Mmegi

NBFIRA probes Orange’s N’stakolle loan

- MBONGENI MGUNI & PAULINE DIKUELO

The Non-Bank Financial Institutio­ns Regulatory Authority (NBFIRA) is investigat­ing Orange Botswana’s expansion into short-term consumer lending, with a view to ensuring that the mobile giant is following the regulation­s provided.

For weeks, Orange Botswana has been teasing a product known as “N’stakolle” which is apparently being offered to certain customers of Orange Money, the cellphone group’s widely popular mobile money wing.

While Orange is yet to formally launch the service, Orange Money users have reported being offered and taking up N’stakolle loans, which are a form of advance against their balances in the mobile money product.

This week, Orange Money representa­tives confirmed that uptake was already ongoing amongst users, with loans of between P50 and P1,200, interest rates of between 10% and 15% as well as repayment periods ranging from three to 30 days. For N’stakolle loans in arrears, Orange is charging users one percent per day on the original outstandin­g balance.

On Wednesday, NBFIRA CEO, Oduetse Motshidisi said the regulator had become aware of the credit product being offered by Orange and was probing the matter.

“That has come to the attention of the authority,” he told BusinessWe­ek during a media briefing.

“Certainly if the entity you mentioned is doing some lending of the type that we have heard, there could be some problems with that.

“That’s something we are investigat­ing, something that we need more informatio­n about.

“We certainly want to get clarity on that and the initial informatio­n has given mixed signals on that.”

NBFIRA’s director of lending activities, Ntema Modongo said the existing legislatio­n gives the

authority the powers to investigat­e the latest developmen­ts.

“If, and I emphasise the word if, the entity that has been mentioned is issuing loans, this would be a matter of enforcemen­t,” she said.

“This is a case that we are investigat­ing.

“There is a possibilit­y that this could also be a case of white labelling rather than outright issuing of loans.

“White labelling means that they are issuing loans either through a regulated bank or regulated micro-lender.”

Since 2020, the country’s mobile money operators have been regulated by the Bank of Botswana. However, the NBFIRA is still able to investigat­e certain instances where activities fall into its purview. The N’stakolle loan has also reportedly unsettled some members of the traditiona­l cooperativ­es savings sector, known more commonly as metshelo. Members of the sector say Orange’s new product directly competes with metshelo built around loans, by offering a 50% discount on the prevailing informal sector interest rates.

“It’s a typical example of big

players coming down to eat small players’ lunch.

“Most metshelo are between 25% and 30% per month and Orange is offering 15% per month.

“Right now, most groups are closing for the year, so we’ll see the real impact of this next year when metshelo restart,” a member of a cooperativ­e saving society told BusinessWe­ek on condition of anonymity.

Through their representa­tives, Orange officials declined to respond to BusinessWe­ek’s enquiries, without giving details on the reasons.

Orange Money’s extension into consumer lending underlines the aggressive expansion of non-traditiona­l financial entities into the formal financial sector.

While banks used to enjoy near-exclusive control of payments, savings, and lending in the economy several years ago, entities such as Orange have leveraged their subscriber base and digitisati­on to extend services such as mobile payments and now lending. Platforms such as crypto have also provided alternativ­e savings pockets for consumers.

 ?? ?? Launching soon: Orange Botswana is expected to launch its N’stakolle product soon
Launching soon: Orange Botswana is expected to launch its N’stakolle product soon

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