On Tuesday the first half of this column by Geoff Embling touched on how debt in South Africa can cost lives. In this second installment he appeals to government, money lenders and citizens to rethink their roles in the economy to save us from this spiralling debt culture.
On Tuesday the first half of this column by Geoff Embling touched on how debt in South Africa can cost lives. In this second installment he appeals to government, money lenders and citizens to rethink their roles in the economy to save us from this spiralling debt culture.
When loan sharks are docking debt re-payments straight from workers’ wages, workers are going to need more money – infinitely more money! It’s not the amount that they are getting paid. There are teachers who quite happily support their families on R12 000 a month. It’s about their habits and how they use their money, not how much they get paid.
They should actually be avoiding loan sharks altogether and, like our President, be asking for a general decrease of higher-income (particularly government) salaries in SA. I think Mr Zuma should set the example and slash his own salary to start the ball rolling. That’s logical isn’t it?
There isn’t much chance of them doing that though. Isn’t it strange how the right solution to most economic problems is always the most unpopular and hard to digest? Nomsa Motshegare, CEO of the National Credit Regulator (NCR), noted that the debt problem doesn’t exist in a vacuum. “Credit health is not just about credit,” she said.
“Electricity costs have gone up, food prices have gone up. If interest rates go up, these are the people who are going to start falling off the cliff.” The National Credit Act must institute a massive cut in the legal money-lending interest rate, and informal money-lending and credit arrangements must be cracked down on with the full force of the law and crushed. South African Trade Minister Rob Davies has pledged to crack down on loan sharks who are violating credit laws, but that is not enough.
The credit laws themselves need to be changed. There’s one further issue: credit providers operating in mining towns aren’t all just small operations. As the Mail and Guardian pointed out in September, one of the biggest players is Ubank; a bank with 500 000 customers, 60% of whom work in the mining industry. Ubank just happens to be owned by the National Union of Mineworkers (NUM). Isn’t that a strange coincidence?
Here is the scenario: the Union encourages strikes while Ubank rubs its hands together with glee. Then the pawns strike, don’t get paid and borrow more money from Ubank. Or alternately, workers’ salaries rise and they pay off money to Ubank and borrow more.
NUM and Ubank win either way, and the greedy circle just happens to fuel itself! Isn’t NUM working directly against the very workers it is supposed to be protecting, or am I missing something? SA is currently in dire need of drastic action, and if President Zuma wants to grant a general amnesty he should make it a micro-lender debt amnesty. That would give the crooked lenders a shock, and cause them to be more careful who they lend to in future.
It would also give informal money-lenders a chance to employ their time and skills in other occupations which uplift the country instead of pulling it down. Less lending equals less debt which will equal less striking, and if there is a strike then there will be less money to be borrowed, which will force strikers to go back to work sooner.
That sort of amnesty would be far more worthwhile than the previous one where President Zuma, feeling benign, might as well have rolled a dice, allowing assorted brazen criminals out of prison to go back into society to revert to their old ways. We are sure that President Zuma regrets that, and we trust that no one does that sort of thing again.
