The Central Bank of Egypt’s decision to raise interest rates by 600 basis points has prompted consumer finance companies to adjust their pricing plans and offers.
Some companies have already informed their customers that they are revising their offers, while others have suspended long-term lending plans.
Said Zater, CEO of Contact Financial Holding, said that the company has conducted a comprehensive review of its pricing plans and offers in light of the changes in the Egyptian market.
He added that the company will lower interest rates on its products if the Central Bank does so in the future after it has curbed inflation.
Aman for Consumer Finance and Valu for Buy Now Pay Later have notified their customers via text message on the electronic application that they are currently adjusting offers and prices according to the current changes.
Ahmed Osama, Chairperson of Forsa for consumer finance, said that the company will modify its pricing plans and offers, but the management is waiting for the economic data to stabilize before finalizing the plans.
He added that the company will design the plans in a way that balances the interests of the company and the customers.
Mohamed El-Fakki, co-founder of the Sympl platform for buy now pay later, said that all companies will tend to review their businesses after the large increase in the interest rate by 6%. He added that the company’s business model differs from the traditional model of consumer finance companies, so the measures it will take to adapt to the higher interest rates will begin with changing the service fees, which it is studying, and will be announced during the current week through its various applications.
He added that the company will wait to make any other decisions for a period of one to ten days to see the impact of the Central Bank’s decisions on prices and customer behavior, whether they will avoid obtaining financing or will continue to seek financing.
El-Fakki explained that the companies in the sector will face challenges in the cost of debt and the cost of operation, which may be hard to cover with the higher interest rates and their profit margin will be affected.
Companies will also significantly reduce the offers and incentives offered to attract customers, which represents a loss for companies at present.
