My colleague gets at least five short-term loan offers from all the big banks every month. She only has one store account and is paying for her car. She feels she is being hounded by credit providers and I think its true.

Paul Slot, a director at Octogen, said this was exactly how consumers fell into the debt cycle. He added that credit providers could be aggressive, but consumers needed to do the hard work and resist the temptation.

“It starts with a small loan and once you [have] gone through the first loan you think it is easy to get the next one. However, once you cannot pay for all these small loans, you go for the bigger one to try and consolidate all your debt.”

According to Martin Snyman, a debt counsellor at Octogen, seven cases were referred to a magistrate court and the individual consumer’s commitment to repay debt was between 79 percent to 160 percent of monthly income. The seven consumers had 82 credit arrangements between them with the lowest being seven and the highest 17. The total debt amounted to R1.6 million.

Slot said the real culprit in this case would be the service provider that allowed the consumer to use up to 70 percent of their monthly income to repay a loan.

The magistrate court declared 25 of these agreements, approved by mainstream credit providers and valued at R575 243, reckless. This means that these consumers are no longer required to repay this debt.

This could be one way to make irresponsible credit providers pay for reckless lending, however, the process was a difficult and long one. And a debtor may lose all of their money or the court may ask you to pay just the capital. But the key is resistance. page 19

Remittance costs

Africa’s overseas workers, who sent close to $60 billion (R540bn) in remittances last year, pay more to send money home than any other migrant group, according to the World Bank.

South Africa, Tanzania and Ghana are the most expensive with prices averaging 20.7 percent, 19.7 percent and 19 percent respectively, “due to limited competition in the market for cross border payments”.

Doubell Chamberlain, a consultant to FinMark on retail payment systems, identified a number of potential reasons for higher costs. In South Africa these include the cost of complying with anti-money laundering legislation and exchange control. Moreover, competition is limited to banks because only banks have access to payment systems.

Sandisiwe Ncube, a senior researcher at the Centre for Financial Regulation and Inclusion (Cenfri), identified generic reasons why costs to transmit to Africa are higher. The size and volume of remittance transactions is often small, attracting higher remittance costs per transaction. And the size of the remittance market is also small – a larger remittance market could contribute to increased volumes and lower costs.

Moreover, regulatory requirements could impede market entry (and ultimately innovation) and drive up costs.

Also limited infrastructure could potentially drive up transaction costs – for instance, sending money to remote areas would mean additional transportation costs.

Other minor considerations could include: the size of the remittance operator (the bigger the better); the size of the remittance service provider, which will determine the exposure to interest and exchange rate shocks; and the market dominance of a particular remittance providers.

According to the World Bank, bringing remittance prices down to 5 percent of the money sent from the current 12.4 percent average cost would put $4bn more in the pockets of Africa’s migrants and their families who rely on remittances for survival.

Zille on breakfasts

DA leader Helen Zille yesterday wrote a long article entitled “First National Bank, the New Age and the Guptas: How political patronage works in the ‘new’ South Africa”.

The past week’s headlines were dominated by the FNB “debacle”, wrote the DA leader. For those readers who might have been hibernating, she noted, FirstRand chief executive Sizwe Nxasana “made a grovelling apology to the ANC, after the bank’s senior executives were summoned to [ANC headquarters] Luthuli House for a roasting over an advertising campaign”.

The enraged ANC threatened that its video clips could deter investment, she reported. “For the FNB’s part, one of their excuses for withdrawing the ads was to protect the children involved. If FNB had reason to fear for the safety of their children, what does that say about South Africa and the ANC? It is truly chilling.”

The ANC’s bullying of a private company would do far more to kill investment “than anything a child might have said”.

But that was going off at a tangent. The DA leader’s withdrawal last week from a televised New Age breakfast was made “after it emerged that state-owned enterprises, Eskom, Transnet and Telkom had funded 24 breakfasts to the tune of R25 million”.

The “sponsorship” was a “fig-leaf” for disguising the transfer of millions of rand of taxpayers’ money into a company owned by the Guptas, “who are major benefactors of the ANC and [President] Jacob Zuma”.

Zille acknowledged that she had thanked Telkom when she spoke at a New Age breakfast in February. She had believed it was an ordinary sponsorship at the time. Instead of focusing on Chancellor House – which acted as a conduit of state funds – the media focused on her alleged “hypocrisy”. It may be a little unfair, but then one has to assume that she too knew about Chancellor House last February, as well as anyone else.

Perhaps is it simply about doing what a politician says, rather than what they should not have done.

Edited by Peter DeIonno. With contributions from Nompumelelo Magwaza, Ethel Hazelhurst and Donwald Pressly.