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Loan sharks dive in as the elderly struggle to keep heads above water

Government - through interventions such as UIF benefits and small increases in welfare grants - has tried to cushion the blow for many people faced with financial burdens.

The elderly practice social distancing while waiting to collect their Sassa grants from the Diepsloot Mall. Picture: Kayleen Morgan/EWN

SOWETO - The coronavirus has brought unimaginable distress to millions of people around the world, and in South Africa the pandemic has pushed even more into economic hardship.

In this country, more than 17 million people rely on social grants to make ends meet, but the numbers are set to skyrocket due to job losses resulting from the lockdown.

Government - through interventions such as UIF benefits and small increases in welfare grants - has tried to cushion the blow for many people faced with financial burdens.

But these relief measures are not enough for some - and that’s where loan sharks and other unscrupulous micro lenders are finding a ripe environment to strike.

It’s expected South Africa’s unemployment rate will reach around 35% by the end of this year as a result of months of lockdown. Social grants will inevitably be the only form of small relief for many households.

It’s no secret that loan sharks target the most vulnerable, and just as many flock to pension pay points monthly, the money lenders are not far behind.

In Pimville, Soweto, Eyewitness News spoke to an elderly woman on a busy day at one of the payment outlets.

She said that the last few months had been particularly hard.

"None of my six grandchildren that I live with are employed, I am often tempted to approach a loan shark, but my children have warned me against it."

Another elderly woman, who said she’d heard about how the loan sharks - or mashonisas as they are known - operate near the payment outlets, said that she would never accept their persistent offers.

"I was taught by my parents to handle my finances. Oh, oh, those are terrible. I heard the security guards just now speaking about what happened yesterday. The loan sharks were here demanding for their money from the gogos."

In addition to charging exorbitant interest rates, unregulated lenders are also known to confiscate crucial documents such identity documents or social grant cards from those they enter into agreements with to use as collateral.

Just last week two people suspected to be loan sharks were arrested in Sebokeng after they were caught with more than 200 Sassa cards, which they were using to withdraw cash from an ATM.

WATCH: Social grants recipients: 'No one cares about us'

STRATEGIC PLACEMENT

Loan sharks prey on the vulnerable by being in the right place at the right time.

On a busy, crisp Monday morning last week at a pension pay point in Pimville, hundreds of elderly people lined up to collect their monthly grants.

Some are accompanied by relatives, but others are on their own, attracting the attention of the loan sharks.

They know exactly how to pick the most vulnerable, as some pensioners and a community safety marshal tellEWN.

They told of how a man stood in the way of a pensioner - demanding that he pay him back with interest.

The marshal - who asked that his identity be protected - said this was nothing new, but there’s not much they could do because these were private agreements.

But the chief marshal at the Orlando Post Office said they had adopted a different approach.

“We make sure those people (loan sharks) are not around. It’s our duty to protect the elderly. We don’t even allow those who say they are accompanying the pensioners. We say if you are accompanying a person, stay very far.”

Gauteng Community Safety’s Ofentse Morwane explained what the marshals could do to shield grant recipients from the clutches of unregulated lenders.

“In as far as the deployment of community patrollers is concerned - the most important thing is to ensure the enforcement of the disaster management lockdown regulations at all the Sassa paypoints. However, in addition to that, there is also a responsibility to deal with crime prevention.”

The South African Social Security Agency said it was aware of loan sharks who took advantage of the elderly and was constantly educating them to be aware.

PROCEED WITH CAUTION

The National Credit Regulator urged consumers - particularly during the lockdown - to steer clear of unregistered credit providers who often charged exorbitant interest rates, asked for initiation fees and even demanded personal documents as surety.

It’s not just loan sharks who are baiting desperate people - but some micro lenders too.

It’s estimated that over a million people will lose their jobs in South Africa because of COVID-19 this year - and it’s inevitable that some will turn to these lenders for help.

In a recent survey by the South African Depression and Anxiety Group (SADAG), 46% of the 55% of people who said they were battling to cope were under financial stress.

Most of those who reached out to SADAG through its crisis helpline said they were worried specifically about hunger, the unavailability of food parcels, fears over accessing UIF payments and social grants.

It’s these kinds of socio-economic hardships that would push many to seek monetary relief elsewhere.

And that’s why the National Credit Regulator’s Lebogang Selibi explained that consumers needed to be careful so that they could get protection.

“To see if the credit provider is registered with the NCR, the consumers can log onto ncr.org.za under credit providers, they can either type in the NCRCP number or the name of the credit provider.”

Selibi said a reputable micro lender or institution would never ask for things like upfront payments before a loan was approved.

“Some consumers are inquiring about credit providers that ask for an upfront deposit before they grant the loan. We are saying consumers must look out for those.”

Selibi said consumers must be aware that any credit provider who demanded personal documents such as IDs as collateral were breaking the law and should be reported to the police.