Credit amendment bill is the wrong instrument to relieve poverty

Opinion by FF Plus

Credit amendment bill is the wrong instrument to relieve poverty
Credit amendment bill as it is wrong instrument to relieve poverty

How can one help those with serious debt problems when their situation is so critical that not even debt counselling can offer a solution? This is one of the problems that the National Credit Amendment Draft Bill must address.

Such complex problems require a holistic approach where factors that perpetuate poverty, like the economic environment, are taken into account. At present, poverty is on the rise due to poor economic growth and there exists general consensus that the government’s policy of interfering in the market, misappropriation and corruption lies at the root of it all.

Given this context, it is obvious that creating and implementing debt counselling processes for a population with an unemployment rate of more than 30% is like putting a bandaid on a terminally ill patient. It may offer some relief in the short term, but it will not save the patient.

Short term and cosmetic solutions are not the answer. The final Amendment Bill did not require a socio economic impact study of the matter and it may, therefore, have unforeseen negative consequences.

The impact that the Bill may have on the country’s economic ecosystem is completely unknown. It could lead to the demise of legal credit instruments and related businesses with the associated loss of job opportunities and an increase in illegal credit extension.

Statistics on the current debt cycle indicate that debt has decreased. At present, South Africa is in the longest period of decline in domestic debt and there is also a decrease in bad loans. Debt orders and summons are the lowest since data records started. It appears as if people are managing their debt better and the current debt intervention system may be a contributing factor.

In spite of the good news, it is clear that only policy changes that will facilitate sustainable economic growth can effectively improve the debt situation.

South Africans, and poor people in particular, need job opportunities to sustainably get out of the debt crisis. Thus, the Department of Trade and Industry should rather do introspection and conduct an independent study to determine which policies are standing in the way of economic growth and sustainable job creation.

The poor must be helped and the best way to do it is through job creation. By merely treating the symptoms and not addressing the root causes, the suffering is only extended and the economic implosion, that the ANC government’s current economic policy will bring about, is only postponed.

Read the original article by Adv Anton Alberts in Afrikaans on FF Plus

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