If you are feeling bushwhacked by the recent increases in bank interest rates, try this thousands of South Africans with no hope of qualifying for bank loans, are paying between 200 and 300 percent interest a year on money they borrow from microlenders.
Stellenbosch professor, Piet du Plessis' research into the microlending industry shows that it is an integral part of the financial services industry in South Africa. It is here to stay because it serves the needs of a large part of the population.
He says the client base of the industry represents the new up-and-coming economic middle class of South Africans the sector which, in the future, will probably form a major part of the middle class economic backbone of this country.
Although high interest rates prevail and people are often compelled to hand over their ATM cards and pin numbers to microlenders, the R10 billion industry is booming.
Government, therefore, has to carefully consider whatever decisions it has in mind for the future of the industry. Attempts to ban it or to strictly control it, will force it back underground.