Many people use cash advances to cover unexpected expenses, such as an unexpected medical bill or the death of a loved one. But the expenses for back-to-school and spontaneous festival expenses continue to haunt their pockets in January.
Helena Timoteus, principal officer at KOBO Cash Loans Namibia, said the company is facing challenges from the effects of Covid-19 but has managed to get through.
“At the beginning of the year, the lending rate is high and fast because people spent too much over the Christmas period. Due to job losses and company closures, we were unable to help employees other than government employees. So it really went down because very few people were allowed to borrow, ”she explained.
Speaking to a regular cash advance customer who asked anonymity because of the stigma of cash advance customers, he said, “Getting a cash advance is not a bad thing, but obviously it depends on the reasons. A lot of people are into cash advances, but they are not known in the industry due to confidentiality. “
He added that he regularly takes cash advances and maintains good relationships with them in keeping his payment arrangements. According to the client, cash advance transactions provide better service to low income earners like him as they can borrow the small amount they need with no collateral expected.
“People with little or no savings represent a natural market for cash advances. I urge people not to malign what they don’t know. I can testify that my child has been to school with cash and is not sleeping hungry. For 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 Namibia Financial Institutions Supervisory Authority (Namfisa), the value of the micro-lender loan book increased on a quarterly basis but declined towards the end of the first quarter of 2021 on an annual basis.
“The increase was driven by transactions from both term and payday lenders, while the decline was only from term lenders. Similarly, lending by the banking sector to households rose 0.2% quarter-on-quarter and 3% year-on-year to reach 60.7 billion reported.
Namfisa added that the cumulative number of household borrowers increased over the same period on both a quarterly and yearly basis.
The number of borrowers rose compared to the previous quarter by 21.4% and on an annual basis by 2% to 229,999 beneficiaries. The quarterly and annual increases in the number of private borrowers came from the term borrower category.
The loan book value (outstanding) increased 12.9% on a quarterly basis but declined 8.1% on an annual basis to N $ 6.8 billion. As in previous quarters, the value of the loan book continued to be largely dominated by futures loan securities, which stood at N $ 6.6 billion, accounting for nearly 96% of the total.
“The number of new loans increased quarterly, but decreased annually to 134,391 loans at the end of the first quarter of 2021,” continued Namfisa.
When asked what the biggest challenge they face when customers fail to return their money, Timoteus said, “We tend to pause a little just to wait for those who pay so we can help new customers. If the payment takes longer than three or five months, we will hand it over to the responsible authorities. ”