UAE banks hunting for Tanzanian loan defaulters who borrowed 30 billion/-

Story by IPP's The GUARDIAN — Three United Arab Emirates (UAE) based commercial banks have launched a crackdown to recover about USD20m (30bn/-) in loans from Tanzanians who borrowed the money for their personal use but failed to repay three years ago.

The loan recovery assignment is being conducted by a local debt collection firm, Harvest Tanzania Limited in partnership with Dubai First Security Group LLC. The banks the money was borrowed are RAK, Emirate National Bank of Dubai and the Commercial Bank of Qatar.

Speaking to The Guardian in an exclusive interview on Tuesday, Harvest Tanzania Limited’s Managing
Director, Joseph Mambia (pictured), his firm hold 700 files of the defaulters up to the moment.

He said most of the people who borrowed the money in Dubai were Tanzanians working there who spent it for personal uses and have not paid back while the repayment period has elapsed.

The borrowers took loans from the said banks ranging between USD5, 000 and USD50, 000 each, with a total amount estimated to be over 30bn/-, he said.

“The defaulters have contacted us and we have started to track them in their respective homes countrywide. Some have agreed to repay, others claim they are not able to pay, while some have ran away,” he said.

He said that they have reached only 45 percent of the borrowers since the start of the exercise here in Tanzania, adding that it has become difficult to carry out the work as fast as possible because they do not have reliable information on the rest of the defaulters.

Mambia said they would continue hunting for the remaining and make sure that they repay the outstanding loans.

He also said that a similar exercise has been carried out in some countries namely the UK, US, Uganda and South Africa where the defaulters have been nabbed and made to repay their defaulted loans.

"Through our partners, international debt collection firms, we have managed to recover some loans from Tanzanians living in those countries," he said.

Harvest Tanzania Limited has also been working with the US based Cedar Financial in collecting debts from Tanzanians who studied in some universities in the UK and in America.

The varsities include Walden University, International University of Liverpool and Harvard University.

"We have a portfolio of 100 Tanzanian student borrowers and have reached 75 percent of them since October last year," he added.

Experts say in order to reduce the rate of loan defaulting, financial institutions are, as a matter of principle, obliged to cross-check with credit reference bureaus to ascertain the credit-worthiness of their potential borrowers.

"We have to emulate what our friends in developing countries are doing to minimise the rate of defaulting on loans since they have cultivated a culture of investigating the history of borrowers," they say.

Credit reference bureaus, helped to avail information on potential borrowers, hence are beneficial to both creditors and debtors, they say, adding that loan defaulting will be greatly reduced and financial institutions will be healthy enough to offer more loans to more customers if the system is adopted and functions well.