In 2008, Erastus Ojaamong, a teacher at a primary school, was 54
years and a member of the Mwalimu Savings and Credit Cooperative
Society.
He had just three years to retirement but was
affected by the 2009 directive that the retirement age be extended from
55 to 60 years.
This gave Mr Ojaamong a renewed sense of urgency. He had contributed Sh280,000 in shares at his savings and credit society.
He applied for a Sh400,000 development loan (long term) against his shares.
Mr Ojaamong would have applied for over Sh700,000, but he had another loan that he was servicing.
“With my shares, I would have qualified for
Sh750,000 but I had a refinancing loan which barred me from taking more
than Sh400,000, according to the sacco regulations,” he says.
The loan marked the beginning of his woes. He
became a shylock, lending small amounts of money to friends on
gentleman’s terms at 10 per cent interest rate a month.
“I made my own rubberstamp and told people that I was an agent of the Uwezo Lending Group — a phantom company,” he recalls.
“My fellow teachers thought that I was an agent of
the money lending firm but it was just a special purpose vehicle I
formed to help me advance my plans.”
Mr Ojaamong says he lent up to Sh50,000 at Sh5,000 fixed monthly interest until the principal sum was repaid.
He did not see the need for security because he was well acquainted with his colleagues and even knew their homes and families.
“I had only a receipt book where I would
acknowledge that you had paid interest on your loan. Otherwise, the loan
itself would be signed on a foolscap that was rubberstamped.
“Whenever somebody defaulted on a loan, I would
gather a few women and men from my rural home and present them as
shareholders who wanted to reclaim their money.
“The flipside was that it always took time for the
money to be paid back, yet each time I hired the ‘shareholders,’ they
had to be rewarded financially.
“For instance, for a default of Sh50,000, I would
end up getting 0nly Sh35,000 after paying the temporary
shareholders-cum-foot soldiers,” he says.
Then came the last nail in the coffin. Mr Ojaamong loaned a school owner Sh130,000, all the money he had.
The man promised to pay Sh13,000 in interest every month until the principal sum was cleared.
Mr Ojaamong was also assured that there would be
no question of default because the school was a going concern — a
The other loans were not doing well as almost all his clients kept postponing their repayments.
Cat and mouse games with the clients became the order of the day.
The matter worsened when the school owner went
bankrupt and it emerged that his creditors, who included banks, were
threatening to sell the school to reclaim their money.
“I am now embroiled in a legal tussles to reclaim my money, which I don’t see coming back” says Mr Ojaamong.
His Sh400,000 loan was not invested well and he was servicing loans amounting to more than Sh600,000.
Out of a gross salary of around Sh27,000, his loan
deductions were Sh14,000 and none of the loans was yielding returns.
“It is as though I took the money and threw it away,” he laments.
The teacher says that the extra years of service
were a waste because the salary he earned during that time only went to
repay the loan he got from the sacco.
“The only thing I am looking forward to now are my
retirement benefits to help me finish educating my children and build a
small structure. Now I can’t take any more loans. I barely have two
years to go in salaried employment,” he says.
According to Mr Davies Kairu, the founder of the
Mbao Pension Plan, employees should plan carefully as they approach
retirement age and avoid undertaking projects that they have no
experience in because it is risky.
