By Helen Nyambura-Mwaura
UK-based online short-term loan provider Wonga has achieved growth “beyond expectations” in South Africa, the company said on Wednesday, even as concerns grow over levels of unsecured lending in the continent’s top economy. Only a year and a half since launching in South Africa, Wonga extends tens of thousands of loans a month and has so far escaped the criticism it has received in its domestic market.
The London-based lender, which has come under fire at home from the Anglican Church for charging annual interest rates of 5,853 percent, offers South Africans loans up to 8,000 rand ($800) at 0.17 percent per day for a maximum of 50 days. South African analysts, however, are concerned about the surge in unsecured lending in recent years, highlighting the risk of default on high-interest loans not backed by collateral in a country where household debt already accounts for three quarters of disposable income.
Wonga’s chief executive for South Africa, Kevin Hurwitz, is more upbeat on the market’s prospects. “It has been very encouraging, beyond expectations,” he told Reuters when asked about growth since the company’s South African launch. We want to be able to grow fairly aggressively, but in a responsible way,” he added.
Wonga, which also has operations in Spain, Canada and Poland, accepts 25 percent of first-time applications in South Africa and plans to increase that to 30 percent, Hurwitz said. Most of the loans have been to individuals to pay for education or health, and the lender plans to launch a product for small cash-strapped companies.