sector credit extension slowed to 23,1% in July 2007 .
Mortgage Advances increased from R295b to R793,1b
between 2001 and August 2007
Disbursements: Quarter ending February ‘07 NCR Industry Statistics 0.52% 24,894 0.7% $8,414,979 Section 21 Companies 0.41% 19,700 0.8% $10,404,721 Co-Operatives 2.49% 119,667 0.8% $10,139,383 Trusts 32.37% 1,557,136 13.7% $172,865,174 Close Corporations 38.45% 1,849,989 43.8% $552,556,405 Private Companies 0.86% 41,404 0.3% $3,371,115 Public Companies 24.90% 1,198,068 40.0% $504,920,800 Banks 100.00% 4,810,858 100.0% $1,262,672,576 Total for Industry % of Industry by number Number of loans disbursed % of Industry by value Total Disbursements
Enacted 1 st June 2007
Aims to protect the consumer from being
granted credit recklessly, and the creation of a
fair and non-discriminatory credit market.
The National Credit Regulator : responsibility for the enforcement of the Act
The National Consumer Tribunal : conducts hearings into related complaints
Applies to all credit products where payment is deferred and where interest or fee is payable: overdrafts, credit cards, installment agreements, leases, secured loans and credit guarantees.
Unfortunately one of the side effects is that the majority of South Africans, already struggling under resent economic climate, are unable to get credit
Example: decline rate for home loans up to 60% per year!
The National Credit Act
The National Credit Act and
Before any credit provider lends money, it must
do a thorough check to see whether the client will
be able to afford the loan.
If he isn’t, and the client fails to pay back the loan,
this could be regarded as “reckless credit” and written off
i) Borrowers: ii) Lenders:
If you’re in the business of lending, pawning or selling
goods on hire-purchase-type arrangements, the NCA will
heavily affect your business.
If you run an ordinary business that allows some customers
to pay at the end of the month or sometime after they receive
the invoice, you will be mildly affected.
You then needn’t register at the National Credit Regulator, nor
do you have to do affordability checks on your customers.
Structure for recourse in South Africa www.finmarktrust.org.za
The Consumer Protection Bill
SA Black L iving S tandard M easure
LSM1 : Rural; income < R1 000/month (poorest group)
LSM10 : Urban; well-educated; income up to R19 000pm
LSM5/6 : Fastest-growing (R2 500 - R4 000pm); young women
LSM5/6 : 3 million; collective buying power R160-billion per year
Bappies : “ B ooming, A spirational and P reviously P oor” – SA’s
biggest economic wave yet. Mostly Black, young,
single, females ( 1,09 million; falling in LSM5 group)
(Consumers: Range LSM1 – LSM10)
Buppies : “ B lack U pwardly Mobile P rofessionals”; Black elite since the 90’s
BAPPIES + BUPPIES = 27% of population! Spending power of R70b/year – almost 40% of entire bottom half of SA economy!
“ BLACK DIAMONDS” : 322 000 in 2006, increasing to 2,5m in 2007! Average income R5 000 – R12 000/m. Buying power of R180b!
NB! “Black Diamonds” are not really making it! A mere 300 000 can afford it! (paying mortgages, car installments, school fees, traveling, golf, eating out – incomes >R12 000)
SA Black L iving S tandard M easure
Income Profile: LSM1 – LSM9
LSM Spending Profile
LSM Banking Profile
Educating SANCU’s “self-help approach”
The “Water Tank” Diagram
i) Calculate your income
ii) Fixed Payments
iii) Variable Payments
iv) Discretionary Payments
v) Your personal Budget Sheet
Five easy steps to personal financial empowerment (i)
 Be your own business and make profit
Profit / Loss
 Ideas on maximizing profits
Controlling and reducing costs
 Preparing your own budget
What is a budget?
How to budget
- The Careways Group -
Five easy steps to personal financial empowerment (ii)
 Experiencing the power of savings
What to do with your profit
Making provision for major life events
 The dangers of borrowing
When to borrow
Where to borrow
What are your rights and obligations?
Already over indebted – what to do?
- The Careways Group -
Dealing with Debt!
Develop a Budget
Contact your Creditors
Dealing with Debt Collectors
Auto and Home Loans
Factors impinging on SA Consumers
World-wide inflation on foodstuffs
Imported inflation, especially oil price
Interest rate hikes: 350 basis points
Price of public utilities i.e. electricity,
water, telephone services are
regulated by Government – influence
inflation – consumer has to accept!
Four Credit Associations holding hands?
The Banking Association of South Africa,
Consumer Credit Association (CCA)
Furniture Traders Association (FTA) and
Micro Finance SA (MFSA)
Representing members who provide in excess of 95% (R850b)
private sector credit to consumers in SA
Common goal : dealing with over-indebtedness in the interest of a healthy and vibrant credit market
Financial advice to over-indebted consumers; facilitate
restructuring of their debts to improve affordability; and
Ensure that consumers can eventually fully recover from their over
indebtedness, fully repay their debts and remain viable and credit worthy borrowers.
“ Such an industry-driven voluntary mediation process could offer
consumers and credit providers a potentially better, less costly deal.”
2007 Banking Bill for low income groups
Allows access to banking services, mainstream products and financial advice
2004: financial Charter
Mzansi Bank; >3 million accounts at present
2006: 49% of total population “unbanked”
Problem of access to financial services too large for commercial banks alone
SA Micro Finance Apex Fund (Samaf): micro credit, savings, insurance and payment facilities to active poor rural households, farmers and agri-businesses. Provides loans of up to R100 000 payable over 12 months.
Access to entrepreneurs in SA: challenges and opportunities
Attitudes of banks
BEE code targets
Lack of awareness of development finance
Lack of financial confidence
Lack of appropriate products
Self-regulation by South African Banks
Banking sector regulated by the Reserve Bank
SARB is a private, listed company
Measures the compliance of banks
banks against international set of
rules agreed in Basel, Switzerland
Independent from Government
SA banking sector is one of
the most sophisticated sectors
on the globe
Government’s big effort to get
banking facilities to the non bankers must continue
Critical counterpart to that however: ILLITERACY !
Communicate with all bodies, NGO’s, the media and e-systems
All Government departments and bodies (DTI; Ombudsmen; NCR; FAIS FSB; Consumer Tribunal . . .)