Historical Aspects of the Statutory Regulation of Financial Inclusion for the Poor and Low-Income Earners in South Africa
Keywords:
financial inclusion, poor and low-income earners, financial exclusion, stokvel, regulation.Abstract
The article discusses the regulation of financial inclusion for the poor and low-income earners prior to, and after democracy in South Africa. Therefore, relevant practices and regulatory measures that were adopted in a bid to curb financial exclusion of the poor and low-income earners in South Africa, particularly after the attainment of democracy are examined. Furthermore, the article explores whether the poor and low-income earners are still financially excluded from accessing basic financial products and financial services in South Africa. Accordingly, various statutes such as National Credit Act 34 of 2005 as amended by the National Credit Amendment Act 7 of 2019 (NCA), the now repealed Usury Act 73 of 1968 (Usury Act), the Credit Agreements Act 75 of 1980 (Credit Act), the now repealed Financial Services Board Act 97 of 1990 (FSB Act), the South African Reserve Bank Act 90 of 1989 (SARB Act), the Banks Act 94 of 1990 (Banks Act), the Consumer Protection Act 68 of 2008 (CPA) and the Financial Sector Regulation Act 9 of 2017 (FSRA) are discussed. To this end, the gaps and flaws in the relevant practices and regulatory measures that were adopted under these and other related statutes to promote financial inclusion of the poor and low-income earners in South Africa are outlined and discussed.
Keywords: financial inclusion, poor and low-income earners, financial exclusion, stokvel, regulation.
References
References
Abrahams, R. (2017). “Financial Inclusion in South Africa: A Review of the Literature”. Southern African Accounting Association, pp. 632-661.
Arun, T. and Kamath, R. (2015). “Financial Inclusion: Policies and Practices”. IIMB Management Review, 27, pp. 267-287.
Atkinson, A. & Messy, F. (2013). “Promoting Financial Inclusion through Financial Education: OECD/INFE Evidence, Policies and Practice”. OECD Working Papers on Finance, Insurance and Private Pensions, 34, pp. 1-55.
Byrnes, R.M. (1997). South Africa: A Country Study. Washington DC: Federal Research Division, Library of Congress.
Bronkhorst, Q. (23 September 2012). “A History of South Africa’s Currency”. Business Tech.
Chitimira, H. and Ncube, M. (2020). “The Role of Regulatory Bodies and Other Role-Players in the Promotion of Financial Inclusion in South Africa”. Acta Universitatis Danubius Juridica, 16(1), pp. 24-37.
Coetzee, G.K., Druschel, K.A., Cook, L.D., Brislin, N.W., Meagher, J.P. and Pearson, R.V. (2005). “The Evolution of the South African Microfinance Sector from 1992 to 2004: The Role of the Microfinance Regulatory Council”. IRIS Centre of the University Research Corporation International, pp. 1-108.
Coovadia, C. (2017). “Making Financial Markets Work for the Poor”. Finmark Trust Annual Report, pp. 1-15.
Coovadia, C. (2018). Annual Report. The Banking Association South Africa, pp. 1-36.
Feinstein, C.H. (2005). An Economic History of South Africa: Conquest, Discrimination and Development. Cambridge: Cambridge University Press.
FinMark Trust. (2018). “Impact Evaluation of Savings Groups and Stokvels in South Africa: The Economic and Social Value of Group-Based Financial Inclusion”. FinMark Trust Report, pp. 1-103.
Finmark Trust. (2010). “FinScope South Africa Small Business Survey 2010”. Finscope Report, pp. 1-8.
Goodwin-Groen, R.P. and Kelly-Louw, M. (2006). “The National Credit Act and its Regulations in The Context of Access to Finance in South Africa”. FinMark Trust, pp. 1-100.
Godwin, A. (2017). “Introduction to Special Issue – The Twin Peaks Model of Financial Regulation and Reform in South Africa”. Law and Financial Markets Review, 11(4), pp. 151-153.
Iqbal, B.A. and Sami, S. (2017). “Role of Banks in Financial Inclusion in India”. Contaduría y Administración, 62(2), pp. 644-656.
