OPINION: Microloans for consumption spell ruin
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.