Picture: Karen Sandison/African News Agency(ANA)
Picture: Karen Sandison/African News Agency(ANA)

Covid-19 in SA: Consumers fall prey to greedy loan sharks

By Tshego Lepule Time of article published May 2, 2020

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Cape Town - Desperate consumers whose pockets have been hard hit by the effects of Covid-19 are falling victim to greedy loan sharks.

South Africans are finding themselves in difficult financial positions with reduced salaries or no income.

Loan sharks, or mashonisas as they are known in townships, are prolific and ply their trade easily. They charge interest rates of from 40% to 60%. And with more unemployment, the unscrupulous money lenders are hiking their rates even more because of the risk of not getting their money back.

A loan shark spoke to the Weekend Argus and explained how for some this is a means of employment which is often exploited.

“I usually charge 50% interest, this remains the same for as long as the loan amount is not fully paid. For example, if I lend someone R1000, that person is expected to either pay R1500 at the start of the next month or R500 every month until they are able to pay the full R1500,” she said.

“But because of the strain on many people and the nature of this business, I have decided not to lend any money, but continue to collect interest from those I had loaned money to before coronarivus.”

The woman said lending people money at 50% interest during this period would not only be detrimental to the clients because they would struggle to repay the money.

“I may lose a lot of money with people not being able to make payments. The loan shark business is very risky, so it is up to individual loan sharks to either be careful or ruthless.”

She said some loan sharks had increased their interest to 100%.

“But this is pure greed. Many people have had drastic salary cuts and some have no income at all. It is heartless to further deepen the sinkhole our people find themselves in.”

Olwethu Thutani said she made a loan before the lockdown and was being harassed to pay it back because there was no payment holiday for loan sharks.

“I am a domestic worker and rotate between three households during the week. So neither of my madams have me on UIF so I cannot claim for that and am stuck but the mashonisa does not want to hear about it,” she said.

“The mashonisa’s husband came to my house last week Thursday and took my TV and entertainment set to hold it ransom until I pay back the money because I couldn’t pay up at the end of March. I’m scared now because they will be back on Monday to collect again and I have nothing.”

Pensioners are also a vulnerable group who are often targeted by loan sharks who loan them money and keep their Sassa cards and IDs as surety.

Civil society organisation Black Sash said a loan shark was arrested in KwaZulu-Natal last month after being found in possession of Sassa cards and IDs of grant recipients.

“Unfortunately such unlawful lending predatory practices continue to persist,” said the organisation’s Evashnee Naidu.

Weekend Argus

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