Irving, M. (2005). “Informal Savings Groups in South Africa: Investing in Social Capital”. University of Cape Town Centre for Social Science Research Working Paper No. 112, pp. 5-50.
Kelly-Louw, M. (2008). “The Prevention and Alleviation of Consumer Over-indebtedness”. SA Mercantile Law Journal, 20(2), pp. 200-226.
Kessler, K., Ikdal, A., Naidoo, E., Portafaix, A., Hendrickson, J., Boje, A. & Rabec, D. (2017). “Improving Financial Inclusion in South Africa”. The Boston Consulting Group, pp. 1-15.
Kritzinger, J.N.J. (1996). “African Cultural Resources in the Struggle Against Mammon”. Mission Studies, 13(1), pp. 109-129.
Mashigo, P. (2006). “The Debt Spiral in the Poor Households in South Africa”. International Indigenous Journal of Entrepreneurship, Advancement, Strategy and Education, 2(1), pp. 1-21.
Meagher, P. (2005). “Microfinance Regulation and Supervision in South Africa”. Essays on Regulation and Supervision, 6, pp. 1-14.
Meagher, P. and Wilkinson, B. (2002). “Filling the Gap in South Africa’s Small and Micro Credit Market: An Analysis of Major Policy, Legal and Regulatory Issues”. IRIS Discussion Papers on Institutions and Development No. 02/11, pp. 1-56.
Lukhele, A.K. (1990). Stokvels in South Africa: Informal Savings Schemes by Blacks for the Black Community. Johannesburg: Amagi Books.
Louis, L. and Chartier, F. (2017). “Financial Inclusion in South Africa: An Integrated Framework for Financial Inclusion of Vulnerable Communities in South Africa’s Regulatory System Reform”. Journal of Comparative Urban Law and Policy, 1(1), pp. 170-196.
Matuku, S. and Kaseke, E. (2014). “The Role of Stokvels in Improving People’s Lives: The Case in Orange Farm, Johannesburg, South Africa”. Social Work, 50(4), pp. 504-515.
Mohane, H., Coetzee, G. K., & Grant, W. (2000). “The Effects of the Interest Rate Ceilings on the Micro Lending Market in South Africa”. Agrekon, 39(4), pp. 730-738.
Mohieldin, M., Iqbal, Z., Rostom, A. and Fu, X. (2011). “The Role of Islamic Finance in Enhancing Financial Inclusion in Organization of Islamic Cooperation (OIC) countries”. The World Bank Islamic Economics and Finance Working Group Policy Research Working Paper 5920, pp. 1-55.
Moorcroft, J. (2014). “Interest, Usury, and the Boni Mores”. Johannesburg Bar Forum, pp. 41-43.
Morgan, P.J., Zhang, Y., & Kydyrbayev, D. (2018). “Overview of Financial Inclusion, Regulation, Financial Literacy, and Education in Central Asia and South Caucasus”. Asian Development Bank Institute Working Paper Series No.878, pp. 1-32.
Nanziri, E. (2015). “Financial Inclusion and Socio-Economic Transformation in Post-apartheid South Africa”. Juniata Voices, 16, pp. 30-49.
Nanziri, E.L. (2016). “Financial Inclusion and Welfare in South Africa: Is there a Gender Gap?”. Journal of African Development, 18(2), pp. 109–134.
National Planning Commission. (2012). “National Development Plan 2030: Our Future Make it Work”. Government of South Africa, pp. 1-217.
Okurut, F.N. (2006). “Access to Credit by the Poor in South Africa: Evidence from Household Survey Data 1995 and 2000”. Stellenbosch Economic Working Papers No. 13/06, pp. 1-34.
Pearson, G., Stoop, P.N. and Kelly-Louw, M. (2017). “Balancing Responsibilities–Financial Literacy”. Potchefstroom Electronic Law Journal, 20(1). pp. 1-55.
Prather, W.C. (1960). “Mortgage Loans and the Usury Laws”. Business Lawyer, 16(1), pp. 181-196.
