As South Africa marks Money Smart Week under the theme \u201cMoney Smart: The Power of
\nPossible\u201d, it is critical that financial education goes beyond teaching consumers how to
\nmanage money. It must also help them understand where to borrow safely and be backed
\nby a financial system that gives access to regulated options when they need credit.
\nThe concern comes as the Old Mutual Savings & Investment Monitor 2026 shows that the
\nproportion of working South Africans borrowing from illegal lenders called \u201cmashonisas\u201d
\nhas increased from 12% to 19% over the past year. More than half of respondents, 54%,
\nalso said they were unsure where to turn for financial guidance.
\n\u201cFinancial education is essential, but it cannot protect consumers on its own,\u201d said Nita
\nMorgan, Chief Executive Officer of Prime Loans. \u201cWhen people cannot access credit
\nthrough regulated providers, demand doesn\u2019t disappear. Desperate consumers will turn to
\nlenders operating outside the protections of the National Credit Act.\u201d
\nThis is why Money Smart Week should also prompt a broader conversation about financial
\ninclusion. Teaching consumers to recognise a registered lender, understand the true cost
\nof credit and borrow responsibly is critical. But those lessons must be matched by a
\nregulatory environment that keeps responsible, regulated credit accessible.
\nThat is becoming increasingly important as South Africa\u2019s formal short-term credit market
\ncome under growing pressure. The framework governing the pricing of short-term credit<\/p>\n
has not been meaningfully updated since 2015. Over the past decade, inflation,
\ncompliance requirements and operating costs have increased significantly, while caps on
\ninterest rates, initiation fees and service charges have remained largely unchanged.
\nThe result is a more risk-averse formal lending environment that leaves consumers with
\nfewer regulated options. This is reflected in National Credit Regulator data, which shows
\nthat 67% of credit applications were rejected in the quarter ended June 2025 – roughly two
\nout of every three applications.
\n\u201cA framework designed around 2015 costs cannot adequately serve consumers in 2026,\u201d
\nMorgan said. \u201cIf the regulated market becomes less viable, consumers are more likely to
\nput themselves in harm\u2019s way by turning to the illegal market to get access to money
\nurgently.\u201d
\nIllegal lenders can expose borrowers to excessive interest rates, coercive collection
\npractices and the unlawful retention of bank cards, identity documents or SASSA cards as
\nsecurity.
\nPrime Loans believes Money Smart Week provides an opportunity to bring the three parts
\nof consumer protection together, namely better financial education, a stronger regulated
\ncredit market and tougher action against illegal lending.
\nOn financial education, consumers need practical information that helps them understand
\nhow credit works, check whether a lender is registered, compare the total cost of
\nborrowing and understand the implications of processes such as debt review.
\nOn access, the regulatory framework governing short term credit needs to be reviewed to
\nensure consumer protections remain strong while allowing responsible lenders to
\nsustainably serve consumers who may qualify for traditional banking products.<\/p>\n
And where operators deliberately remain outside the framework, enforcement needs to be
\nstrengthened so that illegal lenders cannot continue exploiting financially vulnerable
\nconsumers.<\/p>\n
These priorities speak directly to the purpose of Money Smart Week. Financial literacy is
\nmost powerful when consumers not only know how to make informed choices but have
\nsafe choices available to them.<\/p>\n
\u201cCredit is one of the most widely used financial tools in the country, but it remains one of
\nthe least understood,\u201d Morgan said. \u201cConsumers need to know what a legal lender is
\nrequired to do, what protections they have and how to recognise an illegal operator.\u201d
\nPrime Loans supports the ongoing work of the Credit Association of South Africa, which
\nhas engaged with government and the National Credit Regulator on proposals to
\nmodernise the pricing framework.
\n\u201cThese are not competing priorities,\u201d Morgan said. \u201cReform without enforcement leaves
\nillegal operators in place. Enforcement without education leaves consumers unable to tell
\nthe difference. And education without a viable regulated market simply teaches people to
\nrecognise a loan they may never be offered. The three must move together.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
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