The laxity in applying standard loan rules appears to have been deliberate to favor the borrower at the expense of the corporation, and by extension its clients i.e. Gambian pensioners and contributors to its allied Funds.
For the schemes to be viable and sustainable, they must be restructured, including the liquidation, in one form or another, the non-performing loans contracted by former staff who have retired or are no longer in the service of the corporation for whatever reason.
During a recent interview, the Managing Director revealed that the total amount of staff loans outstanding stands at D130 million or approx. $2.6 million. This amount, according to the MD, is probably more that the combined total of the outstanding staff loans of all the commercial banks. There are about a dozen commercial banks i n The Gambia.
There are three loan categories at SSHFC, Building loan which carries an interest of 3%, Car and Personal both carry a 5% interest.
The car loan scheme for senior staff is subsidized with the cost shared at 50/50 with the corporation after every 5 years, but according to sources, this facility is generally abused. Senior level staff were accessing the scheme every 3 years instead of 5 years and buying significantly less than the value they claim.
For example, one will take a D400,000 car for which the corporation adds D400,000 for an D800,000 but the staff will instead buy a D300,000 and pocket the half a million dalasi difference knowing that in about 3 years another loan request will be made.
A condition of the housing loan is insurance - fire, allied perils and life - but staff was not taking our cover for any of these. These were issues that the Managing Director and the Board of Directors were starting to correct which resulted in staff resistance from a handful of them.
There is also what is known as "free deduction months". These are months when no loan deduction is made such as "Tabaski", "Koriteh", Christmas and other religious or traditional occasions which amounts to 5 to 6 months of the year, the impact of which is the automatic extension of the repayment period.
As consequence of these free deduction months, loan repayment periods are automatically extended by up to 10 years instead of the 5 years the laos was originally contracted. Effectively, the extension means 10 extra years of low interest benefiting the staff and 10 years of lost interest to the corporation. Whenever interest is waived, interest is also deliberately or inadvertently waived, in either way, it is the corporation that must absorb a tremendous loss.
There is no commercial bank that will loan amounts of the magnitude and at such liberal terms and condition and still expect to remain in business. The outstanding loan amounts and the laxity of the rules governing these loans are unsustainable and must be addressed urgently.
The abuse will have to stop if SSHFC is to be saved. And the micromanagement of the corporation from State House and/or the Ministry of Finance must cease. The current financial trajectory of the corporation is unsustainable. A few of the staff, especially those who have been benefited the most in the past would want to maintain the status quo despite the threat posed by the current state of the corporation's financial profile. We say, the party, using pensioners' money, is over.