Amnesty+for+black-listed+workers+and+the+poor,+Nzimande

Umsebenzi Online, Wednesday, 17 August, 2005 (Vol.5 No.41)

=An amnesty for workers and the poor black-listed by the Credit Bureaux=
 * //Red Alert://**

Blade Nzimande, General Secretary

As we go to print this edition, the SACP-led Financial Sector Campaign Coalition, will be making its submission to the parliament's Portfolio Committee on the National Credit Bill. The aim of this bill is to effectively regulate the provision of credit in South Africa, with a particular focus on protecting consumers, especially from the predatory practices of the capitalist credit grantors, institutions of micro-credit, loan sharks and the much-hated Credit Bureaux.

Our submission will occur in the midst of our call for an amnesty for workers and the poor from blacklisting by the Credit Bureaux. This call is gaining popular support from our people in general and from some of the progressive organisations. Our Young Communist League, held its first and very successful National Policy and Strategy Conference this last weekend. Amongst the many issues this conference discussed and resolved was to support this call by the SACP and mobilise the youth of our country behind it.

Our submission is also happening in the middle of the Central Committee of our ally, the Congress of South African Trade Unions (COSATU), the largest and most progressive trade union federation in our country. All indications point to the fact that COSATU is going to support our call for a once-off credit amnesty for those blacklisted by the faceless Credit Bureaux.

The drafting and tabling of the National Credit Bill by government is as a direct result of the SACP-led campaign for the transformation of the financial sector in our country. When we launched our Red October Campaign on the financial sector transformation in 200, we, amongst other things, called for the regulation of the loan sharks and the credit bureaux, as part of an overall campaign for affordable financial services and credit as part of building sustainable livelihoods for workers and the poor of our country.

In South Africa today there is an estimated 2,4 million people blacklisted by Credit Bureaux, in essence meaning that they cannot have access to any form of credit. In celebrating our 84th SACP anniversary, as part of our contribution to the struggle of working people and the poor, this year we once more highlighted the plight of more than two million South Africans black-listed by the Credit Bureaux. The great majority of the black-listed are workers and poor.

The blacklisted are the victims of high-interest rates, of loans sharks, of retrenchments, of a widening wage gap, of unscrupulous credit practices by retailers. They must be given a once-off amnesty. The workers and the poor must be given a chance to get back on their feet.

Credit bureaux and their industry associations seem to think it is no problem that more than two million borrowers are blacklisted and cannot access credit. This blacklisting affects not just those directly blacklisted, but families and dependents as well. It is possible that some 10 million South Africans, a quarter of our population, are affected.

This is a national crisis. We call on government to intervene on the side of the poor. In the past decade, government's well-intentioned schemes to extend credit, especially micro-loans, to the poor have not achieved the results hoped for. This has led to the emergence of an extensive and unscrupulous micro-lending industry, with mashonisas charging exorbitant interest.

Practices of this kind have left millions of poor borrowers caught in debt traps and blacklisted by credit bureaux. It is for this reason that we support the thrust of the National Credit Bill, and government's commitment to adopting a new credit policy and to implementing laws that will remedy these shortcomings.

Government's research shows that in our country over R360bn is provided in credit every year. But the poor pay far more interest - in fact the lowest income earners pay an average interest rate that is SEVEN times more than that paid by the rich. High income earners pay an interest rate of around 26% on average for their credit. The lowest income earners pay an incredible 175% average interest rate! Some of the mashonisas charge up to 360% interest per annum. For the poor the official interest rate is only an abstract figure, far from the realities they are faced with. This is akin to a credit black market. In essence the poor are subsidising the rich.

No wonder 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.

In calling for an amnesty for the blacklisted we are not calling for a sentimental or charitable gesture. It is a necessary step to ensure the success of the new National Credit legislation. The new credit bill requires credit bureaux to provide consumers with their own personal credit profiles free of charge and to verify all information they sell. We welcome these measures, but they are just the beginning of transforming this sector.

But some will say these are unrealistic demands.

To these sceptics we have two answers. The first is: why should there be amnesties, debt relief and special financial vehicles for some, but not for the millions of poor of our country?

a. Through the TRC process we have given an amnesty to some of the worst apartheid-era killers and torturers. b. We have given an amnesty to the wealthy who illegally took their money out of the country.

As the SACP we have not in principle opposed any of these interventions. But if these things can be done, then there is absolutely no moral or financial reason why the black-listed poor of our country should not also enjoy an amnesty and debt relief.

Blacklisting in Credit Bureaux also has other consequences for South Africa. The priority of government is to address poverty and the huge challenge of underdevelopment in our country. To this end government is embarking on a number of measures focusing on the underdeveloped sections of our society, including focus on SMMEs and co-operatives.

As a result of our collective financial sector struggles, the banks have also now committed to providing R42 billion to finance low-cost housing in our country. This is the first time ever that South African mainstream banks have committed themselves on this scale to funding low-cost housing.

The targeted beneficiaries of these and other interventions will be the many of the blacklisted. The net effect of this is that they are not going to benefit from these programmes to create sustainable livelihoods, and this has serious consequences for our strategy to fight poverty. That is why a once-off credit amnesty is a necessity, as part of this broader strategy to tackle poverty and joblessness.

However, our submission to parliament is not only limited to the regulation of the Credit Bureaux and the amnesty we are calling for. We believe that the bill as a whole has many features that will, for the first time in our history, properly balance the profit-making interests of credit granters against those of consumers of credit. We find much of merit in the proposed Bill and find that in many instances, the Bill takes cognisance of the demands on credit agreed by the social partners at the Financial Sector Summit in 2002, and originally raised by the SACP-led campaign to transform the financial sector.

We are in agreement with the Bill's attempts to ensure access to affordable, appropriate credit and to address the reckless lending practices that have characterised credit access for the majority of South Africans in the past. The Bill's provisions on limits to total costs of credit and interest rates, access to credit information, contracts in simple language with full disclosure of charges, terms and conditions, effective regulation of credit information and credit bureaus, are welcomed. These were all among the demands of civil society organisations at the Financial Sector Summit three years ago and it is gratifying to see them finally included in the National Credit Bill.

We also welcome the establishment of a national credit regulator to effectively oversee the entire credit regime in our country. This is a better institutionthan the so-called credit ombud, whose radio interview recently convinced us even more that this institution is nothing more than further protection of the bad practices by the Credit Bureaux. The credit ombud is not an impartial institution, it is bias towards credit granters and the credit bureaux.

The regulation of micro-lenders and capping the total cost of credit, including interest rates and other charges, has been one of our long-standing demands. We hope this will go a long way towards eliminating the unscrupulous practices of many of the micro-lenders, and hopefully lead towards the elimination of the loan sharks.

In our submission we will therefore be also calling for the strengthening of the Bill in a number of areas in order to create a credit regime that is responsive to the developmental challenges facing our country.