Amid rising interest rates on the money
market, Chief Executive Officer of Letshego Ghana, Arnold Parker, has revealed
that interest rates on Qwikloans will increase in the coming weeks.
Qwikloan, an innovative financial solution by Letshego
Ghana and MTN Mobile Money (MoMo), provides short-term, unsecured, quick and
convenient loans to subscribers of MTN mobile money – which are currently at 42
million in total since inception.
Updating investors and other stakeholders during the
Fact Behind the Figures held at the Ghana Stock Exchange (GSE), Mr. Parker
said: “If not for some measures we have taken, what would have happened is that
not only would margins have shrunk but our interest expense would have been
more than interest income; because as we speak now, the Treasury bill rate is
higher than our interest rate”.
Currently, the interest rate on a 30-day Qwik loan stands
at 6.8 percent. However, borrowers who default on the loans are penalised with
a 12.5 percent charge. On the other hand, Treasury rates have increased from
12.52 percent in early January 2022 to 24.68 percent as of June 20, 2022.
“So unfortunately for our customers, we have had to revise
our rates as soon as possible,” the CEO said.
Mr. Parker further revealed that the loan count is about
42 million. “In terms of disbursements, we do an average of GH¢10million in
loans a day. So that’s roughly GH¢300million a month. That’s GH¢2.6billion a
year, technically.
“So, it’s been a big learning experience to get out with
our partners Jumo and MTN; it’s been a lot of learning, understanding customer
behaviour, understanding repayment behaviour, being able to schedule loans and
repayments in ways that ensure collections remain optimal.
“So, it’s a work in progress. There’s a lot more to be
done in that space. And, hopefully, in the coming years that’s what we’ll pay
more attention to,” the CEO highlighted.
He mentioned that the E-levy and Ghana Card have slightly
affected the loan intake.
Most users of mobile money services have reduced the
number of funds held on their mobile wallet in order to avoid the E-levy
charges. This has lowered the loan amounts customers qualify for.
However, he is certain that customers will come to realise
the exemptions – which should get them back onto the platform.
“I’m sure, eventually, when they realise that there are a
lot of exemptions they may come back. And so, what we’ve seen is that because
they don’t use their wallets often, they are now also qualifying for lower
amounts. And so those are the learnings, and we need to immediately reprogramme
our algorithms to take care of those,” he said.
Source: thebftonline.com