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Cape Town - Serial entrepreneur Kevin Hurwitz left online microlender Wonga.com South Africa as its CEO on Wednesday, after launching his cousin’s successful UK company in South Africa in 2012.
“As an entrepreneur I feel that the time is right for me to pursue new business opportunities,” said Hurwitz.
“I’ve tremendously enjoyed my time as CEO of Wonga.com SA and I am confident that I leave the business in a really good state – with an extremely competent team and a strong growth trajectory.”
Hurwitz, who started the registered credit provider in May 2012, resigned in June 2014, but wanted to stay on for a four-month transition period and will remain in a part-time position until he and the company no longer feel this is appropriate or necessary, according to Debbie Sharwood, Head of Public Relations and Communications at Wonga.com SA.
The parent company, Wonga.com, was started in the UK in 2006 by cousin Jonty Hurwitz and Errol Damelin and operates in the UK, South Africa, Canada, Spain, Germany and Poland. Jonty Hurwitz left the group at the end of 2013.
Wonga UK profits hit by scandal
The UK-based Wonga Group on Tuesday posted a 53% drop in pre-tax profits to £39.7m (R728.92m) for 2013, resulting from their fake law firm letter scandal.
Wonga said it set aside £18.8m (R343.92m) to cover costs relating to the issue, which helped push its 2013 pre-tax profit down to £39.7m from £84.5m (R1.55bn) the year before.
Between 2008 and 2010, Wonga.com UK sent letters to around 45 000 customers giving the misleading impression that the customers’ outstanding debts had been passed to a law firm, or other third party, with the threat of adverse consequences if the debts were not repaid quickly. Some of these customers also paid additional collection charges after these letters were sent out.
The Daily Mail reported on Tuesday that “the slump revealed today was even worse than expected, and is reported to have also come from difficulties at its overseas and small business operations.”
Wonga SA not affected
The South African venture was not impacted by the scandal and distanced itself from the practice. "These historical practices and system errors are limited to Wonga UK," Kevin Hurwitz told Fin24 at the time.
"The South African business operates as a separate business within the Wonga Group with dedicated systems, technology and teams."
Sharwood said the slump in profits reported on Tuesday did not affect the South African operation whatsoever.
Commenting on Wonga UK's comment that its profit slump was also due to difficulties at its overseas and small business operations, Sharwood said although South Africa forms part of international operations, Wonga SA reached the break-even point several months ago.
"With regard to the International operations - this includes South Africa, Canada, Spain, Poland and Germany - the reason for the ‘cited fall in profits’ is due to investment, and that investment will be continuing, said Sharwood.
"The actual amount spend on international investment during the period was £12m. (That includes all costs including marketing, staffing etc).
"The business units in each of these countries are at different stages of their life cycles but all are now (October 2014) breaking even. Wonga SA reached the break-even point several months ago," said Sharwood.
Hurwitz’s departure not linked to UK slump
“Kevin is a serial entrepreneur,” said Sharwood. “His passion centres on building new companies from the ground up and Wonga.com, thanks to its rapid growth in SA, is now a significant business.
“As a result of the company’s current stability, he is leaving to pursue a new start up opportunity,” she said. “He started Wonga.com SA in 2012 and the company has now provided over one million loans to local consumers.
"It employs 20 people in the business unit, with another 40 employed in the customer service centre.”
What is Wonga.com?
What is Wonga.com
Wonga.com is a British payday loan company offering "short-term, high-cost credit". The interest charged by the lender, which can equate to an annual percentage rate (APR) of more than 5000%, has been widely criticised. Wonga claims that its customers are "tech-savvy young professionals who previously used the banks to borrow money". It accepts that its APR is "not cheap" but claims that its typical customer is on a mid-level salary and is temporarily short of cash because of an unexpected bill, for example to buy a new central heating boiler or tickets to a music festival.
Difficult times for credit industry
Kevin Hurwitz said the credit industry was experiencing some difficult times. “Of course the smaller players in particular will be feeling the pinch,” he said. “But, just as credit providers might be struggling at the moment, consumers are also feeling the strain.
“Interest rate hikes, petrol price increases and inflation are all taking their toll on South African consumers,” he said. “The most important thing is that credit providers lend responsibly and that regulators ensure continued access to credit by reputable lenders.”
Before starting Wonga in South Africa, Hurwitz was the founder and MD of AmVia, a B2B telephony software distribution company that he sold to Vox Telecom in 2007. “It was this experience that enabled him to lead Wonga’s operations team in implementing ground breaking technology for the group’s global call centre,” the company said.
“The search is already under way for a replacement to head up the local business,” it said. “The Wonga.com Group remains confident that the South African unit will continue to play an important role in the future of the international digital finance business.”
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- Fin24