Porteous, D. and Hazelhurst, E. (2004). Banking on Change: Democratizing Finance in South Africa, 1994-2004 and Beyond. Cape Town: Juta & Co. Ltd.
Rootman, C. & Antoni, X. (2015). “Investigating Financial Literacy to Improve Financial Behaviour Among Black Consumers”. Journal of Economic and Financial Sciences, 8(2), pp. 474-494.
South African Reserve Bank. (2020). “History of South African Banknotes 1782 to 1920” https://www.resbank.co.za/BanknotesandCoin/SouthAfricanCurrency/BankNotes/Pages/HistoryofSouthAfricanbanknotes1782To1920.aspx accessed 29 September 2020.
Ssebagala, R.A. (2017). “Relieving Consumer Over-indebtedness in South Africa: Policy Reviews and Recommendations”. Journal of Financial Counseling and Planning, 28(2), pp. 235-244.
Shettar, R.M. (2016). “Financial Inclusion: An Overview”. IOSR Journal of Business and Management, 18(2), pp. 37-44.
Sibanda, S. & Sibanda, T. (2016). “Financial Education in South Africa: Overview of Key Initiatives and Actors”. International Labour Organisation Innovative Finance for Social Justice, pp. 1-36.
Sithole, A. (2018). “Regulatory Strategy of the Financial Sector Conduct Authority: October 2018 to September 2021”. Financial Sector Conduct Authority, pp. 1-75.
Schoombee, A. (2004). “South African Banks and the Unbanked: Progress and Prospects”. South African Journal of Economics, 72(3), pp. 581-603.
Varghese, G. and Viswanathan, L. (2018). “Financial Inclusion: Opportunities, Issues and Challenges”. Theoretical Economics Letters, 8(11), pp. 1935-1942.
Verhoef, G. (2001). “Informal Financial Service Institutions for Survival: African Women and Stokvels in Urban South Africa, 1930-1988”. Enterprise & Society, 2(2), pp. 259-296.
Verhoef, G. (2001). “Savings and Survival in A Modern African Economy: Informal Savings Organisations and Poor People in South Africa”. Historia, 46(2), pp. 519-542.
Warsame, M.H. (2009). The Role of Islamic Finance in Tackling Financial Exclusion in the UK. Doctoral thesis: Durham University.
Whittaker, M. (2008). “South Africa’s National Credit Act: Possible Model for the Proper Role of Interest Rate Ceilings for Microfinance”. Northwestern Journal of International Law & Business, 28(3), pp. 561-582.
Legislation
Consumer Protection Act 68 of 2008 as amended.
Credit Agreements Act 75 of 1980.
Financial Intelligence Centre Act 38 of 2001 as amended.
Financial Institutions (Protection of Funds) Act 28 of 2001 as amended.
Financial Sector Regulation Act 9 of 2017.
Financial Services Board Act 97 of 1990 as amended.
National Credit Act 34 of 2005 as amended.
South African Reserve Bank Act 90 of 1989.
Usury Act 37 of 1926.
Usury Act 73 of 1968.
Usury Laws Act 57 of 1996.
Abrahams, R. (2017). “Financial Inclusion in South Africa: A Review of the Literature”. Southern African Accounting Association, pp. 632-661.
Arun, T. and Kamath, R. (2015). “Financial Inclusion: Policies and Practices”. IIMB Management Review, 27, pp. 267-287.
Atkinson, A. & Messy, F. (2013). “Promoting Financial Inclusion through Financial Education: OECD/INFE Evidence, Policies and Practice”. OECD Working Papers on Finance, Insurance and Private Pensions, 34, pp. 1-55.
Byrnes, R.M. (1997). South Africa: A Country Study. Washington DC: Federal Research Division, Library of Congress.
Bronkhorst, Q. (23 September 2012). “A History of South Africa’s Currency”. Business Tech.
Chitimira, H. and Ncube, M. (2020). “The Role of Regulatory Bodies and Other Role-Players in the Promotion of Financial Inclusion in South Africa”. Acta Universitatis Danubius Juridica, 16(1), pp. 24-37.
