Janu-worry hits cash loans hard

It appears to be 'Janu-worry' too for cash-loan businesses, as they have to contend with a high rate of arrears in loan repayments since December, according to several operators who shared their experience with Namibian Sun.

Consumers do not repay their loans in time and the cash-loans companies have to contend with an alarmingly high rate of defaulters who return in January to borrow more money.

BW Finance cash loan operator Winnie Engelbrecht says January is a tough month, not only for consumers but for the businesses that lend money to them.

According to her, arrears are notoriously high in December and January as consumers look for new loans at the beginning of the year.

She also observed that while many people are paid earlier in December, that does little to lower arrears as consumers usually empty their accounts before debit orders for loan repayments can go through.





“People run away in January. Our bad debt is in the red during this time of the month usually. People lose their heads in December. If they get their money, they run away,” said Engelbrecht.

Because loans are not repaid, cash-loan businesses suffer losses during this time of the year.



“We made a loss in December. Most people did not repay their loans taken in November for December. The arrears are very high,” she said.

Despite the high demand for loans in January, Engelbrecht said many borrowers are turned down because they have too much existing debt. That leads to a situation where consumers start to shop around for new cash-loan businesses to borrow from.

“Although we have new clients in January usually, we still have to deal with the arrears. The arrears are very high, such that we did not meet our targets. It's the same thing every year,” she said.

Cash loans, she pointed out, have to comply with strict regulations and there is a cap on how much can be lent to a single consumer.

“They come in here in tears and even though we would like to help, there is really not much more that we can loan,” she said.

Hakahana Cash Loan operator Albertus Tsamaseb echoed Engelbrecht's sentiments and said January was not as good a month for doing business as one would expect.

“We have the problem of arrears in December. People don't come in and pay their loans. The issue of arrears really affects us a lot but we will see how we can go ahead,” said Tsamaseb.

Despite the high arrears, he says business must still go on.

“It's the beginning of the year and everyone is looking for cash. We just see how we can go ahead with business,” he said.

FINAID representative Helvi Thomas said because of the arrears, the branch where she works performed worse when compared to other FINAID branches in the capital.

According to Thomas, there is a trend that people often do not repay their loans with the bonuses received in December.

“We made a loss here at this branch because people did not repay their loans. Although we have new clients, we still have to deal with the arrears. The arrears are very high and we did not even reach our revenue target,” Thomas said.

FNB Namibia spokesperson Elzita Beukes encouraged consumers to develop a savings culture.

“Start your savings journey by looking at innovative solutions that will help you kick-start your savings plan. Not only will you earn interest over time, you will also earn compound interest, which is basically interest on the interest earned in the past, as well as on the original capital,” said Beukes.

“It is never too early or too late to start saving. Curbing the way we spend money on non-essential things versus intentional and disciplined savings should be an important driver for us and future generations,” said Beukes.



OGONE TLHAGE