time that I have experienced such delays,” Ntsónyana said.
“I will not be surprised if the principal fires me because I have not been attending classes for the past three days because I am busy trying to get money to solve family problems. I am desperate to get the money.”
Mathibeli Ntlhabo, a police officer working at Mazenod Police Station, said he has been waiting for the money for weeks.
He said his loan application had been approved but the money had not been released.
“I have been here every day for the past week but still there is no money. I am disappointed because I have been a client for some time now,” Ntlhabo said.
A government worker who had come from Qacha’s Nek to get a loan said he has been stuck in Maseru for three days because the money had not been released despite the fact that his application had been approved.
“There is no way I can go back home without the money because I borrowed money from relatives and friends hoping that Blue Financial Services would release the money as they had promised,” he said. “I have to stay here until I get the money.”
Blue Financial Services country manager for Lesotho, Jaco Coetzee, confirmed that the company was having cash-flow problems.
“It is quite difficult to convince desperate people that some things are beyond our control. People are bound to make their own conclusions especially when you talk about money,” Coetzee said.
“There has been a delay in the release of the money because of the new financial system.”
Coetzee said the normal arrangement was that treasury releases the money on the last day of each month.
“This time this has not happened but we are confident that it will be sorted out soon,” he said.
He said the company had been assured by treasury officials that the money will be released soon.
“We had a meeting with them (treasury) and they have assured us that all will be well this week,” Coetzee said.
He said the officials in the treasury were now processing the transactions manually.
Coetzee said the company was strong and would open a new branch in Leribe soon.
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