The National Credit Amendment Bill was drawn up by the portfolio committee on trade and industry in the fifth parliament.
Should it be passed, this law would allow low-income workers to extract themselves from debt through debt restructuring if they earn a gross income of R7 500 or less per month, have unsecured debt of R50 000, or have been found to be critically indebted.
Economists, banks, financial institutions and businesses have all warned that this Bill could have dire, unintended consequences.
- The ANC would effectively write off between R13- and R20-billion
- The loans constitute property, which are enshrined in article 25 of the Constitution – so the Bill would contravene the Constitution
- According to Moneyweb, there are approximately 9.4-million current borrowers who have unsecured debt of less than R50 000
- The passing of the Bill may cause ratings agencies to downgrade the country again
- The bill will increase the cost of credit for low income earners as financial institutions would tighten lending criteria to protect their interests
- It will weaken the fight against illegal lenders
- It will negatively disrupt the credit market while posing a financial risk to the state
- Experts are advocating for debt counselling instead
- Retrenched workers and low-wage earners – the people the Bill is aimed at – would ultimately not be able to receive a line of credit