NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, August 14, 2014

AFRICAN Bank may have been the first to fall, but this is just one part of a tragic story that concerns all microlenders who provide cash loans to fund consumption, which affects SA much more broadly and deeply than the collapse of a single business.

Overwhelmingly, people who require a short-term cash loan of a few thousand rand are low-income earners with modest balance sheets. To these people, microloans hold out a promise of relief from the debilitating effects of being poor and offer a chance to sidestep the frustration of deferred consumption.