Many Nigerian employees typically spend 65 to 80 percent of their salaries servicing payday loans within the first to second week of being paid. Many employees have become trapped in a vicious cycle of borrowing and refinancing loans at exorbitant interest rates as a result of this practice. Not to mention the emotional toll and overall impact on their jobs.
People may require emergency financial assistance as a result of a car accident, a fire, a life-threatening illness, or theft. Those who work for specific companies, on the other hand, choose without hesitation one of the available options – Salary Advance – or what some refer to as a payday loan. Fundamentally, scenarios like these have exposed many employees to loan sharks and high-interest rates, often leading to low productivity at work and affecting workplace dynamics.
A salary advance is a type of loan that is commonly given to employees. As the name implies, it is frequently a portion of an employee’s pay that is paid at the end of the month. Naturally, this loan is only available to those who are employed on a salary. This loan, which is typically for a set period of time, is accompanied by interest rates.
A salary advance is a lifeline for many Nigerians. This is because the average Nigerian faces a variety of challenges that necessitate financial obligations. Money must be spent on everything from self-care to assisting siblings, parents, and friends, as well as unforeseen emergencies.
As a result, employees’ monthly earnings do not correspond to current market needs, with a crate of eggs now selling for N2, 400, a 100% increase from six months ago. The same can be said for other market products. As a result of the foregoing and the demand for salary advances, financial institutions across the country, particularly tier-1 Deposit Money Banks, have recognized the pay advance plan as a way to increase their income base. This is why the practice has become popular among Nigeria’s financial institutions.
Despite this, the concept is gaining traction as more loan institutions enter the market, with interest rates ranging from 1.33 to 4%, and the question on many people’s minds remains: how do we break this loan cycle? assist employees in meeting their needs, accumulating wealth, and maintaining workplace productivity.
Cadana’s solution to the monthly payment cycle in Nigeria and its Sub-Saharan counterparts is salary on-demand.
What is the process of Cadana?
The monthly payroll system has long been the norm in many African businesses, with employees eagerly anticipating the end of the month in order to meet their needs.
One of the many solutions Cadana offers African businesses is access to earned wages via a digitized payroll system. The tech start-up is dedicated to accelerating wealth creation for African workers by making their earnings available when they are needed. That is, as an employee, I no longer have to wait until payday to earn my pay.
Cadana’s digitized payroll system enables employees, salaried workers, or contractors to withdraw a predetermined percentage of their real-time earnings and have it instantly transferred into their bank accounts.
Is Cadana giving its employees credit? No. Simply put, Cadana is democratizing the payroll system by allowing employees to access their earned wages and assisting African businesses in creating a more conducive business environment with a dedicated and motivated workforce.
The company, founded by Albert Owusu-Asare and Ameer Shujja, recently expanded its operations from Ghana to Nigeria with the goal of influencing the African continent by providing solutions that promote wealth creation. Cadana’s Co-Founder stated recently, “Africa’s most valuable resource is its people, and they must have access to funds when they need them.”
Cadana has gone one step further in supporting the HR community as part of its commitment to providing solutions to African businesses by sponsoring the recently concluded HR Expo Africa.
Innovative solutions like this one have shown to be beneficial in terms of sustaining business growth and profitability. We believe that the future of workplace compensation will be flexible and borderless as innovative solutions to many issues in the HR space emerge.
