Usury business is killing fragile economy in South Sudan – business body warns
By Deng Machol
Juba – South Sudan Chamber of Commerce has warned some companies over ‘illegal’ loans to business people, amounting to extortion, fraud and money laundering in the war-torn country.
The Chamber is asking the Bank of South Sudan and commercial banks to control businesspeople and corporations that charge unlawfully high interest rates to the general public.
The chamber say the money-lenders borrow money from the banks and take advantage of desperate borrowers. The South Sudan Chamber of Commerce, says the Central and Commercial banks should identify the unscrupulous businesspeople.
An independent research conducted by the Chamber of Commerce last year found that more than 30 people are remanded in Juba prison for defaulting on loan payments. The majority of the accused were granted loans at an interest rate of 100% payable in one month.
South Sudan gained her independence in 2011 from Sudan after the decades of scorched-earth civil war, but the country descended into another civil war in late December 2013, the five-year conflict has devastated the country’s economic and businesses.
The conflict has also chased away the international investors and businesspersons, placed the country in the dire of business collapsing.
Speaking to the press this month, Lado Lukak Legge, Deputy Chairperson of South Sudan Chamber of Commerce, said the practice has become too exorbitant to the citizens, describing it as “cancer that is eating up the country’s economy.”
“The illegal business we are talking about is usury and it is only practiced by a few number of individuals in the country. And we are calling upon those who are involved to stop it immediately,” said Lukak.
Lukak said the Chamber of Commerce is/was working hard towards instituting legal procedures with other relevant authorities to ensure that the business companies who are practicing usury are held accountable.
“We are now planning to have a joint effort with six institutions such that we can address this issue as soon as possible and we are warning such people who are practicing usury to stop [it] now,” said Lukak.
However, the lenders are keeping a money at the homes due to this usury business, in which resulted to lack of cash at the central and commercial banks price of commodities across the country. In return, the businesspersons are not able to brings goods to the country.
Meanwhile, Secretary General for the Chamber, Simon Akuei Deng, said the Chamber of Commerce has just realized that some unscrupulous business persons and corporations have been engaging in usury over the recent months.
Akuei said usury is an unethical practice of which the business persons charge unreasonable high rates of interest loans on person who do not know the deal.
Usury, practice of lending money at very high interest rates, is on a high in the oil-rich country and killing the already fragile economic situation, Akuei said.
Without a credit and usury law, rogue individual and businessmen are taking advantage of people to extort money from them, he added.
“A few people that have cash in their hands are exploiting the whole country and creating more misery to the economy,” Akuei told a press on Thursday in Juba.
Akuei said small and medium size businesses are failing because they can’t repay loans and defaulters are thrown behind bars as their loans pile up. “These high-rate interests accumulate on loans on monthly basis as the borrowers continue to default, reaching tens and hundreds of millions of South Sudanese Pounds and United States dollars,” said Akuei.
Akuei lamented that ‘the interests are levied on the loans at as high as 100 percent or 150 percent for a lending period as short as one month.
“The loans involve huge amounts of money, sometimes millions of South Sudanese pounds and United States dollars,” he said, noting that the official lending policy in the country puts loan interest rates between 15 and 18 percent respectively.
Akuei said at least 33 businessmen who could not repay their loans are now rotting in jail by the lenders. The majority of the accused were granted loans at the interest rate of 100 percent payable in one month, Akuei said.
“To guarantee their money, the lenders sometimes force the borrowers to issue checks which are subsequently renewed monthly and the amounts due in respect of them consequently increase with the passage time, usury is unethical business practice in light of legal and moral norms and the high rates does not affect the individual businesspersons but also the entire society,” Akuei said.
Akuei call upon the relevant public authorities to take appropriate and immediate steps to end usury in South Sudan.
“The Chamber would like to inform the entire public that such practice is unacceptable and we would like those who are involved in usury to desist from it. We call upon the relevant public authorities to take appropriate and immediate steps to end usury in South Sudan,” Akuei stressed.
The country is now implementing a new peace deal which aim to end a long conflict and in position to restore economics and businesses stability. A new unity government is expected to be formed in November 12.