Many people use cash loans to cover an unexpected expense, such as an unexpected medical bill or the death of a loved one. But back-to-school spending and spontaneous holiday spending continue to haunt January pockets.
Helena Timoteus, senior manager of KOBO Cash Loans Namibia, said the business faced challenges related to the effects of Covid-19, but managed to pull through.
“At the beginning of the year, the borrowing rate is high and fast because people have spent too much during the holidays. Due to job losses and business closures, we were unable to help employees except civil servants. So it really went down because only a few could be allowed to borrow money,” she explained.
Speaking to a regular cash loan customer, who requested anonymity due to the stigma of cash loan customers, he said: “Getting a cash loan is not a bad thing, but it obviously depends on the reasons. A lot of people are into cash loans, but they are not known because of confidentiality in the industry”.
He added that he regularly visits cash loans and remains on good terms with them to comply with his payment agreements. According to the customer, cash lending companies provide a better service for low-income people like him because he can borrow the small amount he needs and does not have to provide collateral.
“People with little or no savings represent a natural market for cash loans. I urge people not to denigrate what they don’t know. I can testify that with the cash loan money, my child is in school and does not sleep hungry. For me, it’s just money like any other. Instead, what the government can do is provide collective financial education to the nation,” he explained.
According to statistics from the Financial Institutions Supervisory Authority of Namibia (Namfisa), the value of the loan portfolio of microlenders increased on a quarterly basis, but registered a decline on an annual basis at the end of the first quarter of 2021.
“The increase was driven by transactions from term lenders and payday lenders, while the decline was only from term lenders. Similarly, credit extended to the household sector by the banking sector increased slightly by 0.2% quarter-on-quarter and 3% year-on-year to reach N$60.7 billion at the end of the first quarter. 2021,” they said. declared.
Namfisa added that the cumulative number of borrowing households increased both quarterly and annually over the same period.
The number of borrowers increased by 21.4% quarter on quarter and 2% year on year to reach 229,999 beneficiaries. The quarterly and annual increase in the number of borrowing households comes from the category of term borrowers.
The value of the loan portfolio (outstanding) increased by 12.9% on a quarterly basis, but decreased by 8.1% on an annual basis to reach N$6.8 billion. As in previous quarters, the value of the loan portfolio continued to be dominated primarily by term lenders’ stock which amounted to N$6.6 billion, accounting for almost 96% of the total share.
“The number of new loans issued increased on a quarterly basis, but decreased on an annual basis to 134,391 loans at the end of the first quarter of 2021,” Namfisa continued.
Asked about the main challenge they face regarding non-reimbursing clients, Timoteus said, “We tend to pause a bit, just to wait for those who are paying to allow us to help new clients. If they take more than three or five months to pay, we hand them over to the competent authorities”.