Desperate for money, social grant recipients borrow from astonishing sources

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People who depend on social funds say they struggle to find money and have to pay off debts.

People who depend on social funds say they struggle to find money and have to pay off debts.

  • People who depend on social funds say they struggle to find money and have to pay off debts.
  • Many take out loans at the same Net1 office to attract social funds on the day of the grant payment.
  • To take out a loan of R1,400 and repay it in six months usually costs R462.
  • There are approximately 415 000 EasyPay Everywhere who have a green card with a loan.

Generally queuing outside the Net1 Financial Services office in Soshanguve Plaza, Pretoria. People draw on social funds here but many are also borrowing money on EasyPay Everywhere green cards because they can’t afford a small amount of money.

On the first Friday in June, there was a queue of about 250 people to draw for aging and disability grants, and another queue of about 100 people who wanted to take out a loan for a social grant, a controversial but growing business.

There are queues most days for loans and they start forming hours before the office opens at 8am. Sometimes people have to come back the next day because the office can’t process all the people queuing at 4pm.

Annah Zondo, 68, who lives in a hut in Soutpan, Tswaing, said her family cut food for up to two days and she still had to borrow. On the day of paying the grant there was nothing to eat at home for the family of seven. The old age grant is R1 980. He said that after the deduction, he received around R1 500 in June.

“I received my money yesterday but it’s done,” Zondo said.

He usually throws away groceries, then buys paraffin and pays dues to the funeral community.

“I’m here to borrow money again because I’ve finished paying off the loan I took on in December,” he said. He has borrowed R1 800 from Net1 and repaid it over six months.

“I know that even a loan was given to me [now] it will not last. I’m going to suffer before the month is over, “Zondo said.” I’m busy crushing the cans I’ve collected so I can earn extra money. “

To take out a loan of R1 400 and repay it in six months the borrowing costs R462.

Some people take on debt to pay off debt.

Solly Mokoena, 64, of Soshanguve Block TT, joined the queue before 6 p.m. He has aged helping to support a family of five. He took out a loan for R1 800 with Net1. He also borrowed from FinBond, first R600, then another R600.

“If I can get a job because the grant money is too little. I have a Net1 debt of R1 800 and I still have five months to pay it off. At FinBond, I have a loan of R1 200 … take the money, I have nothing,” he said. . “I live with a borrower. I’ve been regular. The cost of living is very expensive.”

We returned on Wednesday and there were again about 100 people in line. One of them is Mpho Mosima, who relies on child support benefits received for four children. He was there to get a loan.

Samuel Mosetlana, 67, of Winterveldt, said, “I borrowed money from Net1 because I’m tired of the debt I owe where I live. I still have three months to pay R2 000.” I have no income. So my family relied on me. From debt. Grants are small, everything is expensive. “

Moneyline Financial Services (Pty) Ltd, a subsidiary of Lesaka Group (a rebrand of Net1) said it offers loans between R100 to a maximum of R2 000, with loan terms of up to six months. “We don’t charge interest on the loan,” the company said, but there is a “service fee” (which can add up to 32% of the value of the loan).

To get a Moneyline loan, an applicant must be an EasyPay Everywhere customer and “must prove that they have three months’ income, can repay the loan, and have a good credit history ”.

In its latest quarterly report, Net1 said that Lesaka Technologies is pushing to increase the number of EasyPay clients as well as micro loan clients and “cross selling” promotions, such as funeral insurance. This signed 5,500 new independent policies in the first quarter of 2022.

The report said the company had 1.1 million active customers and 415 000 active loans from EasyPay Everywhere clients with a total loan book of R359-million as of March 31, 2022. The average loan size was R1 417.

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