Usury or the practice of lending money and charging the borrower interest, especially at an exorbitant or higher than normal rate, is an old business whose dealers are increasingly making fast returns in Cameroon. Non-financial institutions and individuals sometimes lend money at up to 30 per cent - far above the 15 per cent ceiling fixed by the Central African Banking Commission (COBAC). Article 325 of Cameroon’s Penal Code prohibits usury and sanctions defaulters, but the phenomenon keeps growing with each passing day, making victims of many who patronise the service.
Mode of Operation
Given that the business is illegal, dealers do not make any noise. It suffices for somebody to gather a chunk of money, fix his/her interest rates and loans out to whoever comes begging. Examples of people paying FCFA 20,000 or FCFA 30,000 per month for borrowing FCFA 100,000 or FCFA 200,000 or FCFA 300,000 a month for borrowing FCFA one million abound. The ease with which the lenders give out the loans and the conditions, under which borrowers go for the money, make the business an easy one to make quick money.
Most often, very little paper work is needed from the borrower, talkless of collateral security. Money, they say, doesn’t make noise. In most companies, there are people who make huge benefits from the ‘sale’ of money. Non-customers may not know about the business, but their “Cus,” as the regular borrowers are fondly known, know where to meet their ‘bankers’ and how to pay back at least the interest, when due.
Impact on Individuals, Economy
The fact that the business thrives is indicative of how “useful” it is to some borrowers. People have used the loans to solve emergency problems instead of waiting to obtain loans from the banks with their sometimes long and complicated procedures. But its victims are both individuals and the entire economy, given that the business is not only illegal, but informal. Thus, the public treasury does not benefit from its returns. However, those who practise it have reason to smile at the end of each month as they receive the huge compound interest.
A female teacher in one of the schools in Yaounde (whose names were are withholding) ignored a loans and thrift group where she is member and where she was asked to produce collateral security for a loan at five per cent interest and got money from a usurer at 20 per cent. She has spent years only paying the interest which is more than her monthly salary.
Others have found themselves in situations much more deplorable than that of our teacher. Cases of public embarrassment such as the outright confiscation of one or more household items from the insolvent borrower are rife in the country. That the business functions informally, paying no taxes to the State and threatening the optimal functioning of legal money lending institutions, makes it a veritable drawback to the economy. Worse still, all this is happening at a time when government efforts are focused on riding the economy of fraud and attaining emergence.
