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South Africa shows an alarming increase in the number of people in bad debt. Citizens who make an honest living, find it hard to make ends meet with their basic salaries. When you take up a credit or a loan, one should always ensure that they fulfill their obligations and commitments, however, South Africans, especially young people are in a constant battle of making just about enough money to meet the next payday.

According to BusinessTech, Benay Sager, who is the DebtBuster‘s chief operating officer, confirmed that the average debt repayment is 61% to net income figure. He added to say the overall debt levels increased to 107%.

When we look at the lowest and highest income earners, the situation is even starker. People who earn less than R5,000 a month need 63% of their income to repay their creditors. They are also charged the most interest.

Those who earn over R20,000 a month have debt levels of on average 133% of their net annual income.

SA debts
SA debts, image:


Reuters wrote a story on Solani Rivele – who is single mother, earns R800 ($55) a week and has made loans worth R80 000 ($5500)

I can’t afford to pay because I’m a single parent, I’m the one who is providing food on the table,” the 44-year-old said in a shopping center on the outskirts of her home township of Alexandra in Johannesburg.

I can’t sleep.

In Mogopa Village, Ventersdorp, North West Province, the majority of young people earn R1000 ($70) a month, 95% of which are breadwinners. Most owe and/or borrow 2 to 3 times what they earn on a monthly basis.

South Africans are over-indebted and most have a really bad credit score. NCR (Nation Credit Regulator) shows 40% of credit-active South Africans who are in bad debt.

Matthew Parks who is the Congress of South African Trade Unions’  parliament Coordinator, has indicated that bad debt could be due to unemployed relatives.

Part of the problem compounding is that the average worker supports seven unemployed relatives. So if you deal with the jobs, we can deal with the debt issue. Parliament recently passed and the President signed the National Credit Amendment Act which tries to deal with the problem. It criminalises the ‘mashonisas’ (loan sharks) sector. So we want the DTI and the National Credit Regulator to indicate when they will bringing regulations to deal with the ‘mashonisas’

Statistics show 25.7 million credit-active consumers, and only 15.5 million are in good credit standing.

Banks and Financial Credit Providers

When looking for a financial solution, be it loanscredit cards, goods and services on credit and overdraft facilities, we tend to rely on banks are other well-known FSPs. National Credit Regulator indicates a 53% growth of opened credit accounts since 2007.

When the formal financial institutions deny you a loan or credit, many South Africans rely on informal credit providers who are unscrupulous and charges outrageous interest.


A mashonisa is an informal word used in South Africa to describe a person or a company that provides short term loans to consumers.

However, in townships and villages, it is described as an individual who gives out informal loans to people in the community and typically charges a 50% interest rate which is declared unlawful.

A mashonisa does not have to register with the National Credit Regulator because of their small size but they are still required to comply with the law.

Take Note

When you take a loan from a Mashonisa, please ensure that you are charged legal interest rates and fees and that illegal collection methods such as the retention on ID Books, pin codes and bank cards are not used.

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  • Founder and Business Writer of, (born June 28), a South African Business Reviewer and Blogger. A native of Ventersdorp, Mogopa Village (SA), often referred to as Zack. Let's talk iBusiness.

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