Pawnshops don’t just lend to the poor. More and more wealthy people seem to be using this solution in order to discreetly obtain liquidity at low interest rates.
Ihe difficult economic situation that Algeria has been going through for several years, aggravated by the health crisis linked to the Covid-19 pandemic, has given rise to a new clientele of the pawnbroking agencies of the Local Development Bank (BDL) which retained the monopoly of this alternative form of bank loan. “The time when pawnbroking was reserved for the poorest is over. The agency currently receives a clientele from all strata of society, from the richest to the poorest. Customers come to pawn their jewelry for various reasons. There are, of course, retirees with meager pensions who need to pay a bill, rent or face health costs, fathers and mothers from poor families who come to borrow to make ends meet, those who want to live beyond their means… But the agency welcomes a new category of clientele made up of wealthy people short of cash who opt for this formula to finance themselves in the short term. We often welcome small traders who have an urgent need for cash to finance purchases or meet an unforeseen expense, traders with a suitcase who want to finance their operations of importing various goods, wealthy people who do not have guarantees or immediate cash, etc. I personally know a regular who comes to pawn her jewelry for pocket money,” says this former employee of a BDL agency in Oran who requested anonymity. In the waiting room, well-dressed women, gold jewelry around their necks, fingers and wrists, patiently wait their turn to pawn their finery. Asked about the reasons that lead people to pawn their jewelry, our interlocutor assures us that many customers borrow to live beyond their means. These would be people who had become accustomed, during the years of the financial upturn, to a comfortable lifestyle, but who found themselves, overnight, short of money due to the economic situation. difficult. The health crisis was in a way a catalyst that precipitated wealthy people into a form of “precariousness”.
The pawnbroker to make ends meet
People in a precarious situation – retirees or civil servants receiving meager salaries – come to this agency every day to deposit their jewelery in order to be able to make ends meet that are increasingly difficult. The month of Ramadan, synonymous with great expense, forces fathers and mothers of families to pawn their jewelry to garnish the table. These households with modest resources, cornered by the fall in purchasing power and the soaring prices of foodstuffs, are thus caught between a rock and a hard place: going into debt with relatives or selling off their jewelery at the price of broken gold. The pawnbroker thus constitutes an alternative to limit the damage while waiting for better days. Retirees are a loyal clientele in this pawnshop. “Many pensioners subsist on pawnbroking. Retirement pensions are no longer enough to live with dignity and the increase in the cost of living gives them no respite. They come on the 18th of each month to collect their jewelry, but a few days later, they pawn it again,” says our interlocutor.
The BDL has six branches spread across the country’s four major cities (two in Algiers, two others in Oran, one in Annaba and another in Constantine). Against the deposit of a piece of gold jewellery, a loan is granted immediately to the customer who remains the owner of his jewellery. The loan can last up to three years with the possibility of a payment schedule. The BDL pawnbroking agency in downtown Oran welcomes an average of 400 customers a day, but as the month of Ramadhan or religious holidays approaches, this number can quickly double or even triple. The pawnbroker is now attracting more and more customers interested in its many advantages: ease of access to the loan, money paid immediately after the pledge of the jewellery, security, confidentiality and, above all, revaluation of the loan ceiling which is increased from 50 million to 120 million centimes per customer. The loan amount is calculated on the basis of DA 4,000 per gram of gold instead of DA 2,000 previously, and the gold stamping that was once required is no longer mandatory. In this agency, customers do not need to be asked to pawn their jewelry. Employees are often overwhelmed by the number of applicants who sometimes travel from other wilayas and many are asked to come back another day. The bank has above all facilitated access to this formula for individuals who can benefit from an immediate loan on simple presentation of an identity document (paper CIN), while for those who hold the biometric identity card , they must attach a valid residence certificate. The main advantage of this formula reserved for Algerian residents aged 19 and over, according to an employee of this agency, is the low interest rate which would be largely competitive compared to other consumer loan formulas. The pawnbroker does not require any insurance or financial guarantee in addition to the pawned jewel. The interest rate is calculated on the basis of 200 dinars per month for 10,000 dinars lent, or 2,400 dinars per year for a loan of one million centimes.
Experts have the last word
The pledge loan is formalized by a contract which mentions the total amount of the loan, its duration (from 6 to 36 months), the repayment terms, the rights attached to the jewel and the conditions for recovering the pledged property before the term. of the loan, but before concluding this contract, the pawned object must go through a meticulous expertise to ensure the authenticity of the gold.
The pawnbroker mainly accepts 18 carat gold jewelery (18 carat gold is made up of 75% pure gold. Called by professionals 750/1000 gold, this alloy, the noblest after the 24 carat gold, is used by renowned jewelers). “The pawnbroker has professional appraisers to assess the quality of jewelry and the rate of pure gold. All jewelry must go through an expertise before signing the pawnbroker’s contract. Many customers have been amazed to learn that their 18 carat jewelry (or 18 gr of pure gold in 24 gr of alloy) only contains 16… carats”, continues the bank employee.
The vertiginous increase in the price of local and imported gold encourages traffickers to redouble their ingenuity to counterfeit jewelry: fake hallmarks, jewelry stuffed with copper wires and worthless ornamental stones, cans of beer and drinks melted down before being mixed with gold, etc. The touchau or touchstone test is generally used to test alloys and precious metals. The touchstone is a small dark tablet made of quarry stone, slate or basanite. Its finely granular surface allows soft metals to leave a visible mark when rubbed. This test is, however, not 100% reliable, according to experts and appraisers of the pawnbroking agency, who are thus forced to resort to more specialized equipment to verify the authenticity of the gold.
The pawnbroking agency also offers the rental of safes for customers who want to benefit from optimal protection of their property.
“The price for renting a small safe is very modest. It is only 3,000 dinars per year”, explains our interlocutor, specifying that this service is reserved only for customers with a checking account at the BDL. They have the choice between three models of safe (small, medium and large) and can benefit from several advantages: security, the bank acting as guarantor of the security of the deposited goods, the ease and speed of subscription and confidentiality (only the client is authorized to access the safe). Access is by means of a unique key provided by the bank when signing the agreement and paying the rental amount. The customer has, however, the right to authorize a third person to access the safe, under the same conditions as him by establishing a nominative power of attorney for the person concerned. When the agreement is signed, a predefined debit date is set, the bank reserving the right to debit directly from the customer’s account the amount specified on the due date.
“The safe rental service is of interest to many customers, but it is especially emigrants who subscribe to this service to keep their jewellery, precious objects and their property deeds during their stay abroad”, continues the employee. . Thus, contrary to popular belief, pawnbroking is no longer the prerogative of people in need: whatever the financial or social situation, everyone can benefit from it: the rich and businessmen short of cash, retirees and fathers of modest families who hope to make ends meet and, sometimes, women who just want to be sure of the authenticity of their jewelry.
Realized by : AREZKI M.