Archive for September, 2010

Pawn your jewelry or do the smart thing and borrow online

September 7, 2010 Leave a comment


A shocking story in this weeks UK’s newspapers is that the British public has taken to borrowing money from pawn shops and  ‘ayday loan shops’ to meet their daily food and grocery bills. In fact the report says that the pawn broking industry (which  takes old jewelry in exchange for small amounts of cash) has grown to be a £192 million industry, some shops have seen  profitability growth rates of over 70% in the last 2 years! This is all because Britain’s banks are no longer lending and  have moved from literally throwing money at consumers 5 years ago, to being extremely tight with their capital as a result of  the credit crunch. The scary fact is that some of the pawn shops charge interest rates of over 2000% for amounts borrowed that  could be as low as £300, which means that some consumers may never be able to pay these loans off. This is where peer-to-peer  lending comes in, which involves the process of ‘disintermediation’ where consumers remove the banks from the equation and  lend money between each other. MyAzimia’s business model follows this philosophy, the only difference being that the lending  is between investors in Europe and entrepreneurs based in Africa as opposed to companies like Zopa (UK) or Smava (Germany)  where lending is between ‘peers’, i.e. based in the same jurisdiction. The average rates of interest on these sites don’t come  anywhere near the rates charged by the pawn shops which says to me that the British public should wise up and ditch the  pawn shops in favour of social lending. It’s a much cheaper form of financing and provides a social networking effect as well  as a human face to the borrowing process.

Categories: Uncategorized