I work on online loan debt collection in Africa: my base salary is 200, and I earn a living by cursing at people over the phone.

Last week, we published an article about OPay, the African payment and online lending platform, that is planning to launch an IPO.

IPO of the King of African Payment: 3.6 Billion Annual Revenue, 28.5 Billion Valuation

A commenter said in the comment section that lending business in Africa is very easy to run, and when bad debts occur, collectors can show up at the debtor's door with a gun to demand repayment, and no one dares not to pay back the money.

The editorial team was also extremely curious: if you default on online loans in Africa, will you really get shot?

After verification, the situation is not like that. Debt collection in Africa mainly relies on mental attacks, that is, verbal abuse, to make debtors who refuse to repay online loans break down psychologically.

Are there cases where collectors show up at the door with guns? Yes, but such cases are rare, which mainly happen in countries with extremely poor public security such as South Africa. And the money lent out in these cases is not online loans, but private usury in similar forms.

In Africa, it is very easy to borrow money. With just a mobile phone, the money equivalent to dozens of US dollars will be transferred to your account in more than ten seconds. However, debt collectors have a very tough life: they need to follow up 400 debtors a week, and their monthly income may be only more than 200 yuan.

We also found more interesting information: there are people running "anti-debt collection" businesses in Africa, and others doing new-type debt collection services that have raised 19 million in financing.

01

Debt collectors only earn more than 200 yuan a month

On the morning of July 31, 2023, a five-story building in Lagos, Nigeria, was full of young people who came to apply for jobs.

Some of them just graduated from middle school, some have university degrees, and some even have master's degrees. Academic qualifications are not important, and they are about to receive the same training: how to get the lent money back.

This company is called Newedge Finance, which owns multiple lending products including Palmcredit and EasyBuy.

The trainer told new employees that the company has a strict set of work standards. For example, they must never insult borrowers.

The actual work scene is completely different. Dozens of debt collectors sit together, yelling and cursing at the person on the other end of the phone. Some threaten borrowers that they will expose all their personal information and ruin their reputation.

The company has a software called Moneymaker. After logging into the system, debt collectors can see the borrowers assigned to them: name, phone number, loan amount, overdue days, emergency contacts, and previous debt collection records.

Debtors are divided into different levels.

Overdue for 1 to 7 days is one level, and 8 to 15 days is another level. As the overdue time gets longer, the difficulty of debt collection increases. The most tricky level is borrowers who are overdue for more than 121 days.

One debt collector found that he was assigned more than 60 customers of this type. They may have been contacted countless times by other debt collectors. Some of them have no ability to repay, and some simply refuse to answer the phone.

But the performance assessment will not be lowered because of this.

According to a local media investigation, the basic salary of debt collectors in this company is only 35,000 naira per month (about 176 yuan). Only by recovering more debts can they get extra bonuses.

A female debt collector has four WhatsApp accounts of her own: one account was reported and banned for harassment, and other accounts can still be used continuously.

It is quite absurd that the company has a dedicated compliance department. On the surface, the company prohibits insulting customers. But in private, debt collectors believe that they can never recover the money if they make phone calls in a proper and regular way.

Here, the lending department has loan issuance targets, and the debt collection department has repayment recovery targets.

As for who the loan is finally lent to, and whether the other party has the ability to repay, these issues are easily ignored instead.

Such a similar system is not an isolated case.

In 2022, the Nigerian investigative journalism agency ICIR interviewed Tobilola, a debt collector from another lending company called LCredit.

He revealed that the company divides debt collectors into five groups, and each person has to deal with 400 debtors a week.

The monthly salary is 50,000 naira (about 250 yuan). If they meet the performance target, they can get a bonus equal to 3% of the recovered amount. The best-performing employees can get extra rewards. But if the target is not met, the team leader will threaten to fire them.

Tobilola explained that the superiors pass the pressure to debt collectors, and debt collectors vent their anger on borrowers. As a result, debt collection practices become more and more intense.

02

Default on repayment: social death or being shot dead

The following story describes another debt collection method that is very familiar to Chinese people: making you suffer social death.

