Why the UK’s Wonga issues aren’t affecting South Africa
It has been well reported in the UK that personal loans provider Wonga faced serious trouble and has collapsed into administration, but details of how the company has fared in other countries has not been as well documented.
Wonga, which was originally started in the UK by South Africans Errol Damelin from Klerksdorp and Jonty Hurwitz from Johannesburg, still operates their South African website, and has been unaffected by the issues overseas. It has been promised a money boost by its shareholders, two venture capital funds, and all seems to be ‘business as normal’.
Wonga became the go to online credit provider after its creation and its simple to use system, easy to understand promises and fast cash injections for customers at rapid availability, made it a favourite for those seeking short term loans without the fuss that often accompanied other providers.
It became ingrained in the UK population with catchy advertisements featuring funny elderly characters which meant they wouldn’t forget the brand any time soon, while customers taking out a loan could see the money reach their account in as little as a few hours. In total, this winning recipe led to its incredible success. In its prime, Wonga became the biggest payday lender in Britain. and was touted to publicly trade at a value approaching 1 billion dollars.
In 2014, the Financial Conduct Authority promised to place stricter affordability checks on the loans industry and introduced a cap on the amount borrowed per day. Despite the tighter legislation Wonga popularity still prevailed. Internationally the company began operations in South Africa in 2011 and has since funded almost $3 Million dollars in personal loans.
When news of Wonga’s UK administration was announced in August 2018, the company board said in its statement that current customers could continue to manage their personal loans but that no new loan applications would be processed, while ‘Wonga’s overseas businesses continue to trade and are not part of this announcement.’
The Wonga South Africa CEO has talked about their recent product reform that increased the loan lending time from 30 days to 6 month instalment loans, making Wonga credit more flexible and affordable than ever, and has also reiterated the strength of the operation outside of the UK, saying that: ‘The current developments in the UK do not impact the South African operations and it is business as usual for Wonga Finance SA.’
