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Red Alert:
An amnesty for workers and the poor black-listed by the Credit Bureaux

Blade Nzimande, General Secretary

As we go to print this edition, the SACP-led Financial Sector Campaign Coalition, will be making its submission to the parliament?s Portfolio Committee on the National Credit Bill. The aim of this bill is to effectively regulate the provision of credit in South Africa, with a particular focus on protecting consumers, especially from the predatory practices of the capitalist credit grantors, institutions of micro-credit, loan sharks and the much-hated Credit Bureaux.

Our submission will occur in the midst of our call for an amnesty for workers and the poor from blacklisting by the Credit Bureaux. This call is gaining popular support from our people in general and from some of the progressive organisations. Our Young Communist League, held its first and very successful National Policy and Strategy Conference this last weekend. Amongst the many issues this conference discussed and resolved was to support this call by the SACP and mobilise the youth of our country behind it.

Our submission is also happening in the middle of the Central Committee of our ally, the Congress of South African Trade Unions (COSATU), the largest and most progressive trade union federation in our country. All indications point to the fact that COSATU is going to support our call for a once-off credit amnesty for those blacklisted by the faceless Credit Bureaux.

The drafting and tabling of the National Credit Bill by government is as a direct result of the SACP-led campaign for the transformation of the financial sector in our country. When we launched our Red October Campaign on the financial sector transformation in 200, we, amongst other things, called for the regulation of the loan sharks and the credit bureaux, as part of an overall campaign for affordable financial services and credit as part of building sustainable livelihoods for workers and the poor of our country.

In South Africa today there is an estimated 2,4 million people blacklisted by Credit Bureaux, in essence meaning that they cannot have access to any form of credit. In celebrating our 84th SACP anniversary, as part of our contribution to the struggle of working people and the poor, this year we once more highlighted the plight of more than two million South Africans black-listed by the Credit Bureaux. The great majority of the black-listed are workers and poor.

The blacklisted are the victims of high-interest rates, of loans sharks, of retrenchments, of a widening wage gap, of unscrupulous credit practices by retailers .They must be given a once-off amnesty. The workers and the poor must be given a chance to get back on their feet.

Credit bureaux and their industry associations seem to think it is no problem that more than two million borrowers are blacklisted and cannot access credit. This blacklisting affects not just those directly blacklisted, but families and dependents as well. It is possible that some 10 million South Africans, a quarter of our population, are affected.

This is a national crisis. We call on government to intervene on the side of the poor. In the past decade, government's well-intentioned schemes to extend credit, especially micro-loans, to the poor have not achieved the results hoped for. This has led to the emergence of an extensive and unscrupulous micro-lending industry, with mashonisas charging exorbitant interest.

Practices of this kind have left millions of poor borrowers caught in debt traps and blacklisted by credit bureaux. It is for this reason that we support the thrust of the National Credit Bill, and government's commitment to adopting a new credit policy and to implementing laws that will remedy these shortcomings.

Government's research shows that in our country over R360bn is provided in credit every year. But the poor pay far more interest ? in fact the lowest income earners pay an average interest rate that is SEVEN times more than that paid by the rich. High income earners pay an interest rate of around 26% on average for their credit. The lowest income earners pay an incredible 175% average interest rate! Some of the mashonisas charge up to 360% interest per annum. For the poor the official interest rate is only an abstract figure, far from the realities they are faced with. This is akin to a credit black market. In essence the poor are subsidising the rich.

No wonder millions of our people are caught in debt spirals and end up blacklisted. It is time to wipe the slate clean and close this chapter of massive exploitation of the poor.

In calling for an amnesty for the blacklisted we are not calling for a sentimental or charitable gesture. It is a necessary step to ensure the success of the new National Credit legislation. The new credit bill requires credit bureaux to provide consumers with their own personal credit profiles free of charge and to verify all information they sell. We welcome these measures, but they are just the beginning of transforming this sector.

But some will say these are unrealistic demands.