Coetzee, G.K., Druschel, K.A., Cook, L.D., Brislin, N.W., Meagher, J.P. and Pearson, R.V. (2005). “The Evolution of the South African Microfinance Sector from 1992 to 2004: The Role of the Microfinance Regulatory Council”. IRIS Centre of the University Research Corporation International, pp. 1-108.
Coovadia, C. (2017). “Making Financial Markets Work for the Poor”. Finmark Trust Annual Report, pp. 1-15.
Coovadia, C. (2018). Annual Report. The Banking Association South Africa, pp. 1-36.
Feinstein, C.H. (2005). An Economic History of South Africa: Conquest, Discrimination and Development. Cambridge: Cambridge University Press.
FinMark Trust. (2018). “Impact Evaluation of Savings Groups and Stokvels in South Africa: The Economic and Social Value of Group-Based Financial Inclusion”. FinMark Trust Report, pp. 1-103.
Finmark Trust. (2010). “FinScope South Africa Small Business Survey 2010”. Finscope Report, pp. 1-8.
Goodwin-Groen, R.P. and Kelly-Louw, M. (2006). “The National Credit Act and its Regulations in The Context of Access to Finance in South Africa”. FinMark Trust, pp. 1-100.
Godwin, A. (2017). “Introduction to Special Issue – The Twin Peaks Model of Financial Regulation and Reform in South Africa”. Law and Financial Markets Review, 11(4), pp. 151-153.
Iqbal, B.A. and Sami, S. (2017). “Role of Banks in Financial Inclusion in India”. Contaduría y Administración, 62(2), pp. 644-656.
Irving, M. (2005). “Informal Savings Groups in South Africa: Investing in Social Capital”. University of Cape Town Centre for Social Science Research Working Paper No. 112, pp. 5-50.
Kelly-Louw, M. (2008). “The Prevention and Alleviation of Consumer Over-indebtedness”. SA Mercantile Law Journal, 20(2), pp. 200-226.
Kessler, K., Ikdal, A., Naidoo, E., Portafaix, A., Hendrickson, J., Boje, A. & Rabec, D. (2017). “Improving Financial Inclusion in South Africa”. The Boston Consulting Group, pp. 1-15.
Kritzinger, J.N.J. (1996). “African Cultural Resources in the Struggle Against Mammon”. Mission Studies, 13(1), pp. 109-129.
Mashigo, P. (2006). “The Debt Spiral in the Poor Households in South Africa”. International Indigenous Journal of Entrepreneurship, Advancement, Strategy and Education, 2(1), pp. 1-21.
Meagher, P. (2005). “Microfinance Regulation and Supervision in South Africa”. Essays on Regulation and Supervision, 6, pp. 1-14.
Meagher, P. and Wilkinson, B. (2002). “Filling the Gap in South Africa’s Small and Micro Credit Market: An Analysis of Major Policy, Legal and Regulatory Issues”. IRIS Discussion Papers on Institutions and Development No. 02/11, pp. 1-56.
Lukhele, A.K. (1990). Stokvels in South Africa: Informal Savings Schemes by Blacks for the Black Community. Johannesburg: Amagi Books.
Louis, L. and Chartier, F. (2017). “Financial Inclusion in South Africa: An Integrated Framework for Financial Inclusion of Vulnerable Communities in South Africa’s Regulatory System Reform”. Journal of Comparative Urban Law and Policy, 1(1), pp. 170-196.
Matuku, S. and Kaseke, E. (2014). “The Role of Stokvels in Improving People’s Lives: The Case in Orange Farm, Johannesburg, South Africa”. Social Work, 50(4), pp. 504-515.
Mohane, H., Coetzee, G. K., & Grant, W. (2000). “The Effects of the Interest Rate Ceilings on the Micro Lending Market in South Africa”. Agrekon, 39(4), pp. 730-738.
Mohieldin, M., Iqbal, Z., Rostom, A. and Fu, X. (2011). “The Role of Islamic Finance in Enhancing Financial Inclusion in Organization of Islamic Cooperation (OIC) countries”. The World Bank Islamic Economics and Finance Working Group Policy Research Working Paper 5920, pp. 1-55.
