Consumer Research Africa

TFG – What Debtor Collection practises tell us

We find the spike in bad debts concerning and our reconstruction of TFG’s Debtors Book shows that debtor collections may have fallen by -9.3% y-y. We examine TFG’s collection cost recovery and service fees, which grew rapidly and believe that this revenue stream diminishes the quality of TFG’s earnings. We attempt to get an independent view of the number of TFG customers who may be under financial stress by estimating the number of customers who may be paying collection cost recovery fees. We calculate that a substantial proportion of TFG credit customers may be under some financial stress and believe there may be further downside risk to its bad debts.