South Africa's National Credit Act: Successes (and Failures) in Preventing Reckless and Predatory Lending

摘要

South Africa is a developing country of approximately 55 million people, of which 40 million are regarded as economically active, and fall between the ages of 15 and 64. Of this, approximately 25 per cent are unemployed, with many adults classified as illiterate. This presents opportunities for unscrupulous financial service providers, especially lenders, to take advantage of the large number of unsophisticated financial consumers in South Africa. In 2002 the South African Department of Trade and Industry (DTI) recognised that the situation in the consumer credit market was untenable. Existing legislation provided inadequate rules regarding disclosing the cost of credit, consumers were uneducated regarding financial matters (especially when it came to understanding the concept of interest and fees), and there was excessive predatory behaviour among credit providers, who often made no attempt to establish whether consumers were in a position to repay their debts. A study conducted by the DTI in 2004 revealed that the credit market in South Africa, which had developed over a period of 40 years, was inappropriate for the development of a new democratic society, which aimed to cater for all its citizens.