MBABANE – Eswatini Competition Commission (ESCC) has emphasized the need for clear contracts when consumers are made to deposit money over a long period for goods that they will receive once full payment has been made.

The Commission describes this as the Save-Now-To-Buy-Later (SNBL) arrangement, which is commonly practised in local hardware shops whereby consumers save money for building materials.

ESCC Manager Consumer Protection Linda Dlamini said there was a need to ensure full transparency in client’s accounts.

“Every detail encompassing consumer liability must be clearly spelt out before the customer signs on paper,” he said.

He said it was also important for consumers to nominate their next of kin, who will receive the goods or savings in the event of death of the account holder.

Dlamini mentioned the need to create separate accounts for the SNBL scheme and the trader’s business to ensure that the clients’ monies did not end up being used for unintended purposes.

“The contract should be understood by all the parties and the terms and conditions be set out on an easy-to-understand template,” he said.

He stated the importance of securing insurance cover to mitigate the risks associated with this scheme, whereby the trader suddenly closes shop due to factors such as fire or death.

On a positive note, the Manager Consumer Protection noted that the SNBL arrangement enabled and incentivised consumers to save for a particular purchase.

“This supports consumers in setting savings goals and then facilitate the completion of the purchase when those goals have been met,” said Dlamini.

He said the SNBL also benefited the trader by increasing the customer base and availing cash in advance to sustain the business, among other things.

“SNBL invites customers only to make purchases once they have sufficient funds to do so. No credit is extended to the customer. Instead, that credit line runs the other way. Since the customer is paying into a savings account, they have with the business, it’s essentially them extending a credit line to the business,” said Dlamini.

On the other hand, Dlamini said the Buy-Now-Pay-Later (BNPL) arrangement encouraged customers to make purchases they may not be able to afford at the time.

“They would receive the goods or services immediately and pay later through instalments,” he said.

There are often no interest charges to the customer for this short-term credit line. But should they fail to make payment on time, they’ll be hit with potentially hefty fines, which can add up, in the long run, to making the debt unpayable.

Dlamini said these were some of the issues they discussed with consumers during the roadshows held at Nhlangano and Buhleni last week.