TransUnion warns against COVID-19 induced blacklisting
Pauline Dikuelo | Friday May 22, 2020 12:45
TransUnion collects information from various sources and provides consumer credit information.
Bank of Botswana data shows that households’ indebtedness levels rose from P35.2 billion in January 2019 to P40.3 billion in January 2020, a nine percent year-on-year growth.
Arrears over that period rose from P2.5 billion to P2.8 billion, with more than a third classified as ‘specific provisions’ the most serious category of non-performing loans.
In a statement this week, TransUnion CEO, Kabelo Ramaselwana said consumer debt balances have increased sharply in the past 12 months, as growing numbers of consumers have turned to unsecured credit, including credit cards, personal loans and overdraft, to cover everyday expenses.
“With the rising delinquencies, many people are struggling to make repayments on their debts,' he said.
“If you’re going to struggle to pay your bills in the coming months, it’s critical to talk to your lenders upfront.”
He advised consumers to protect their credit, talk to lenders and stay in control of their credit health in order to manage their credit through the COVID-19 pandemic and beyond. Institutions, on the other hand, need to soften their approach to debt recovery.
“The lockdown has landed most lenders in situations where they need to balance between empathy with troubled consumers and company needs and responsibilities,” the CEO said.
“For most financial institutions to survive, they will need to shift from being authoritative and functional to being more supportive and emotional.
“They need to transition from simply collecting debts to enabling financial betterment.”
Ramaselwana said the most important factor to avoid problems with lending institutions is to pay bills on time if possible. He said this was one of the single biggest factors affecting consumers’ credit profiles.
“It’s even more vital than usual to protect your credit profile during tough times, because access to credit can often help you get through the rough patches.
“If money is tight and you’re worried you’re going to miss a payment or two, it’s best to contact your lender before the payment is due. You can explain your situation and ask whether they can offer any assistance.
“Consider contacting your bank or credit issuer if you’re affected by the COVID-19 pandemic. You may qualify for some leeway.
“Several Botswana banks have already announced payment holidays to help consumers and small businesses get through this time,” the CEO said.
Household arrears accounted for 48% of total arrears due to commercial banks in January 2020.