Connect with us

Hi, what are you looking for?

Capital Business
Capital Business


Flu boosts Mexico pawn trade

MEXICO CITY, May 13 – Pawn shops in Mexico City have seen a spike in business since the A(H1N1) flu broke out last month, as residents try to fight hard economic times by hocking their valuables.

"I don\’t think the economy will pick up, I think it\’ll be the opposite," said Mauricio Dieguez, standing in a line snaking through a centuries-old Mexico City pawn shop.

Most staff and some customers covered their faces with surgical masks, while paper signs taped on stone walls informed clients of longer opening hours introduced since at the end of last month.

"Who knows how long I\’ll leave them here for?" the 37-year-old said as he dropped off a watch and several rings for cash at a glass-fronted counter.

The maximum time limit to reclaim possessions pawned at Monte de Piedad — a nationwide network of pawnbrokers founded in 1775 — is 17 months.

Dieguez was laid off with almost half his colleagues from a microchip company two weeks ago. He blamed his departure not only on the months-long economic crisis, but also on swine flu, which has left dozens dead in Mexico.

"There are a lot of problems for exports and for employment now. I think people don\’t want Mexican products," Dieguez said, twisting an empty plastic bag in his hands.

Already hard hit by the crisis which began in its closely tied northern neighbor, the flu has dealt Mexico a further blow, with tourism and small businesses particularly suffering from a shutdown of activities to try to contain the virus.

Experts predict the economy will this year put in its worst performance since 1995, when an economic crisis and devaluation of the peso caused GDP to sink 6.9 percent under what became known as the "Tequila Effect."

Advertisement. Scroll to continue reading.

This year\’s GDP was already expected to shrink by around five percent even before the flu struck. The finance ministry has estimated the flu\’s impact will cost the economy around 2.3 billion dollars — around 0.3 percent of GDP.

Monte de Piedad registers some 140,000 operations per day across its nationwide network, and staff are expecting that to increase along with growing job insecurity.

"I think that the impact of the crisis and the flu are starting to be felt," said spokesman Gustavo Mendez Tapia. "I think we\’ll see more people."

The enormous institution, with some 7.5 million clients, lent out around 1.28 billion dollars in 2008, and was expecting that to rise to 1.43 billion dollars in 2009, Mendez said.

Clients can pawn anything from a ring to a house, with the average loan at 192 dollars, and the minimum only three dollars.

Most clasped small pieces of jewelry as they lined up in the hall with stained-glass ceilings next to a shop selling unclaimed possessions. Some 95 percent of possessions are eventually bought back, according to Mendez.

The interest rate is four percent, and clients — including many workers with no steady wage — have no choice but to accept.

"I don\’t have a bank account because I don\’t have any money," said 63-year-old Mexican Rosa Jaramillo as she queued to pawn a gold ring.

The small, bespectacled woman has pawned and redeemed countless objects in the past seven years to top up her pension of 136 dollars per month.

Advertisement. Scroll to continue reading.

"We\’re going through a really critical period now," Jaramillo said.

Further down the line, Araceli Lopez, a 22-year-old student, came to pawn some family jewelry after her parents lost all clients from their Internet cafe two weeks ago.

"People still aren\’t coming. No one has come back," Lopez said.

Click to comment

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...


NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...


NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...


NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...


NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...