This article rings true and is worrying Trevor Manuel blames Microlenders

UNSECURED lending is a significant factor in unprecedented demands for a 100% wage hike, Minister in the Presidency Trevor Manuel says.

Addressing a conference in Sandton on Thursday on business and transparency, Mr Manuel said unsecured lending also played a role in the deaths of 34 miners killed at Lonmins Marikana mine last year after a standoff over wages.

Mr Manuel blamed microlenders for the high wage demands issued by the Association of Mineworkers and Construction Union (Amcu).

Amcu is seeking increases of more than 100% for all unskilled and semiskilled employees in the gold sector. Its demands include a minimum entry-level wage of R11,500 for surface workers and R12,500 for underground workers.

At present, the minimum wage in the gold industry is about R5,000 and varies slightly according to mining houses.

"There were 13 microlenders operating in that small community," Mr Manuel said. "Many of the workers didnt see up to about 40% of their income."

Mr Manuel said most employees had garnishee orders in place and never saw their salaries. He said one microlender had been charging interest of 30% a month.

Mr Manuel said unsecured lending was also a factor in corruption. The amount of borrowing needed to be reduced.

Analysts seem to concur with Mr Manuels sentiments.

Imara SP Reid research head Stephen Meintjes agreed, but said there were other factors as well.

"Yes, we believe its a significant factor but we must understand that unsecured lending took place in other sectors as well. But it is undoubtedly a factor," he said

South Africa has seen sharp growth in unsecured lending over the past five years, raising concern about a credit bubble consumers ability to repay their loans.

Figures from the National Credit Regulator show the total amount of unsecured lending has grown fourfold from R7bn to R29bn.

The annual growth rate has moderated since peaking at 67% in the first quarter of 2011.

The Reserve Bank said in its financial stability report in March that the banking sectors total gross unsecured credit exposure rose to R441bn in the fourth quarter, from R398bn in the previous quarter.

It was against this background that Mr Manuel said microlenders had also become a huge problem for the country.

A senior analyst from Avior Research said: "It is possible, there are a lot of loan sharks out there who put the miners under pressure."

The South African Human Rights Commission (SAHRC) organised the conference, at which Mr Manuel was the keynote speaker.

The gathering brought together a number of businesspeople, academics and members of government to discuss the role and relevance of transparency in the business sector.

SAHRC deputy chairwoman Pregs Govender said there was a need for proper compliance and transparency in the business sector. She said the conference was aiming at best practice and, through engagement on issues related to corruption, ensuring business enjoyed the benefits of transparency.
I haven't had the pleasure of having garnishee orders for my staff but have seen how this lending screws up people's lives. What is worrying me is the one solution is to demand higher wages instead of educating the masses into a savings culture. Then the addon costs that these guys incur when lawyers phone and insurance and whatever is sickening.
The government is trying with the NCA but needs more education for the poor suckers who get caught in this. I just can't see how the people involved in this feel it is moral.
Anyway rant over.