This is the time for the South African financial sector to step forward and help all citizens to develop their full potential
In 2003, Sebastian Mvundla* lost his job as a security guard at a black-owned advertising company in Sandton. The developers were expanding the building and were outsourcing security duties to a new company. Faced with the prospect of unemployment, Mvundla, the holder of a Code 10 driving licence, asked to be redeployed to one of the companies in the building as a driver. But the company that obliged had enough drivers and Mvundla would be needed only three times a week, when his colleagues’ loads were unbearable. His new pay, luckily, was just R1 000 less, coming in at R6 000 a month.
About a year before his financial circumstances changed, Mvundla had stumbled upon a way of supplementing his income. “I got into the business of money-lending through a colleague who asked me to connect him to more customers,” says Mvundla of his start in what’s known as ukushonisa.
But the precariousness of a middle class existence ensured the smooth transition of the business from Mvundla’s colleague to himself.
Unless the business is registered, lending money and charging interest is illegal.
In what amounts to a subversion of social standing, Mvundla often finds himself lending money to people who earn quadruple or seven times his salary, some of whom often give him a lift to his Putco bus stop on 5th Street in Sandton.
A number of his customers do earn less than he does, but the majority fall within what is considered middle class in South Africa. It is a wide category often invoked by politicians and marketers for political pontificating. The Bureau of Market Research described this category as earning between R49 001 and R783 000 a year, with monthly salaries ranging from R4 084 to R65 250. This group comprises only 18% of South Africa’s working age population.
In 2014, South Africa’s debt to income ratio was sitting at 75%, meaning three quarters of it was headed straight to debtors on a monthly basis. Add to this rising food and electricity prices, it is easy to see why some people in the lower range are living beyond their means.
All of this requires Mvundla to be judicious in doling out his financial assistance, because it comes with a price tag of 40% interest a month.
“For cleaners and security guards, I try not to go over R500 per month,” he says as I hitch a ride with him on one of his delivery errands. “Others we also limit. I don’t pass R5 000. I have given someone R5 000 once. It was a close family member.”
Mvundla, who has silent backers in his business, says he tries to stay out of the reasons his customers borrow money, so that he does not get sentimental when they default.
“Many people can’t manage,” says Mvundla idling the car in northern Johannesburg afternoon traffic. “Sometimes if they can’t pay, I just decide to get what I initially gave the customer and forget about the interest.
“Ours is not like the bank. So if a customer defaults, it’s their own problem at the end of the day because they won’t find help in the near future.”
Still, Mvundla says he makes enough from the loyal customers to make the risk worthwhile. Of the defaulters, he says he often relents after a few months of pestering. Most of his customers earn more than he does.
“I’m in the working class,” he asserts. “Middle class people are people with money, like the rich of Soweto who own restaurants. They have money. Middle class people don’t hesitate. If there is a R500 000 house on the go, he will buy it. He has other streams of income that you know nothing about and others that you can see. But you can be working class and buy a house or a car.”
Mvundla travels to work and back home to Soweto by bus and says he understands the financial difficulty of his clients because they have large families to look after; the unavoidable black tax.
Phakathi — Soweto’s Middling Class, a video that follows the work of sociologist Mosa Phadi, a researcher at the University of Johannesburg (UJ) who conducted a perception study in Soweto about what it means to be middle class, found that 66% of people identified themselves as middle class. (http://sacsis.org.za/site/article/1270)
The people interviewed range from a woman who owns three businesses and has a car, to a gallery assistant who earns R7 000 a month and an unemployed woman who lives in an informal settlement.
In the closing moments of the documentary, the richer woman and poorer woman are brought together to discuss how they come to the definition of middle class from opposite ends of the financial spectrum. Over a meal at the poorer woman’s house, the wealthier woman almost berates her host for daring to identify as middle class, listing a couple of prerequisites that the woman doesn’t fulfill before calling her “lower class”.
It is an uncomfortable moment, showing not only the material gap between the rich and the poor but an ideological one steeped in the subtext of class mobility as linked to race.
As she drives off, the wealthier woman declares her host to be worthy of institutionalisation for seeking to identify as her societal equal.
Earlier in the documentary, Kim Wale, a researcher at UJ’s Centre for Sociological Reform, states that a middle class identity is one that is very individualised and a working class identity is one concerned with broader power structures and challenging these.
Nolwazi Mdlalose*, a mashonisa who works as a security guard at a Woodmead printing company, is more disparaging of her customers, many of whom earn up to six times the amount of money she earns from her salary-paying job.
“They like things they cannot afford. If you know you have debt to pay off, why would you go and eat out? What’s wrong with yesterday’s leftovers and some tea?”
Not for her is the false security of a middle class life, centred on an income vulnerable to the market. Mdlalose says she got into the business when people asked her for money because she never complained about a lack of it.
“It was like I was the bank,” she says, covering her slim torso with her navy blue blazer from outside the company’s security booth. “I grew up knowing how to make money. Our family is one of independent people. My uncle owns taxis, for instance, but he started as a driver. After school I sold vegetables and my son sells clothes. It’s just our family trait.”
Mdlalose earns R7 000 a month but she believes she could survive if she lost her job, or at least earn enough to be able to live between jobs without slipping into indigence. She charges her customers 30% monthly interest. “Many people who earn more than I do have many chances and opportunities to put more money in their pockets but they don’t use them. The money they earn is a lot but they’d rather drink it, which is dom (stupid). Working for just one company limits your mind; you only end up thinking about one source of income.”
She considers herself outside of the middle class because she “doesn’t afford” much of what she would want for herself and her two teenaged children.
In Soweto’s Mzimhlophe section, a burly Vuma Zondi* makes a case for how mashonisas are “no worse than banks”, which his clients cannot use for various credit-related reasons.
“I’d say banks are ridiculous these days with their charges and interest. I borrowed R6 000 from a company the other day and I was paying back R1 800 per month for six months. That’s why people come to us.”
Zondi, a motor mechanic, says some of his borrowers are poor budgeters but he can’t blame them for hedging their bets.
“I don’t ask for security from the clients. I give them based on my trust. Sometimes with strangers I take that risk. I only take your car if you are borrowing something like 20 grand.”
People return the money, sometimes after being intimidated, “but on the fourth of the month they are back again to ask for more,” he says. “I collect my money on my own. There is a demeanour for every situation,” he says, choosing brevity over explaining.
Pressed, he says: “Sometimes you can prevent the customer from going to work until they realise that you are serious.”
Zondi says the worst that has ever happened was having to activate a prior gentleman’s arrangement with the client in question and their human resources (HR) officer, an illegal but not uncommon practice.
Mvundla has an HR story of his own, recalling that once an ad agency employee who was underperforming for a prolonged stretch, blamed his uninspired patch on Mvundla and his persistent demand for an overdue payment. But because there was no documented proof of any transactions between Mvundla and the borrower, the scapegoating was left as that; desperate smearing.
Zondi says these days he is more ethical in how he does his business, falling back a little on defaulting customers after three to four months and only asking for his initial loan amount back. “
At the end of the day I know many of these people, and even though I charge 50% interest. Really, I am just out to help. People don’t take us as criminals, the government does.”
Interestingly, as a motor mechanic who sews curtains and upholsters furniture in his spare time, Zondi, resists the temptation to call himself middle class, mulling over the phrase as if it was some kind of dirty word.
“Upper class people can communicate with middle class people,” he says. “A low-class person, it’s hard for them to reach high class. I see myself in all categories in terms of my friends, people I hang with and people I plan business with. I’m in every category. Being self-employed, the money fluctuates but it doesn’t define who I am.”
* pseudonyms are used to protect source’s privacy