PROSPECTS FOR THE MICRO LENDING INDUSTRY (MLI) IN SOUTH AFRICA

Keeping in mind that the MLI is as old as mankind itself, the prospects that the industry will exist for as long as mankind does, is unquestionable.

Internationally the MLI is sound and well and is prospering in many countries around the world. The size of the South African market segment, which for various reasons, has no access to the formal banking sector, or other sources of funds, is significant and is growing.

ORIGIN AND SIZE IN SOUTH AFRICA

The informal and underground version of the MLI has existed in South Africa virtually since the first foundations of civilization were laid.  The formal, accountable and transparent version of the MLI came into being in 1992 when certain lending transactions were exempted from the Usury act.  This brought the industry into the open, with a significant number of participants indicating through their actions their desire to be part of the acknowledgement, respected and accountable business sector of the South African economy. Since then the MLI has grown to a conservatively estimated annual turnover of over R100 billion.  This confirms the demand for its services and elevates the industry to a very important role-player that enjoys unparalleled support from its clients.

WHAT IS THE POSITION OF GOVERNMENT ON THE MLI ?

The South African government has already indicated, through its actions, that it will never close down the MLI.  Regulations such as the NCR are in place which controls the Micro Lending Industry thus protecting the Client.