As South Africa marks Money Smart Week under the theme “Money Smart: The Power of
Possible”, it is critical that financial education goes beyond teaching consumers how to
manage money. It must also help them understand where to borrow safely and be backed
by a financial system that gives access to regulated options when they need credit.
The concern comes as the Old Mutual Savings & Investment Monitor 2026 shows that the
proportion of working South Africans borrowing from illegal lenders called “mashonisas”
has increased from 12% to 19% over the past year. More than half of respondents, 54%,
also said they were unsure where to turn for financial guidance.
“Financial education is essential, but it cannot protect consumers on its own,” said Nita
Morgan, Chief Executive Officer of Prime Loans. “When people cannot access credit
through regulated providers, demand doesn’t disappear. Desperate consumers will turn to
lenders operating outside the protections of the National Credit Act.”
This is why Money Smart Week should also prompt a broader conversation about financial
inclusion. Teaching consumers to recognise a registered lender, understand the true cost
of credit and borrow responsibly is critical. But those lessons must be matched by a
regulatory environment that keeps responsible, regulated credit accessible.
That is becoming increasingly important as South Africa’s formal short-term credit market
come under growing pressure. The framework governing the pricing of short-term credit
has not been meaningfully updated since 2015. Over the past decade, inflation,
compliance requirements and operating costs have increased significantly, while caps on
interest rates, initiation fees and service charges have remained largely unchanged.
The result is a more risk-averse formal lending environment that leaves consumers with
fewer regulated options. This is reflected in National Credit Regulator data, which shows
that 67% of credit applications were rejected in the quarter ended June 2025 – roughly two
out of every three applications.
“A framework designed around 2015 costs cannot adequately serve consumers in 2026,”
Morgan said. “If the regulated market becomes less viable, consumers are more likely to
put themselves in harm’s way by turning to the illegal market to get access to money
urgently.”
Illegal lenders can expose borrowers to excessive interest rates, coercive collection
practices and the unlawful retention of bank cards, identity documents or SASSA cards as
security.
Prime Loans believes Money Smart Week provides an opportunity to bring the three parts
of consumer protection together, namely better financial education, a stronger regulated
credit market and tougher action against illegal lending.
On financial education, consumers need practical information that helps them understand
how credit works, check whether a lender is registered, compare the total cost of
borrowing and understand the implications of processes such as debt review.
On access, the regulatory framework governing short term credit needs to be reviewed to
ensure consumer protections remain strong while allowing responsible lenders to
sustainably serve consumers who may qualify for traditional banking products.
And where operators deliberately remain outside the framework, enforcement needs to be
strengthened so that illegal lenders cannot continue exploiting financially vulnerable
consumers.
These priorities speak directly to the purpose of Money Smart Week. Financial literacy is
most powerful when consumers not only know how to make informed choices but have
safe choices available to them.
“Credit is one of the most widely used financial tools in the country, but it remains one of
the least understood,” Morgan said. “Consumers need to know what a legal lender is
required to do, what protections they have and how to recognise an illegal operator.”
Prime Loans supports the ongoing work of the Credit Association of South Africa, which
has engaged with government and the National Credit Regulator on proposals to
modernise the pricing framework.
“These are not competing priorities,” Morgan said. “Reform without enforcement leaves
illegal operators in place. Enforcement without education leaves consumers unable to tell
the difference. And education without a viable regulated market simply teaches people to
recognise a loan they may never be offered. The three must move together.”