To these sceptics we have two answers. The first is: why should there be amnesties, debt relief and special financial vehicles for some, but not for the millions of poor of our country?

  • Through the TRC process we have given an amnesty to some of the worst apartheid-era killers and torturers.
  • We have given an amnesty to the wealthy who illegally took their money out of the country.

As the SACP we have not in principle opposed any of these interventions. But if these things can be done, then there is absolutely no moral or financial reason why the black-listed poor of our country should not also enjoy an amnesty and debt relief.

Blacklisting in Credit Bureaux also has other consequences for South Africa. The priority of government is to address poverty and the huge challenge of underdevelopment in our country. To this end government is embarking on a number of measures focusing on the underdeveloped sections of our society, including focus on SMMEs and co-operatives.

As a result of our collective financial sector struggles, the banks have also now committed to providing R42 billion to finance low-cost housing in our country. This is the first time ever that South African mainstream banks have committed themselves on this scale to funding low-cost housing.

The targeted beneficiaries of these and other interventions will be the many of the blacklisted. The net effect of this is that they are not going to benefit from these programmes to create sustainable livelihoods, and this has serious consequences for our strategy to fight poverty. That is why a once-off credit amnesty is a necessity, as part of this broader strategy to tackle poverty and joblessness.

However, our submission to parliament is not only limited to the regulation of the Credit Bureaux and the amnesty we are calling for.  We believe that the bill as a whole has many features that will, for the first time in our history, properly balance the profit-making interests of credit granters against those of consumers of credit. We find much of merit in the proposed Bill and find that in many instances, the Bill takes cognisance of the demands on credit agreed by the social partners at the Financial Sector Summit in 2002, and originally raised by the SACP-led campaign to transform the financial sector.

We are in agreement with the Bill�s attempts to ensure access to affordable, appropriate credit and to address the reckless lending practices that have characterised credit access for the majority of South Africans in the past. The Bill�s provisions on limits to total costs of credit and interest rates, access to credit information, contracts in simple language with full disclosure of charges, terms and conditions, effective regulation of credit information and credit bureaus, are welcomed.  These were all among the demands of civil society organisations at the Financial Sector Summit three years ago and it is gratifying to see them finally included in the National Credit Bill.

We also welcome the establishment of a national credit regulator to effectively oversee the entire credit regime in our country. This is a better institution than the so-called credit ombud, whose radio interview recently convinced us even more that this institution is nothing more than further protection of the bad practices by the Credit Bureaux. The credit ombud is not an impartial institution, it is bias towards credit granters and the credit bureaux.

The regulation of micro-lenders and capping the total cost of credit, including interest rates and other charges, has been one of our long-standing demands. We hope this will go a long way towards eliminating the unscrupulous practices of many of the micro-lenders, and hopefully lead towards the elimination of the loan sharks.
In our submission we will therefore be also calling for the strengthening of the Bill in a number of areas in order to create a credit regime that is responsive to the developmental challenges facing our country.

Ufasimba is Focused and in Action

Guest article by Buti Manamela, National Secretary YCLSA

We have just emerged from a very successful National Policy Conference in Mokopane Multipurpose Center over the weekend and already the buzz is in the open on the resolutions of the conference. More than 600 delegates (representing more than 20 000 members); guests from the ANCYL, COSAS, SASCO and the leadership of the Alliance blessed this historic gathering with their presence. The most important people at the Conference were the branch delegates, who without fear and full of courage engaged robustly in the issues of the day.

The quality of the debates and the outcome reflects the more than 100 meetings that took place as part of the preparations were a fruitful exercise and the implementation that will follow such resolutions should now take the center stage.

When we met in Limpopo Province, it was exactly 20 Months since the re-establishment Congress of our organisation and since then, there has never been a turning back.

We said at the Policy and Strategy Conference that the re-establishment of the YCL a resultant of the SACP resolution, we were marking a historic moment in the history of the country, in the history of the youth movement, in the history of the SACP and importantly, in the struggle for Socialism in our lifetime and the revolutionary role of youth.

