Fiery storm as DTIC's draft credit regulations heightens student debt crisis fears
DTIC reassures South Africans on proposed National Credit Regulations amid student debt concerns.
Image: GCIS
The Department of Trade, Industry and Competition (DTIC) has moved to calm fears that its proposed National Credit Regulations could harm students, insisting the reforms are aimed at boosting small business finance.
But some South Africans remain unconvinced, warning that the measures risk trapping indebted graduates in even deeper financial distress.
Minister Parks Tau, who is currently attending the Intra-African Trade Fair (IATF) in Algeria, said the draft regulations, published on August 13 for consultation, are intended to improve access to credit for Micro, Small and Medium Enterprises (MSMEs).
The department maintains they will strengthen township economies and reduce reliance on loan sharks.
The controversy over the draft regulations is mounting. Ministerial spokesperson Kaamil Alli defended the proposals, saying: "The minister remains committed to ensuring that these regulations do not unfairly impact on individuals as an unintended consequence."
But Sabelo Chalufu, an academic, accused the government of failing to deal with what he called the heart of the crisis. "Minister, I am worried that you are not sufficiently addressing the fundamental issue many of us have – the impending blacklisting of student debtors…and that this is intentional on your part," Chalufu said.
Chalufu revealed he had launched a petition to demand withdrawal of certain clauses, particularly amendment Regulation 18(7)(e). It currently has close to 700 signatures.
"I am one of the people who is greatly concerned about the Draft Regulations. Consequently, I have started a petition seeking to persuade you to withdraw them, specifically insofar as the proposed amendment Regulation 18(7)(e). Therefore, Minister, it is far from comforting for you to tell us that it is not your intention ‘to prejudice individuals who are indebted to institutions of higher learning," he said.
Regulation 18(7)(e) refers to the South African National Credit Act (NCA) regulations, which deal with the maintenance and retention of consumer credit information by credit bureaux.
The DTIC has pledged to consider submissions before finalising the reforms. "The Minister is committed to a fair public participation process. This includes ensuring all inputs that are made during the public participation process are considered before finalising the regulations," Alli said.
Chalufu, however, insisted that government's assurances fall flat.
"The fact, minister, is that the effect of your proposed Regulation 18(7)(e), on a plain reading of the text, is that these people will be further prejudiced and are at risk of great harm by predatory financial services providers in particular.
"Let us be serious; if you did not intend to hand over this vulnerable group, you would not have included language that could conceivably drag them into the net of these businesspeople. You would have at least taken great care to protect the vulnerable," he argued.
The department rejected suggestions that students were being targeted. Alli emphasised: "The Minister will engage stakeholders in order to clarify this process and allay any fears that this process may prejudice the most vulnerable in our society."
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