Current Project
The Postal Payment System & Debt
In mid-2018, the delivery of South Africa's social grants was brought under the Post Office's remit. And yet, even though grants are now distributed by a public entity, debt has continued to be implicit in the system. With the Black Sash, Deborah James, David Neves and I researched how social grantees remain a significant market for formal and informal money-lenders. We found that creditors use government grants as collateral because such payments are regular and secure incomes. We also found they charge extremely high (though legal) interest rates based on the erroneous perception that grant recipients are a "risky" market. In addition, we found that most people borrow money to pay for the very things that should be part of the wider social protection framework provided by the state. The Black Sash used our findings to engage the National Credit Regulator and the Department of Trade and Industry about how to protect social grantees from reckless lending.
PATHWAYS TO IMPACT:
- We did qualitative and quantitative research around the country about deductions and debt on social grants.
- We are advising the National Credit Regulator, Department of Trade and Industry, Department of Social Development and the South African Social Security Agency on how to protect grantees from reckless lending.
- We are consulting with the Stellenbosch law clinic to asses whether the new legislation or regulation could be used to protect grantees.
- We have updated a paralegal manual on debt for use by community based organisations and advise offices.
- We have held workshops with paralegals to train them on issues related to debt.
IMPACT ACHIEVED:
- We succeeded in ending lending on children's grants because children are too young to consent to credit.
FUTURE IMPACT:
- We are fighting for loans attached to grants to be treated and priced as a secure (rather than unsecure) form of credit.
- We are advocating for lower interest rates, initiation fees, and services on short term loans to social grantees.
- We are advocating for a larger budget and larger physical footprint for the NCR to register and ensure compliance of money lenders.
Advocacy agenda
Reduce THE cost of credit To Grantees
Read: Our report on how debt continues to be part of the social grant payment system.
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