Rising living costs drive millions into debt as loan sharks thrive, warns Atlas Finance CEO

MICRO LENDING

- TAWANDA KAROMBO

SOUTH Africans are increasingly turning to credit to survive the rising cost of living, a trend that is deepening indebtedness and leaving millions exposed to loan sharks, says Jack Halfon, founder and CEO of Atlas Finance.

In an interview with Business Report on Thursday, Halfon said formal micro-lenders were calling for stronger policy implementation and tight regulation.

Halfon said South African consumers are "taking loans to cover gaps in their spending as the cost of living rises" despite inflation trending down from the highs of the past few years.

But South Africans are also borrowing for unseen expenditures such as burst geysers or new tyres for their vehicles. However, for many South Africans, the current state of the South African micro-lending industry also means that they have significant exposure to loan sharks.

Data from Finmark shows an estimated 10 million South Africans being over-indebted, with 37% of formal credit borrowers facing repayment issues. When those borrowing solely from informal sources is included, the number of over-indebted South Africans rises to approximately 12 million adults.