David Kiragu is a Kenyan. In 2018, the 32-year-old man worked as a manager at an international NGO in the capital Nairobi, with a decent income.

But one day, he found that he could not even gather enough money to pay the rent.

It was rather embarrassing for him to borrow money from friends. At this moment, he saw a lending App called OKash on Facebook. The advertisement told him that he did not need complicated procedures, and he could get the money after a few minutes of operation on his mobile phone. Kiragu decided to have a try.

For the first time, he borrowed about 15 US dollars and paid it back on time.

The platform quickly raised his credit limit. For the second time, he borrowed 35 US dollars and paid it back smoothly as well.

Later, in order to cover the rent gap, he borrowed the third sum of money.

Then the problem came. Although the previous loans were paid off, they kept squeezing his already not abundant cash flow. He had to borrow money again and again to fill the gap caused by the last repayment. When the third loan matured, he failed to repay the money on time.

The debt collection call came immediately. The other party warned him that if he did not repay the money, they would notify all the people in his mobile phone address book.

Kiragu initially thought it was just a threat. Soon, he found that he underestimated the debt collectors.

After the overdue, the debt collector called him three or four times an hour. Then, his relatives, friends, colleagues and parents received text messages one after another.

The most embarrassing thing happened in the office. A colleague took a screenshot of the debt collection text message and sent it to the company's WhatsApp group. At this point, the whole office knew that he owed money. Even the boss called to ask him what on earth had happened.

The incident did not end there. A relative passed the news of his debt back to his hometown village. After his father learned about it, he accused him of bringing shame to the whole family.

Facing his mother, Kiragu could only lie, claiming that those text messages were scam messages. He did not want his mother to know that he was being pressed for debt. The man who originally only wanted to borrow money quietly to pay the rent finally had to explain the debt problem to almost everyone around him.

This is exactly the debt collection weapon that some African lending Apps once used.

They do not need to find your house, do not need to seize your property, and do not need to take you to court. They only need to find the people you least want to lose face in front of.

This method is called Debt Shaming.

In Nigeria, similar stories are even more outrageous.

In 2022, a woman named Victoria borrowed 15,000 naira through a lending App. After the loan became overdue, she surprisingly found that her photo was made into an obituary.

She said that the debt collector also called her mother and insulted her. Victoria was very angry and publicly stated that she would no longer repay the loan.

But in South Africa, debt collectors are not that "civilized", and they even carry guns.

In September this year, in Ballito near Durban, South Africa, a 39-year-old businessman fell into a nightmare.

He owed 180,000 rand (about 73,000 yuan) to an acquaintance and failed to pay it back on time. One night, the other party came to his residence with three men. The businessman thought they just came to discuss the repayment, so he gave them the access password of the residential area.

But according to his father's account, several men who entered the door took him away at gunpoint. At that time, his wife and his three-month-old baby were at home.

The subsequent experience was even more terrifying. The man was beaten in the car, and his neck was strangled by the seat belt. His father said that the perpetrators also called in front of him and asked the person on the other end of the phone: Is the pit ready to bury him dug?

The original debt of 180,000 rand was required to be repaid double, reaching 360,000 rand. And the full payment must be made before Friday.

The businessman said that he could only gather 210,000 rand. The other party did not accept it.

His father told the media that his son later received another threat, warning him to prepare a body bag. In the end, the family turned to the police and local private security and rescue agencies for help.

Another South African man, due to financial difficulties, borrowed 25,000 rand (about 10,100 yuan) from a private lender.

Later, he successively repaid about 46,400 rand (about 18,800 yuan). He had paid back nearly twice the principal, but the debt collection did not stop.

According to this man, when he was unable to continue paying the monthly interest of 10,000 rand (about 4055 yuan), the other party began to send death threats through WhatsApp.

He even dared not drive normally, dare not sleep peacefully, and locked up the dogs at home, because someone threatened to poison them.

The head of the local rescue agency told the media that they come into contact with about 15 similar illegal lending disputes on average every month.

In these cases, the threats borrowers face include killing their family members, kidnapping their children, and burning their residences. Some illegal lenders simply send armed men to the borrower's home or workplace to force repayment.

