A community is lifting the lid on loan sharks who are holding SASSA cards as collateral while their elderly clients suffer, living from hand to mouth.
The South African Social Security Agency (Sassa) has since warned that any illegal money lender who is found in possession of Sassa cards will be arrested.
Ralph Bouwers, the CEO of the Guardians of the National Treasure, which runs 25 soup kitchens, soccer, chess and soccer and other extra-mural activities, including a club for the elderly, has begun a pilot project with two elderly women who owe loan sharks thousands of rand.
One of the women has since been able to repay her debt in less than three months.
Bouwers said it was heartbreaking, watching families suffer while pensioners’ grants were being held hostage by loan sharks.
“Some charge R40 on a R100 (loan) and others R100 on a R100 (loan),” said Bouwers.
“These elderly people and their families need to eat. We find there are drug dens which also act as loan sharks, as well as selling alcohol.
“These people find themselves in debt because they are from very poor families and often they have to make debt upon debt. But the problem we have is that this causes a ripple effect; a cycle where it affects the youth in that household who have nothing to eat.
“I have a woman who has paid her debt. She owed over R3 000 and one month she gave her whole SASSA grant of R1 900 and in three months she is clear.
“(But) their Sassa cards are being kept by these loan sharks and interest is being charged. Where are the authorities, where is the control?”
A 62-year-old woman who met with her team was in a flood of tears, often going to bed without a meal.
“I owe R2 500 and my SASSA card is still with the loan shark,” she said.
“They charge me R40 (interest) on a R100 loan. I do not have my card which means I am unable to buy food for my family.”
Another 61-year-old woman said she was only left with R400 after a loan was made via a loan shark following the death of her husband.
“I am living in a one bedroom and I have to pay R200 rent there. I am left with R200 for food. I survive by standing in the food queues, or coming to breakfast here at Ralph’s, or I have bread and coffee.”
Sassa spokesperson Shivani Wahab aid they were aware of the ongoing issue of loan sharks and that anyone caught in possession of a recipient’s card would be arrested.
“Sassa clients must fully understand the implications of pledging their social grants for loans; this is unlawful. Abuse of a social grant may lead to the grant being withheld, suspended or cancelled. Beneficiaries have to take cognisance of this.”
Wahab added that Sassa clients were always advised that the Sassa card and pin must be safeguarded at all times.
“Furthermore, money lenders who are found in possession of Sassa cards, will be arrested. Sassa cards remain the property of the beneficiary, and it is illegal for loan sharks to take possession of cards in exchange for loans.
“The use of Sassa cards as collateral for loans deepens the poverty line for beneficiaries”
Weekend Argus also approached a loan shark but he declined to speak.
Spokesperson for the Department of Social Development, Esther Lewis, said their office was encouraging beneficiaries to report these loan sharks to authorities.
“We strongly condemn this practice, as it causes the exploitation of a group who is already vulnerable. We urge people to report these cases to the relevant authorities, such as the police and Sassa.”
Moeshfieka Botha, consumer debt expert, explained many South Africans were vulnerable to this trade.
“It is believed that there are nearly 50 000 of these unregistered credit providers in South Africa.
“Mashonisa is a Zulu term rooted in the word Shonisa, which means to impoverish. With interest rates of from 50% to 120%, that is certainly what they are doing to the most vulnerable in our society.
“There simply isn’t any money and, sadly, far too many people are still waiting for their UIF and Sassa payments.
“Pensioners and other Sassa grant beneficiaries are also a vulnerable group who are often targeted by loan sharks who lend them money and then keep their Sassa cards and IDs as surety.”