SACP welcomes the signing of the National Credit Amendment Bill into an Act by President Cyril Ramaphosa as victory for the working class and poor
22 August 2019
The South African Communist Party (SACP) welcomes the singing into law of the National Credit Amendment Bill by President Cyril Ramaphosa. The bill amends the National Credit Act of 2005. It is a victory for the working class and poor especially in so far as it aims to pull the vast majority of the people out of inescapable debts. By enacting this bill into law, President Ramaphosa has placed the interests of the people above the narrow, self-centred interests of exploitation in the sphere of finance. It is financial exploitation including reckless lending practices that plunged many workers and households into a debt crisis.
The Act provides for debt intervention for people earning less than R7, 500 per month, with unsecured debts of up to R50, 000, by giving them access to mandatory credit life insurance in respect of certain credit agreements. This measure will prevent, among other things, the prevalent scourge of over-indebtedness prevalent in the bottom rungs of the working class, particularly in the event of retrenchment.
Research conducted by the democratic government and other stakeholders indicated that debt review processes tend to be too costly for people earning less than R7, 500 per month. Debt administration often accounts for up to 12.5 per cent of the value of their debt repayments in administration costs, making it an unaffordable mechanism for any consumer with a low income. Without suitable alternatives, escaping the debt trap for many people becomes an unbeatable challenge, thus amounting to unjustifiable and unfair discrimination based on socio-economic status in violation of section 9 of the Constitution.
Hitherto, many unscrupulous insecure and reckless lenders have gone unpunished and, due to this, prohibited conduct has often occurred with little to no consequence. The Act thus also aims to provide for the National Consumer Tribunal to re-arrange consumers’ obligations and make an order in respect of an unlawful credit agreement. It is a drive towards ensuring that all people are afforded protection through fair, transparent, sustainable and responsible processes.
The SACP continues to oppose the lust for profits at any expense by financial institutions. Financial institutions were in furious opposition to the National Credit Act, a direct result of SACP-led campaigns for the transformation of the financial sector, before and after it was promulgated in 2005. The Act shielded South Africa against the worst effects of the global capitalist system crisis that broke out in 2007/2008 by curbing these institutions’ chances of preying on vulnerable consumers and drowning them into debts. In deepening the 2001 “Make Banks Serve the People” campaign, along with other people-centred campaigns, SACP will continue to campaign for a people’s economy and calls on the government to ensure that the amended law is applied accordingly, placing people before profits.
One of the reactions to the new Act claims that the Act will result in a “moral hazard”. This claim is based on no evidence whatsoever, is nothing but a sheer politics of opposition against the working class, the overwhelming majority of our people.
Issued by Alex Mohubetswane Mashilo, National Spokesperson & Head of Communications, SACP, 22 August 2019