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JANUARY SEES SURGE IN LOAN APPLICATIONS

By NOKUNCEDA MAGAGULA | 2025-02-02

January has witnessed a significant rise in loan applications aimed at covering educational expenses.

This is according to licensed credit providers, which include Amandla Financial Services, First Finance Company, Letshego Financial Services, and Select Limited. They are jointly represented by the Eswatini Credit Providers Association (ECPA).

ECPA Chairperson Thulani Dlamini said the beginning of the year saw an increase in loan applications.

Dlamini said this was an indication of the sector’s commitment to financial empowerment.
“There has been an increase in loan applications this January, though the rate of increase varies across different credit providers. On average, we have observed an upswing compared to the same period last year,” Dlamini said.

He explained that many clients were seeking loans to cover school fees, tuition and other associated costs to ensure uninterrupted education for their children or themselves.

He noted that January was traditionally a high-demand period for financial assistance due to school fees, household expenses, and other start-of-year commitments.

“Beyond education, other top loan purposes include land acquisition, home improvements, and renovations, as clients use personal loans to buy land, renovate homes, or make necessary upgrades,” he added. He also highlighted other common reasons for taking loans, such as loan consolidation, where borrowers restructure debts to better manage repayments.

“We have also seen a lot of applications for vehicle acquisition and repairs. The creditors also noticed a rising demand for small, short-term loans (such as payday loans) to cover everyday expenses, which aligns with the current economic realities many households are facing,” he said.
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Dlamini acknowledged that while demand for credit remained strong, the industry’s performance could improve with better economic conditions. He cited stagnant salaries for civil servants and parastatal employees, which he said was a key segments of clients and a limiting factor on borrowing capacity and repayment trends.

“To mitigate risks, we assess each borrower’s ability to repay before approving a loan to ensure affordability and prevent over-indebtedness,” he explained.

Additionally, he said some credit providers offered flexible repayment options to help customers manage their obligations effectively.

He stated that loan default trends varied across providers, but stressed the importance of affordability assessments and financial literacy to help borrowers make informed decisions.
“In cases where customers struggle with repayments, many of our members offer debt restructuring options to provide relief while maintaining financial stability,” Dlamini said.

With unlicensed lenders resurfacing during times of financial need, the chairman strongly advised the public to avoid taking loans from such entities. Dlamini said the issue was a major concern, stating that this was however, the primary responsibility for the regulator.

“As ECPA, we strongly advise members of the public to borrow only from licensed and regulated credit providers. It is also important to verify the legitimacy of lenders before taking out a loan.
“If in doubt, contact the Financial Services Regulatory Authority (FSRA) for guidance,” he added.

Dlamini expressed optimism about the growth of the credit industry, emphasising the role of digital lending, financial inclusion and regulatory improvements.

“The credit industry is evolving, and we are seeing more financial services moving online, making access to credit faster and more convenient,” he stated.

He reiterated ECPA’s dedication to promoting ethical lending practices and ensuring a stable, transparent credit industry, saying they were committed to promoting responsible lending, financial education, and collaboration with regulators to ensure a healthy credit environment in Eswatini.

Dlamini further encouraged licensed credit providers to join the ECPA in shaping the future of Eswatini’s microfinance sector.

“By working together, we can strengthen financial inclusion and create a more resilient credit market,” he said.

As economic conditions continue to influence loan demand, Dlamini stressed the importance of borrowing responsibly.

While credit can be a valuable financial tool, he urged individuals to only borrow for necessary expenses. “As ECPA, we advocate for responsible borrowing and lending to ensure that people do not become financially overburdened. Financial education is, therefore, key in helping consumers make informed decisions about credit use.

“The ECPA remains committed to supporting individuals and businesses through responsible lending practices while ensuring the credit industry remains inclusive and adaptable to the needs of the people,” he said.

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