Monday, 18 April 2005
The South African Communist Party (SACP) condemns the criticism of the new National Credit Bill by the 11 Credit Bureaux in our country. The SACP rejects Bureaux's claims that the proposed new law is unrealistic or will damage credit bureau businesses. The SACP calls on the government to pass the National Credit Bill into law as soon as possible and to strengthen, not weaken, its provisions. In addition to protecting borrowers with the new law, we call on government to grant amnesty to the millions of South Africans blacklisted by credit bureaux. In the same spirit and intentions it has given amnesty to those capitalist criminals who took money offshore illegally during apartheid. The government gave amnesty to the rich who had billions of rands in wealth offshore, so why can't it do the same for the poor? Poor communities can not benefit from government's planned interventions in stimulating the informal economy, or benefit from the low cost housing and other proposals of the Financial Sector Charter, because millions of poor people are blacklisted by credit bureaux.
Credit bureaux and their industry associations seem to think it is no problem that more than two million borrowers are blacklisted and can not access credit. This blacklisting affects at least 10 million of our people, a quarter of our population. We say it is a national crisis and call on government to intervene on the side of the poor. In the past decade, government's scheme to extend credit, especially microloans, to the poor has failed. The creation of the massive and unscrupulous microlending industry in the 1990s, with microlenders charging unlimited interest, left millions of poor borrowers caught in debt traps, blacklisted by credit bureaux. We fully support government's commitment to adopting new credit policy and laws that will remedy these shortcomings.
Government's own research shows that in a system where over R360bn is provided in credit every year, the poor pay far more in interest than the rich, making repayments difficult and credit blacklisting all too easy. The lowest income earners pay 175% in interest a year for credit, while the highest income earners pay only 26%. An estimated 18 million of the poorest South Africans pay more than 360% a year in interest on unregistered microloans. It is no wonder that 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. The new Credit Bill is designed to remedy some of these ills in the credit environment that have provided rich pickings for credit bureaux in the past.
The Bill requires credit bureaux to provide consumers with personal credit profiles free of charge and to verify all information they sell. This is the least credit bureaux should do. It is time they stopped being part of the problem and become part of the solution. As per the resolution of the SACP Special Congress last week, the SACP Central Committee will discuss action against the credit bureaux and in support of demands for a credit blacklisting amnesty at its forthcoming meeting scheduled for next month.
Contact
Mazibuko Kanyiso Jara (surname Jara)
Head of the Office of the General Secretary
South African Communist Party (SACP)
Tel - 011 339 3621/2,
Fax - 011 339-4244/6880
Cell - 083 651 0271
Email - mazibuko@sacp.org.za ,
Website - www.sacp.org.za