COSATU welcomes the introduction of the maximum interest rate for all types of credit agreements

COSATU welcomes the introduction of the maximum interest rate for all types of credit agreements by the Department of Trade and Industry to help consumers. This is long overdue and we call on the department to work with all stakeholders to embark on a mass publicity campaign to inform the public about it.

They should also put strident measures in place to ensure that there is proper enforcement of the regulations and that all credit providers abide by them. South African workers are highly indebted and they are victims of unctuous credit providers, who hide fees and extra charges behind unclear calculations

Credit providers prey on the poorly paid and desperate workers and impose unreasonable interests on their loans. The levels of reckless lending in the country have left many low income earners saddled with loans they cannot afford.

Most of these workers end up being unfairly listed in credit bureaus. We call on government to demand that banks fund the consumer education campaign that will explain and inform consumers about this maximum interest rate.

With monetary committee of the South African Reserve Bank sitting next week to review the interest rate and inflation, we call on them not to increase the prime rate as this will only hurt workers further, by reducing whatever little money they have.

It will also increase their heavy debt levels, reduce expenditure and consumption further stifling economic growth and job creation. Given the steady and below 6% inflation levels, the SARB should in fact reduce the prime rate to provide relief to workers and stimulate economic growth.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 16 November 2015