Nearly 229 000 Namibian household borrowers owed micro-lenders – also known as lcash loans – a staggering N$7.1 billion with new borrowers increasing on an annual basis by 5.5% to at least 156 000 borrowers at the end of the third quarter of 2022, a report released by the Namibia Financial Institutions Supervisory Authority (Namfisa) last week reveals.
In the third quarter of 2022 alone, loan sharks dished out N$763 million despite this being a decline both on a quarterly and annual basis, which the Authority notes that it emanated primarily from the transactions of term lenders.
Approximately 163 000 clients of term lenders accounted for about N$6,9 billion of the loan book while approximately 66 000 clients of pay day lenders accounted for about N$258 million.
“During the second quarter of 2022, the average value of disbursements decreased both quarter-on-quarter and year-on-year. For term lenders, the value of disbursements averaged at N$30,369, while the same for the payday lenders stood at N$2,273,” Namfisa says.
Despite the decrease in the value disbursed, the number of new loans issued rose by 1.3 percent on a quarterly basis and by 5.5 percent on a yearly basis to 156 054 at the end of the third quarter of 2022 The quarterly increase in the number of new loans is reflective of the increase observed in the number of new loans issued by payday lenders. In terms of the contribution share of the total number of new loans issued, the payday lenders accounted for 89.0 percent, while term lenders accounted for 11.0 percent
“With respect to total arrears, a downward trend was observed and as a result, arrears decreased by 2.1 percent quarter-on-quarter and by 1.7 percent yearon- year to N$ 1.5 billion at the end of the third quarter of 2022. Relative to the value of the loan book, the total value of arrears as a percentage of the total loan book stood at 21.0 percent at the end of the review period, while the payment in the current period stood at 79.0 percent. When compared to the previous and corresponding quarters at 21.0 percent, the percentage share of arrears remained constant. Similarly, that of the payments in the current period remained constant at 79.0 percent,” the Authority further explained in the report.
Total arrears for term borrowers stood at N$1.5 billion at the end of the third quarter of 2022, accounting for 21.0 percent of the value of the loan book for term lenders (Figure 52(a-b)). In addition, arrears for term lenders decreased by 2.2 percent on a quarterly basis but, rose by 1.3 percent on a yearly basis. The age category of 120 days+ accounted for the largest amount of the total arrears at 11.0 percent. The second largest age category, is the age category of 30 to 60 days which accounted for 9.0 pecent.
Total arrears for payday borrowers stood at N$ 61.6 million accounting for 24.0 percent of the loan book value, of which 76.0 percent accounted for payments due in the third quarter of 2022 (Figure 53(a)). Furthermore, arrears for payday lenders increased both quarter-on-quarter and year-on-year by 0.8 percent and 4.1 percent respectively, over the same period. The age category of 120 days+ accounted for the largest amount of total arears, accounting for 16.0 percent at the end of the third quarter of 2022.
Overall, the microlending sector’s performance in the third quarter of 2022 was mainly driven by the number of household borrowers and the value of disbursements, which declined on a quarterly basis and increased marginally on an annual basis. In contrast, credit extended to households by the banking sector increased on both a quarterly and yearly basis during the review period.
In this regard, the stock rose by 1.1 percent quarteron- quarter and by 2.8 percent on a yearly basis standing at N$63.2 billion over the same period. This upward trending trajectory was mainly driven by two categories of loans, namely: other loans and advances, and mortgage loans.