Society's most vulnerable are at the mercy of micro-lenders and trapped in a vicious cycle of debt
The pay point is at the community hall, which is encircled by a barbed-wire fence. Two security guards are on duty at the gate and check grant recipients’ slips showing their pay date.
Martin’s Funeral Services has pitched a tent outside the fence to market its business among the pensioners.
Young women who receive child support grants and pensioners join the queue coming out of the hall. A child support grant is R310 and the old-age grant is R1 350. Sixteen million South Africans receive social grants every month, and the South African Social Security Agency (Sassa) has a R120-billion budget for paying beneficiaries this year.
Next to the hall, a number of women with blankets wrapped around their waists sit on plastic chairs. They, and men waiting in cars outside the gates, are here to collect loan repayments from grant beneficiaries.
The Sassa pay cards, used by pensioners to draw money from the pay station, are kept by loan sharks as long as their owners still owe them money. They also keep their identity documents and slips that show their pay date.
Pensioners who owe them money first collect their slips and pay cards before making their way into the pay station. Once they have received their money, they settle their debts outside.
I chat to two young women sitting on the chairs who say they work for a Chinese mashonisa (loan shark) who they know as Kevin. His surname is difficult to pronounce, they say.
A tall man in black trousers and a jersey approaches us. His name is Simon Mahlangu*, and he is 42 years old. Later, his mother tells me has a history of mental illness.
He was granted a loan of R700 by Kevin in January. He says he knows the two women because they work for the “Chinese man”.
He asks for R2 to buy a loose cigarette. “Why are you here today? It is not your payday; your turn is tomorrow,” one of the women shouts at him, handing him some coins.
They say Mahlangu usually hangs around the pay point even if it is not his payday.
His mother, Mary Mavuso* (65), says at their RDP house that she wasn’t aware that her son had taken out a loan until she “wanted to see his social grant pay card and ID”.
“He told me that he gave them to a Chinese man. I knew it must have been a mashonisa because I have been there with him before.”
Mavuso says she has also borrowed money – R300 from a different mashonisa – because “there was no food at home”. They made a verbal agreement with the lender, who was repaid R500 from her son’s grant.
Mahlangu receives a monthly R1 350 disability grant, but only takes home R350 because the rest is “eaten up” by the mashonisa, his mother says. He borrows R700 every month, and then has to pay back R1 000.
She says her son can therefore never get out of debt, and is shocked that he was loaned money in the first place because of his mental condition. The pay card he uses to withdraw money is still with the lender and can only be retrieved once he has completely settled his debt.
Mavuso says she spends R150 on water and R100 on prepaid electricity every month.
“It is very difficult as a woman to head a household without a husband,” she says.
Family of nine
She receives an old-age grant and the family of nine survives on this as well as her son’s grant. She also says she is now in debt to yet another mashonisa, to whom she pays R900 every month.
“I took a R700 loan last year because I wanted to take my daughter, who fell sick, to a sangoma.”
She now borrows R700 every month from the same lender to supplement the amount she is left with.
Back at the community hall, the two women say their job is to go out on payday and look for potential clients among the pensioners. They collect debts on behalf of their Chinese employer. They both have bulky handbags with them. One of their clients, a man in his early 40s, comes to pay R650 for his R450 loan.
The women say he has epilepsy and receives a monthly disability grant of R1 350. “Here is your money,” he says as he hands over cash to a woman. He also hands over his pay card and then waits. The woman opens her bag, which is stuffed with Sassa cards and cash, and hands him back another R450. He is now in debt once again, and will be liable for R650 come next payday.
He smiles and walks away.
The woman says the Chinese lender has about 700 clients on his books. The majority of his clients are pensioners.
Then a woman carrying sheets of paper – “our friend working for Sassa” – makes her way towards us from inside the hall. The papers contain lists of pensioners who will be paid the following day. Mahlangu’s name is among them.
Over the road from Thembalihle is Vrede. The Chinese mashonisa is sitting in front of his tiny shop in Vrede on a plastic chair. The two women are standing by. He gestures that he does not understand English and then points to the women, suggesting I speak with them.
“Kevin, he is speaking about 427,” one of the women says. She uses number 427 to refer to Mahlangu. Kevin nods his head and ignores her. The woman says they “call the clients by their numbers because Kevin can’t pronounce their Zulu names”.
Unscrupulous credit providers
When approached for comment, National Credit Regulator (NCR) chief operating officer Obed Tongoane said he was aware of unscrupulous credit providers operating at pension payout points.
He says the NCR, the police and Sassa have conducted raids at payout points in Port Elizabeth, in the Nqutu district in KwaZulu-Natal and in the Northern Cape, Thohoyandou and Mpumalanga, which are yielding positive results. Regarding Mahlangu’s case, Tongoane says it is illegal to give credit to a minor or a mentally unfit person, and that Sassa will be investigating.
This was echoed by Sassa spokesperson Kgomoco Diseko, who said it appears that Mahlangu’s lender has committed a criminal offence and that Sassa will investigate.
In November, the human rights organisation Black Sash launched a campaign called “Hands off our grants”.
Black Sash advocacy manager Elroy Paulus says loan sharks are prohibited by law from doing business within 100m of pay points.
* Names have been changed.
Rapula Moatshe is the Eugene Saldanha fellow for social justice reporting, sponsored by the Charities Aid Foundation Southern Africa.