Africa-Press – Eswatini. As of December 2022, there were 77 000 accounts in the retail credit provider debtor’s book and at least one per cent of customers accounts with a value of E3.2 million were written off.
This essentially means there are slightly over a thousand consumers having credit in the retail sector encountering difficulties with servicing their accounts. According to the Financial Services Regulatory Authority (FSRA) Quarterly Bulletin, repercussions to this are the possible handover of delinquent consumers to the credit bureau for blacklisting. From the data presented, clothing retailers had a higher number of written-off accounts during the period compared to furniture and mixed retailers. Given the difference in value and cost of furniture compared to mixed retail and clothing, the monetary value of write-off was higher in furniture compared to clothing.
According to the report, retail outlets received a total number of 14 114 applications for credit facilities as of the end of December 2022. Based on the assessment of the retail credit outlets, over 6 800 of these applications were rejected for various reasons, which could include affordability among other factors. The highest number of applications were made to the clothing retailers, which also conspicuously made the highest number of rejections. This means, as a consumer, one was more likely to get approved for a retail credit advance in a furniture outlet than in a clothing outlet.
Latter
The opposite is expected to be true considering that the breakdown in value of credit agreement for clothing is expected to be lower overall to furniture as the latter is more expensive including mixed retail goods. Credit advances generated through the retail credit sector stood at 4.2 per cent compared to the overall credit sector, which was E7.9 billion (as at Q4 2022).
Compared to DFI credit advances, the difference was 24 per cent. Inverse to the increase in credit advances across all credit sectors as at excluding DFI’s as at Q4 2022, the savings and investment component of SACCO’s and Building Societies recorded a decline.
Environment
While this could point towards a decline in disposable income from consumers given the prevailing economic environment and continued hikes in interest rates, it would be thus expected that as part of cost containment/savings measures, consumers would equally avoid spending on credit. Based on the data presented, the opposite is true – consumers continue to access more retail credit while their savings and investment held through savings cooperatives and building societies declined. It could thus be subjectively concluded that amidst financial challenges, consumers tend to not adjust lifestyles but rather resort to credit to maintain the former.
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