The biggest credit crisis in South Africa is not debt, it’s access

SOUTH Africa's biggest credit challenge is not excessive borrowing but a growing lack of access to regulated finance, according to the Credit Association of South Africa (CASA), which has warned that millions of consumers are increasingly being pushed toward informal and potentially risky lending channels.

- ASHLEY LECHMAN

CASA chief executive Leonie van Pletzen said that every year millions of credit applications are declined by the formal financial sector, leaving many consumers with few alternatives when faced with pressing financial needs.

"Behind every declined application is a person trying to solve a real life problem, whether that is paying school fees, repairing a vehicle, covering a medical emergency, purchasing stock for a small business, or simply making it through the month," she said.

According to CASA, when consumers are unable to obtain credit from regulated financial institutions, they often turn to illegal lenders, informal borrowing networks, unregulated financial products, or alternative financing arrangements that may offer little protection if problems arise.

"The reality is that when regulated credit becomes inaccessible, consumers do not disappear. They simply move elsewhere," said van Pletzen.