The Deputy General Secretary of COSATU concurred that the launch of the YCL was an important landmark in youth politics as it occupies a space that has been empty since 1994. He agreed that the YCL has in a way transformed youth politics from that of being obedient, calm and recipients of directives from above into youth politics of activism, radicalism and engagement.

We also said in the National Policy and Strategy Conference that since the re-establishment Congress, the critics of the re-establishment of the YCL have dissipated and went into oblivion, those who alleged that this growing youth organisation has no relevance have perished leaving behind a strong Ufasimba; in their place, the new critics who cannot wish us away develop a new sense of function in trying to suppress the might that the YCL will become. When their philosophy of cutting the roots of a flourishing YCL failed, all that they resort to is to wish that the fruits of our work will rot and the seeds that we plant will not grow.

As all who wish we were not here struggle to write us off, the youth of the country looks in glee at the wonder of hope that is being brought were hope was no more; were activism is rekindled were activism was no more; were swimming against the tide can still be possible in the course of building socialism?in our lifetime.

The conclusion of the conference with the presence of deputy president of the ANC, Jacob Zuma, and an estimated 10 000 young people to come and hear the resolutions of the conference demonstrated that the YCL has become a force to be reckoned with.

As we headed to Limpopo province, we set ourselves the following tasks:

  • The first and major task is the development of the YCL Political program, 
  • The Second task was to explore the permanent tasks of the YCL: learn, educate, mobilise, organise and fight�
  • Thirdly, placing our programme in the context of the history of the working class youth movement and the revolutionary movements. To deal primarily with the question of tactics in the general sense 
  • Lastly, to deal with the activity plan of the YCL and its priority tasks in a ferociously capitalist society.

Given the resolutions of the National Policy and Strategy Conference, we have clearly achieved the said objective and defined the marching course for the members of the YCL and the agenda for youth development in general. Below are some of the critical resolutions that the National Policy and Strategy Conference.

Call for an Inquest into the Death of Chris Hani
The National Policy and Strategy Conference (NPSC) resolved that there should be a further inquest into the assassination of the late General Secretary of the SACP, Chris Hani. The NPSC believes that those who were accused, tried and sentenced went through this process under Apartheid. The NPSC believed that much more can be found on who the real killers of Chris Hani are, and those who were involved in the conspiracy to assassinate him. The YCL will be calling on young people to sign a petition to the department of Justice and to the various courts throughout the country so as to put pressure on these institutions to launch the inquest.

Nationalisation of all land and the creation of a State Bank
The YCL calls the government to nationalise all land, excluding residential land and ensure that, in the spirit of the Freedom Charter, the land belongs to all those who live it. We believe that all land used for production and commercial purpose should be leased by the government to individuals for that purpose, for a limited period of 99 year. We believe that there should be no private ownership of land in this country. The NPSC notes the fact that there is a review in the �willing buyer willing seller policy�, however; we believe that this does not do away with private ownership of land.

The YCL NPSC further resolved that the government should create a State Bank for the development of our people. The YCL believes that private banks have failed our youth because of their profit orientation. We believe that the tasks performed by the Land Bank, Umsobomvu Youth Fund, NTSIKA, KHULA Enterprise, The National Empowerment Fund and other funds that the government has created for economic development should be centralised and be rum by the State Bank. The other role of the State Bank should be to focus on housing, education and other financial services that the private banks provides at lower or no interest.

The Conference also resolved that all mineral resources should be nationalised and the products thereof be shared by all who live the country. The Conference further criticized the privatisation of State Assets, and called on for their total nationalisation. We believe that this process has shed many jobs, and has led to these institutions (TELKOM, ESKOM, TRANSNET etc) to focus on profits rather than service delivery

The 10 Youth Demands for 2015
The Conference resolved that the YCL�s programmatic vision and strategy should be to rally young people behind the �10 Youth Demands for 2015�. The demands includes Work for All Youth, Free education, Free Justice System, Safety and Security, socialisation of the means of production and many others. These demands are in line with the Freedom Charter. The YCL will be launching a programme to the public in two months time around the demands. We believe that the demands are achievable, and thus our activities will be inclusive of demonstrations, engagement and internal initiatives to address some of the demands.

