Many people use cash advances to cover unexpected expenses, such as B. an unexpected medical bill or the death of a loved one. But back-to-school and impromptu holiday expenses continue to haunt pockets in January.
KOBO Cash Loans Namibia Chief Executive Helena Timoteus said the company has faced challenges from the impact of Covid-19 but has managed to pull through.
“At the beginning of the year, lending rates are high and fast because people overspent during the Christmas season. Due to job losses and closed businesses, we could not help the employees, apart from the government employees. 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 asked not to be identified because of the stigma attached to cash loan customers, he said: “Getting a cash loan is not a bad thing, but of course it depends on the reasons. Many people are into cash advances but are not well known due to the confidentiality in the industry.”
He added that he regularly visits cash loans and maintains good relationships with them to meet his payment agreements. According to the customer, cash advance companies offer a better service to low-income earners like him because he can borrow the small amount he needs and is not expected to post collateral.
“People with little or no savings represent a natural market for cash advances. I urge people not to badmouth what they don’t know. I can testify that my child is in school on cash loans and doesn’t sleep hungry. To me it’s just money like any other. Instead, the government can collectively provide financial education to the nation,” he argued.
According to statistics from the Namibian Financial Services Regulatory Authority (Namfisa), the value of microlenders’ loan book increased on a quarterly basis, but recorded a decline on an annual basis as of the end of the first quarter of 2021.
“The increase was driven by transactions from both term and payday lenders, while the decline was driven only by term lenders. Similarly, loans provided by the banking industry to the household sector increased slightly by 0.2% q/q and 3% y/y to N$60.7 billion at the end of the first quarter of 2021,” they stated.
Namfisa added that the cumulative number of household borrowers increased on both a quarterly and annual basis over the same period.
The number of borrowers increased by 21.4% quarter-on-quarter and 2% year-on-year to 229,999 beneficiaries. The quarterly and annual increase in the number of household borrowers stems from the category of term borrowers.
The value of the loan book (value outstanding) increased quarterly by 12.9% but decreased annually by 8.1% to N$6.8 billion. As in previous quarters, the value of the loan book continued to be dominated primarily by Term Lender shares, which amounted to N$6.6 billion and accounted for almost 96% of the total.
“New loan originations increased on a quarterly basis but declined on an annual basis to 134,391 loans at the end of Q1 2021,” continued Namfisa.
When asked about the biggest challenge they face in relation to customers who don’t pay back the money, Timoteus said: “We tend to pause a bit just to wait for those who pay so that we can help new customers be able. If the payment takes longer than three or five months, we hand it over to the relevant authorities.”