Mad rush in banks for school fee loans

Many parents say that they are not finding it easy preparing their children for back to school. They say the offer of back to school loans by banks and finance houses is helping them out of a tight situation.

With the difficulties that parents face in their bid to prepare their children for the new school year, many say they have had to turn to banks and micro-finance institutions to obtain loans just to make ends meet.

Many parents who spoke to this newspaper said their difficulties are not helped by the catechist’s salaries that they earn at the end of the month. They said it is for this reason that they have no other option than to obtain school fee loans from banks and micro-finance houses.

“I am going in for the back to school loan as a last resort. I have no other way of raising money to prepare my children for back to school,” said Mbah Humphrey, a civil servant, who added “I don’t care about the interest rate offered by the bank; all I need now is money to prepare my kids for schools.”

Another parent, Tiku Thomas, a soldier, also expressed the same feelings like Mr Mbah. “I have always counted on the school fee loan to prepare my children for back to school. I have no choice; I am forced to take the loan.”

When we sought to know from micro-finance officials why they offer and widely advertise back to school loans, they said it is because they want to help their members and customers. But they also admitted that the loans afford much benefit to the institutions.

“Back to school loans help to increase the loan patronage ratio of our credit union. It also boosts the interest on loans and of course the net income of the credit union,” said Lum Delphine, loan officer of a popular micro-finance institution in Yaounde.

Though many commercial banks were also flooded with people seeking back to school loans, many parents said they prefer to deal with credit unions other than banks because the interest rates at the credit unions are low and their procedures are simple and easy to understand even to the man on the street.

“I don’t know how much they impose as interest rate. But I came here because a friend advised me that the interest rates at credit unions are much lower than in commercial banks,” Mbah Humphrey said, also noting that “what ever the interest rates at credit unions are they are far better than that offered in njangi houses and private money lenders.”

“The interest rate here is 1.5% and I have been accorded a loan of 500.000 frs. I have to pay back this money in 12 months. So the bank will be cutting about 49.000frs each month from my salary.” Mr. Mbah said smiling.