SACP calls for action against social grants abuse
Johannesburg - Tuesday, 22 October 2013
The South African Communist Party (SACP) calls for firm and decisive action against abuse of the social grant payment system. The SACP calls upon government to urgently review and possibly cancel the Cash Paymaster Services (CPS) contract.
The Communist Party has noted with concern reports suggesting that there is an abuse of social grants payment system through unsecured and reckless lending practices to the elderly and other recipients of social grants, perpetuated by some micro lenders in active collaboration with the social grants payments distributor, Cash Paymaster Services (CPS).
CPS is reportedly selling the state's social grant database to micro lenders who then advance loans to social grant recipients, among others for cellphone airtime and funeral insurance. CPS is allegedly playing the role of an intermediary doing "marketing" for micro-lenders through selling them social grant database, thus profiteering through the exploitation of state information. The company is allegedly effecting deductions from social grants recipients when making their payments. This constitutes one of the worst forms of exploitation of the poor and the indigent.
The SACP has consistently raised alarm bells about the predatory practices of most of the lending institutions that offer credit facilities to impoverished and vulnerable communities. We have noted the rise in the prevalence of the granting of such debt in the recent past and have warned of the adverse consequences that such would have on the working class and the poor.
The SACP is not completely shocked that the loan sharks are now preying on the social grants recipients and the social grant payment system because of the general predatory conduct that is prevalent in the financial sector aimed at nothing, but profiteering, regardless of the socio-economic effects to society.
The Communist Party is calling for investigation into the scam. Perpetrators of wrongdoing must be brought to book with immediate effect. If necessary the contract with CPS must be reviewed and cancelled.
The scramble for reckless lending
The major banks are now competing for customers through reckless lending with micro-lenders - otherwise known as Amashonisas, Kamela and so on. The overnight rise of Capitec Bank, into becoming one of the key banking entities, is owed largely to its participation in the unsecured lending space. There is also evidence that the mainstream financial institutions, including the BIG FOUR banks - Standard Bank, First National Bank, ABSA and NEDBANK - are involved in the scramble for customers in the unsecured and reckless lending space ("market").
The recent decision by the National Credit Regulator (NCR), imposing a series of penalties on the African Bank bears testimony to our view that there is rampant abuse of the credit system, much of which borders on contravention of the National Credit Act.
The SACP calls on the NCR to continue investigations into the conduct of all reckless lenders including the banks, who prey on the vulnerable and poor working class communities. Where abuse and unlawful practices are uncovered maximum penalties must be imposed including criminal charges. Such action should serve as deterrent to the continued rampant abuse of the poor and vulnerable in society.
Our Red October campaign for the transformation of the financial sctor is being daily proven relevant, and we will be intensifying it in the coming weeks and months.
Statement issued by the SACP, October 22 2013
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