Batswana swamped in debt � Microlender
Pauline Dikuelo | Wednesday June 24, 2015 14:29
According to Executive Chairman at Bayport Financial Services, Father Maphongo the figures on the level of household provided by the monetary authorities are supported by anecdotal evidence they get from their customers during which they observe certain pointers indicating a degree of indebtedness.
“On average we do come across at least five customers daily having multiple loans that run concurrently and are unable to qualify for our facilities. When you aggregate the repayments of these loans you begin to realise that the customer is definitely unable to afford an aggregated repayment given their net take home pay,” he said.
The International Monetary Fund (IMF) has also confirmed the uncomfortable level of indebtedness in the country, which trended at about P15 billion for unsecured household debt as of April 2015.
This figure also represented about 70 percent of the entire P21 billion debt that included ring-fenced loan products such as mortgages and vehicle financing. Upon discovering such abnormalities, Maphongo says they have often engaged various unions with a whole purpose to rehabilitate their members by consolidating their loans.
“We have also brought this to the attention of other stakeholders, the regulator and other players in the industry so they can inform and feed into the regulatory framework,” said Maphongo.
Apart from advertising on the cautions of borrowing more than one could afford, Maphongo said they are currently embarking on their ‘borrow for the right reasons’ campaign, which has been their brand mantra for years now.
He said in all their marketing communications, they ensure they instil within their psyche that the money they give them should be spent on aspects of lives that make positive impact.
“We have been running financial literacy workshops to sensitise our customers on the right licensed partners from whom to take their loans and also make them efficient with their finances when they become more financially literate,” he said. According to Maphongo, they have also been working on strengthening regulations that protect consumers against unscrupulous microlenders suggesting the enactment of the National Credit Act and other approaches to eliminate the ‘zero take-home’ pay.
The Non-Bank Financial Services Regulatory Authority (NBIFIRA) has previously warned consumers against giving the unscrupulous microlenders bankcards and national identity cards.
As of March 31 last year, NBIFIRA registered about 228 microlenders from which 155 applications were citizen-owned companies whilst 73 were from non-citizen-owned entities.
Gaborone had the highest number of microlenders registering about 87 applications, followed by Francistown with 37, Selebi-Phikwe with 14 then Jwaneng and Maun with 12 each.
Currently, the lending term ranges from one month to 12 months. About 154 lenders have applied for one to three months lending term while 30 have registered for four to 12 months lending term, about 25 are operating under the over 12 months lending term.