A lack of saving culture and reckless spending in the festive season have seen most Namibians scampering to cash converters to pawn their properties for a “quick buck” while failing to break the cash loan cycle.
While this phenomenon is always catching people from previously disadvantaged backgrounds off-guard, small to medium enterprises expert, Professor Danny Meyer says this culture is being found mostly in younger people working in the public and private sectors.
“Buying on credit for many means spending money you just don't have. This sort of spending is fuelled by retailers who make all sorts of promises in their adverts and marketing campaigns, like for example open an account and there is a reward in the form of a N$500 voucher, buy now and only pay back in three months’ time, buy something and get a 'gift', zero interest if paid within six months, etc.,” says the economic commentator.
He also says consumer spending is all too often done in an unplanned and at times even in a reckless manner and this has been of major concern for years now.
Speaking of the young people, Meyer says, “They are the target as part of risk management by the clothing, furniture, household goods and jewelry retailers (who) entice those who have a job to open an account. That is why proof of employment and a copy of a pay-slip is on that list of documentary requirements needed to open an account.”
Visiting professor at the University of Cape Town, Henning Melber, says that the practice of pawning is a typical survival strategy for the lower social strata in a society.
“Unfortunately, it is a costly one. Generally, these segments of society are always battling to make ends meet. They have no savings but live from one month to the next, and in good times purchase some of the items they bring to the pawn shop later on,” he says.
He says this is often necessitated by overspending for certain events such as a wedding or a funeral, but also Christmas or any other occasions where gifts are a matter of social status.
Meyer reinforces this view: “Indeed there is a lack of a saving culture. This tendency to spend before saving is endemic among youngsters in employment.”
“Awareness programmes in the print and electronic media. By using social media platforms too. Make use of examples to show the consequence of going on a spending spree and the failure to routinely save a portion of income earner,” says Meyer.
While some Namibians are fast giving in to pawning to beat the January sickness, Melber seriously advises that the act is “an expensive form of refinancing.”
Melber says, “To feel safe from embarrassment, those who actually cannot afford are tempted to overspend and then fail to make ends meet. As a result, they have to seek some cash for the few items in their possession, which are valuable enough to be brought to a pawn shop.”
“But re-buying the stuff is of course coming at a price and similar to shark loans. At the end, the poor are further exploited by paying overcharged fees to have their goods returned (if they have the means to buy them back). The only sound alternative to such practices would be not to live above the means, that is to remain modest, not get indebted and accept that certain ways of life are simply not possible. Everything else comes at a hefty price.”