Coronavirus paralyses Instant loans vendors’ activities despite increase demand

On the back of rising cases of coronavirus, Nigeria’s households that have been enjoyed services of instant credits vendors are being disappointed.

In order to reduce exposures, numbers of peer to peer lenders have lowered their appetite for disbursing credits.

Despite significant increase in instant credit demands, these loan vendors have adjusted activities as lockdown paralysis economic activities.

More than 70% of people sampled by MarketForces indicate interest in short term loans to cushion the economic effect of lockdown on their finances.

Prices of goods have increased such that families’ disposable income has been pressured due to abnormal, unanticipated prices surge.

MarketForces research gathered that many customers that have used the services of credits vendors had hope to be supported during the lockdown.

Contrary to their expectations, many consumers’ credit vendors have started playing safe due to rising fear of high default rates.

App and Unstructured Supplementary Service Data based instant lenders are hedging their positions by pushing aggressively other services areas where risk is relatively low.

Reacting to the developments, some experts that spoke with MarketForces expressed that operators have to gauge their appetite for risk at this time.

Some of the operators however said their instant loans services are active, but that would depend largely on credit report and historical relationship with applicants.

Also, a top executive with one of the leading vendors who prefers not to be named stated that there is low appetite onboarding new customers now.

He said, existing customers are being served with adjusted credit appraisal and other consideration to reduce operators’ exposures.

In their reactions, Consultants at LSintelligence said instant loans operators’ position is understandable because productivity is low.

“People are not earning as much to cover their needs. The most pathetic part is that there is no end in view to the pandemic.

“What that means is that many beneficiaries of the short term credits may not be able to meet their obligations when due.

“At this moment, it is unlikely that debtors could be pressured to pay as there is a standing alibi.

“So, this exposes credit vendors to avoidable risk. However, it is suffice to say that it cost money to keep money”, LSintelligence said in an email.

Coronavirus pandemic continues to ravage the economy, and analysts have projected that household income may likely slip.

Early in the year, credit vendors had started aggressive campaign to increase market share as some deposits money banks started crawling into the space.

Having observed the pattern, some popular credits vendors like Carbon has slashed rating by half.

Their customers that have stronger credit rating and close to nil default rate are being giving priority for short term lending.

Consultants at LSintelligence tag it a right move to ensure cleaner risk assets portfolio as non-performing loan rate in the segment is already steep.

MarketForces had reported that government stimulus is too measly and lack direct impacts on people.

Meanwhile, analysts said the slowdown in activities is expected to negatively impact credit vendors’ performance in 2020.

Coronavirus paralyses Instant loans vendors’ activities despite increase demand by Julius Alagbe