Local people call this type of private lenders Mashonisa.

Although these cases happened in different countries and different types of lending markets, they reveal a common problem: when borrowers do not have enough property to mortgage, and creditors lack low-cost and effective legal recovery channels, some lenders begin to take people's reputation, freedom and even life safety as the pressure to force repayment.

03

New-type debt collection, 19 million in financing

But debt collectors gradually found that threats do not always work. Some borrowers are not afraid at all.

In January 2022, Bayo, a primary school teacher in Lagos, Nigeria, borrowed 25,000 naira from the online lending platform Soko Loan, which was about 54 US dollars at that time.

Four weeks later, he failed to repay the loan as scheduled.

The lending platform sent mass messages to the contacts in his address book, claiming that he was being pursued for debt because he refused to repay the loan.

Bayo was very annoyed.

He did not immediately gather money to pay off the debt, but opened Facebook and joined a group called "Say No to Soko Loan".

He found that many borrowers with similar experiences gathered in it. What everyone discussed was not how to gather money to pay off the debt, but how to deal with debt collectors. Some people shared how to restrict lending Apps from accessing the address book, some tried to fight back against the harassment from the platform, and even some people began to discuss using fake identities to defraud loans.

An anti-debt collection movement gradually took shape.

A 2023 survey found that there were at least 11 similar groups on Facebook, ranging in size from hundreds of people to 46,000 people.

One group member even publicly stated that he owed a total of 740,000 naira to eight lending companies, but he no longer worried that the platform would contact his relatives and friends.

Debt collection companies also know the existence of these groups.

Joseph, a debt collector at a lending company, said that if borrowers repay the loan on time, or respond actively after receiving the reminder, they will not take humiliating measures.

He does not think his debt collection method is wrong.

Another lending manager admitted that the company knows that some people are organizing loan fraud, but it is difficult to stop it effectively.

What's more interesting is that the struggle between debt collection and anti-debt collection has even given birth to a new business.

A Nigerian man named Chukwuemeka Ogbu began to provide special help to borrowers harassed by debt collection.

Ogbu used to be a borrower too. In 2019, he borrowed 500,000 naira from a lending App, and agreed to repay the money two weeks later, with an interest rate as high as 50%.

He failed to repay the money on time. Later, the lending platform not only sent messages to his relatives and friends, but even claimed that he was dead.

Ogbu decided to fight back. He began to study how to deal with these debt collection text messages, and then turned the experience into a paid service.

Customers only need to pay 1500 to 4500 naira to get help, such as sending clarification messages to contacts in the address book, reducing the impact of debt collection messages on personal reputation.

He also claimed to be able to clear customer records from the databases of certain lending Apps, but this capability has not been independently confirmed.

He was originally just a borrower who could not pay back the money, but in the end he made money by helping other borrowers deal with debt collection.

This is probably the most ironic scene in the African digital lending market:

Lending companies make money by issuing loans, debt collectors make money by pursuing debts, and some people make money by doing anti-debt collection business.

A number of new startups are starting to look for opportunities in the debt collection business.

For example, BFREE, a Nigerian fintech company. It was founded in 2020, and its initial business was to help banks and lending institutions recover overdue debts.

But it does not advocate recovering debts by humiliating borrowers. Instead, it uses automated tools, borrower behavior data and artificial intelligence to communicate with debtors and negotiate new repayment plans.

In 2024, BFREE completed a financing of 2.95 million US dollars (about 19.7 million yuan). According to the company's disclosure at that time, 92% of its communication with borrowers has been fully automated.

Later, BFREE started to do an even bigger business: directly purchasing non-performing loans from banks and financial institutions.

Assuming that a bank has a loan portfolio with a book value of 1 million US dollars that cannot be recovered for a long time. If an institution is willing to buy it at a low price, the bank can recover part of the funds and reduce the disposal burden. As long as the acquirer can buy, manage and collect the debt at a cost lower than the actual recovered amount, it has the opportunity to make money.

The real threshold lies in judging which debts can still be recovered and how much they are worth.

BFREE believes that the accumulated borrower data and debt collection experience can help it identify these opportunities.