Millions of South Africans are drowning in debt. Consumers owe more than R2.5 trillion to their creditors. And that’s just what can be estimated from legal sources.
Debt is debilitating. It tears families apart, fuels crime and destroys lives. We cannot allow ourselves to be comfortable with the fact that so many of us are scraping by to meet monthly interest payments.
Innumerable micro- and macro-economic factors have led us here — and rarely are two individual situations alike. We are a grossly unequal country. Debt doesn’t discriminate by class; it ensnares some in their interminable pursuit of the excesses of modern life, and captures others who hope only to put food on the table.
But one factor continues to float to the top: financial illiteracy. We are continually taken aback by the lack of understanding of monetary matters across all sections of society.
This perception is borne out in reliable data. According to a 2015 survey by the Financial Sector Conduct Authority and Human Sciences Research Council, South Africa has a financial literacy rate of 51%. In 2021, the Organisation for Economic Co-operation and Development put that number at 42%.
A dearth of understanding first creates debt and then entrenches it. It is an intractable problem. Such an environment allows the nefarious to flourish. Mashonisas (loan sharks) and other unscrupulous fly-by-night microlenders lurk in newspaper classifieds and online running adverts that read something like: “Need a loan? Blacklisted? No problem.”
Despite the ubiquity of debt, we are afraid to talk about it. A lack of understanding breeds stigma, forcing many to suffer in silence until it is too late, or turn to the dangerous informal sector.
We have to collectively change that thinking. As the late anthropologist David Graeber wrote: “If history shows anything, it is that there’s no better way to justify relations founded on violence, to make such relations seem moral, than by reframing them in the language of debt — above all, because it immediately makes it seem that it’s the victim who’s doing something wrong.”
There is a vast market of some 10.09 million consumers with impaired credit records, according to the National Credit Regulator, a number that rose 2.7% during the first quarter of 2024. We should not take this increase lightly … or turn a blind eye to practices that increase it.
Authorities should be clamping down harder on banks and other financial institutes that continue to hound consumers with “courtesy calls” offering their clients new credit cards, or outrageous increases to their existing limits.
If that is not a blatant violation of the National Credit Act 34 of 2005, which prohibits the granting of reckless credit and offers legal recourse for consumers who have fallen victim to these reckless lending practices, then we don’t know what is.
