PAYDAY LOANS IN DURBAN
The stats reveal that the number of total applicants looking for emergency financial help in Durban has nearly doubled – having shot up by a surprising 93%. The number of hard-up Durbanites applying for payday loans to help cover their rent or mortgage has more than doubled in just two years, shocking new figures reveal. The amount being requested to short-term credit brokers has also increased by nearly 50% since 2015. It comes just after the South African Reserve Bank (SARB) announced a rise in interest rates and the FCA found that one in six Durban citizens wouldn’t be able to pay their rent or mortgage if it went up by just R500. Earlier this month, SARB’s Monetary Policy Committee announced it would increase interest rates for the first time in ten years – from 0.25% to 0.5%. The figures have been released just ahead of the fiscal budget summit, where the Deputy Minister of Finance is expected to address the impact payday loans have had on the market. Yearly figures also revealed that KZN workers still top the list of employees who most require emergency financial help. They are followed by supermarket staff from Shoprite, Pick n Pay and Truworths. Hard-up members of the armed forces also make up the top five workforces requesting payday loans. Managing Director of CashExpress Chris Khuzwayo said: “Keeping a roof over your head is a basic human right. These figures, uncomfortable as they are, lay bare the state of the nation as people are struggling to cover their rent or mortgage payments”. He added, “Wages for some of our most valuable members of society are just not high enough for them to manage basic living costs and they are regularly being forced to seek out express loans and other risky financial help.
Housing expenditure is the largest monthly expense for our customers and they should be able to comfortably afford this before turning to emergency finance” He encouraged the financial community claiming that they act as a broker for short term credit to help customers find financial assistance from FCA authorized credit providers instead of seeking out illegal or potentially dangerous alternatives. The FCA is currently considering further ways to tackle high cost credit and research topics which align with a report from the CashExpress on Financial Exclusion, which recommended far stronger regulation of consumer credit along with further support for credit unions and microfinance institutions. As well as strengthening the regulation of high cost credit, it is also important to support alternatives such as the not-for-profit organizations whose sole function is helping local residents of Durban with financial advice, and in special circumstances, financial aid towards rehabilitating their credit status. Credit unions are another alternative to high-cost lenders, supporting their members to save, borrow and gain access to other financial services. They are financial co-operatives, owned and controlled by the members.
CashExpress’ research also highlights that many people in Durban, both in and out of work, are on very low incomes which vary week to week. This makes it very difficult to make ends meet and is one of the main reasons why people turn to credit. It is therefore important to tackle these fundamental problems of poverty and precarity, as well as the issue of high cost credit. Credit can be a vital lifeline to many people and should not be taken away entirely. But nor should lenders be allowed to take advantage of people in desperate situations. The End High Cost Credit Alliance is therefore a much-needed initiative, supporting alternatives to high-cost credit and so improving the credit landscape in Durban, and South Africa in large parts, today.