Government Urges Citizens to Avoid Borrowing from Unregistered Financial Groups

The government has issued a strong advisory to citizens to avoid borrowing money from informal financial service groups that are not officially registered, to prevent the negative impacts of predatory loans. This call was made by Mr. Jackson Mshumba, a Financial Officer from the Ministry of Finance, during a financial seminar held in Sumbawanga Municipality, Rukwa region.

Mr. Mshumba emphasized the importance of engaging with legally recognized financial institutions to safeguard against exploitation. "We have discovered that many citizens are involved with groups that are not officially registered under the Microfinance Services Act of 2018. Therefore, I urge citizens to be proactive in joining groups that are officially registered according to this law," he stated.

The seminar, part of a broader government initiative to enhance financial literacy in rural areas, highlighted the critical need for awareness about safe borrowing practices. Mr. Mshumba noted that many citizens lack understanding of loan procedures and terms, leading to detrimental financial decisions. He stressed that before taking loans, individuals should verify the interest rates, ensure the service provider is legally registered, and fully comprehend the contract terms.

In his address, Mr. Mshumba urged the public to report any unregistered small financial service groups to relevant authorities, including Community Development Officers in district and regional offices. This measure is expected to curb the prevalence of unregulated lending practices.

Local residents responded positively to the seminar. Ms. Rehema Lukali of Kaengesa Village acknowledged that the session had provided valuable insights into the importance of saving and the necessity of being part of legally registered financial groups. "The arrival of experts from the Ministry of Finance has opened our eyes. To be trusted by financial institutions, one must be a member of a legally registered group," she said.

Mr. Mishek Kassian, a member of the Kambarage group in Lyapona Village, expressed his commitment to sharing the knowledge he gained. "Through the education I received, I have learned a lot and will educate others, as many people borrow from individuals and various institutions without having any clear goals," he commented.

This government initiative marks a significant step towards fostering a more informed and financially secure citizenry, aiming to mitigate the risks associated with unregistered financial services and predatory lending practices.