Microfinance Practice: Re: [MFP] proposed changes to South African National Credit Act

Hi Jeff;

Good luck on finishing the book. Yes, I think that is the problem with legislating to resolve social ills as well; it is much easier to identify the problem than to create a legislative response that fixes it -- also begging the question is legislation even an appropriate tool. South Africa and Australia are particularly interesting in this regard as they are trying to clearly define, label and ban reckless and other inappropriate lending practices by law. That said, the Italians say when a law is born, so is a way to get around it.

Then, on the subject of payday lenders in the US, I wonder if these are more heavily used by immigrants or US born citizens -- I would guess the latter. Wonder if anyone has any stats on that?

I am guessing the migrants use the check-cashing and money remitting places, but less so the payday loans in the US, but this is a guess. That said, I know that high-remitting migrant populations in Italy like the Filipino did have problems with over indebtedness related to consumer debt, because even with economic downturns they were still expected to remit to family back home (and even more so when natural disasters hit), and thus, sometimes get into difficulty taking out high interest rate consumer loans to send remittances.

Best,

Jami

On Sun, Jan 5, 2014 at 1:30 PM, M <jaashe@aol.com> wrote:

Jami,

Thanks for this. Great fodder for the book Kyla Neilan and I am writing on Savings Groups, "In Their Own Hands: How Savings Groups are Revolutionizing Development." to be published by Berrett Koehler in fall 2014. 76% of disposable income to service debts? That must be some kind of world record. Working through the Carsey Institute at the University of New Hampshire Bill Maddocks and will be introducing savings groups to the USA as an alternative to spiraling debt through Pay Day lenders in the USA working through existing ROSCAS in immigrant communities.

As the article points out, it is easier to identify a problem than to solve it.

Jeff Ashe

Fellow Carsey Center

Jeffrey Ashe
jaashe@aol.com

-----Original Message-----
From: Jami Solli <jamisolli@gmail.com>
To: MicrofinancePractice <MicrofinancePractice@yahoogroups.com>
Sent: Sun, Jan 5, 2014 12:16 pm
Subject: [MFP] proposed changes to South African National Credit Act

fyi article contains from very interesting stats from South Africa which you may recall has the credit legislation in place that bans 'reckless lending,' which is apparently easier said than done because they give the stats that 76% of consumers' household disposable income is being used to service debts, and more than 20% of credit active population (estimated to be 20m persons) is more than 3 mos. in arrears on loans.

Here's the full article:

https://www.compuscan.co.za/government-moves-protect-consumers-assist-indebted-households/

Best,

Jami