ANC Deputy President Jacob Zuma
The conference noted the systematic attacks on the South Africa former Deputy President, Jacob Zuma. The conference also raised a concern regarding the process towards his trial. The former Deputy President has already been found guilty by Squires and the court verdict was used as a basis for his dismissal as the Deputy President. The right of the former Deputy President to be innocent until proven guilty has been violated. For this reason, the proceedings of the court have already prejudiced him.  This was also confirmed by the Public Protector office that said the former National Director of Public Prosecutions �unjustifiably infringed upon Mr. Zuma�s constitutional right to human dignity and caused him to be improperly prejudiced�.
The conference resolved that YCL must support all activities aimed at supporting the former Deputy President.

SACP and State Power
In line with the SACP Medium Term Vision (MTV), the conference agreed in principle that there must be communist presence in the state legislative arms at all levels. The YCL will participate in the SACP-led Commission to look at the SACP�s relationship to state power and power in general.  In doing so, the YCL will also establish its own Commission to consolidate our position guided by the aforementioned perspective. We in the same light resolved that all list committees should be representative of the alliance partners, including the deployment committee of the ANC. This will in the final analysis ensure broader Alliance participation in governance issues.

Building a Strong and Mass Based Youth Organisation
The National Policy and Strategy resolved that our role as the YCL is to recruit as many young people as possible behind clear demands and ensure that these young people understand what it means to be a communist and thus, prepare them for membership of the SACP. The conference expressed concerns over the uneven growth of the organisation, and indicated that the YCL at any province, district or branch should not be second fiddle to any organisation. Districts were encouraged to ensure that they launch ward based branches were possible and ensure that the YCL grows bigger in quantity, quality, influence and action.

Other key Demands includes

  • The banning of all privately owned Credit Companies, and the creation of an institution run by the state to keep credit records. This is mainly because the credit status of individual, which is their private affair, is used for profit making purposes, and equally used for the disadvantage of young people. Many young people gave been refused an opportunity to work precisely because of they are blacklisted with the credit bureaux. Equally, there are young people who cannot advance co-operatives development, SMME�s and many other economically developmental functions.
  • Basic Services for all should be the function of the State, this means that all privately owned companies providing basic services should discontinue. The crises that communities face is mainly because of the profit-oriented private companies who charge high prices. 
  • Communal Land should not be sold or privatised to anybody except to the State. Communal land should be administered by the state in consultation with the community and community structures such as People�s Land Committees.
  • Houses that are subsidised by the government should not be sold except back to government. We are worried of the welfare of the people, and thus the whole package of our proposals focus on these. We call on for constitutional amendments in this regard. The other critical issues relates to the corruption in the housing subsidies.
  • Lowering pensionable age to 55 for all men and women. We believe that the idea that men live longer than women is flawed. This will result in sufficient work for youth. Pensions to elders should then be increased and those who currently qualify should be put in the system. This should apply for both private and public institutions. We also call on government and the private sector to extend pension and provident fund to all workers.
  • We call on the extension of the child support grants to 18 and an increase in that child support grant. We also call on the extension of school feeding schemes to high schools.
  • We call on the institution on prescribed assets as most companies have failed to meet the GDS target of 5% investable income into infrastructure development. This should be done by a law passed in government and not NEDLAC, and that this should apply across the board.

Post Conference Process
Post conference, we will be convening an extended National Policy and Strategy Conference whose main focus will be on the implementation of the resolutions of that conference. We will engage with the different youth organisations which are rooted in communities to ensure that we build a strong youth force for youth development.

Kaizer Mohau
Media Liaison Officer
South African Communist Party (SACP)
Tel: 011 339 3621/2
Fax: 011 339 4244/6880
Cell: 073 571 7528