Moorcroft, J. (2014). “Interest, Usury, and the Boni Mores”. Johannesburg Bar Forum, pp. 41-43.
Morgan, P.J., Zhang, Y., & Kydyrbayev, D. (2018). “Overview of Financial Inclusion, Regulation, Financial Literacy, and Education in Central Asia and South Caucasus”. Asian Development Bank Institute Working Paper Series No.878, pp. 1-32.
Nanziri, E. (2015). “Financial Inclusion and Socio-Economic Transformation in Post-apartheid South Africa”. Juniata Voices, 16, pp. 30-49.
Nanziri, E.L. (2016). “Financial Inclusion and Welfare in South Africa: Is there a Gender Gap?”. Journal of African Development, 18(2), pp. 109–134.
National Planning Commission. (2012). “National Development Plan 2030: Our Future Make it Work”. Government of South Africa, pp. 1-217.
Okurut, F.N. (2006). “Access to Credit by the Poor in South Africa: Evidence from Household Survey Data 1995 and 2000”. Stellenbosch Economic Working Papers No. 13/06, pp. 1-34.
Pearson, G., Stoop, P.N. and Kelly-Louw, M. (2017). “Balancing Responsibilities–Financial Literacy”. Potchefstroom Electronic Law Journal, 20(1). pp. 1-55.
Prather, W.C. (1960). “Mortgage Loans and the Usury Laws”. Business Lawyer, 16(1), pp. 181-196.
Porteous, D. and Hazelhurst, E. (2004). Banking on Change: Democratizing Finance in South Africa, 1994-2004 and Beyond. Cape Town: Juta & Co. Ltd.
Rootman, C. & Antoni, X. (2015). “Investigating Financial Literacy to Improve Financial Behaviour Among Black Consumers”. Journal of Economic and Financial Sciences, 8(2), pp. 474-494.
South African Reserve Bank. (2020). “History of South African Banknotes 1782 to 1920” https://www.resbank.co.za/BanknotesandCoin/SouthAfricanCurrency/BankNotes/Pages/HistoryofSouthAfricanbanknotes1782To1920.aspx accessed 29 September 2020.
Ssebagala, R.A. (2017). “Relieving Consumer Over-indebtedness in South Africa: Policy Reviews and Recommendations”. Journal of Financial Counseling and Planning, 28(2), pp. 235-244.
Shettar, R.M. (2016). “Financial Inclusion: An Overview”. IOSR Journal of Business and Management, 18(2), pp. 37-44.
Sibanda, S. & Sibanda, T. (2016). “Financial Education in South Africa: Overview of Key Initiatives and Actors”. International Labour Organisation Innovative Finance for Social Justice, pp. 1-36.
Sithole, A. (2018). “Regulatory Strategy of the Financial Sector Conduct Authority: October 2018 to September 2021”. Financial Sector Conduct Authority, pp. 1-75.
Schoombee, A. (2004). “South African Banks and the Unbanked: Progress and Prospects”. South African Journal of Economics, 72(3), pp. 581-603.
Varghese, G. and Viswanathan, L. (2018). “Financial Inclusion: Opportunities, Issues and Challenges”. Theoretical Economics Letters, 8(11), pp. 1935-1942.
Verhoef, G. (2001). “Informal Financial Service Institutions for Survival: African Women and Stokvels in Urban South Africa, 1930-1988”. Enterprise & Society, 2(2), pp. 259-296.
Verhoef, G. (2001). “Savings and Survival in A Modern African Economy: Informal Savings Organisations and Poor People in South Africa”. Historia, 46(2), pp. 519-542.
Warsame, M.H. (2009). The Role of Islamic Finance in Tackling Financial Exclusion in the UK. Doctoral thesis: Durham University.
Whittaker, M. (2008). “South Africa’s National Credit Act: Possible Model for the Proper Role of Interest Rate Ceilings for Microfinance”. Northwestern Journal of International Law & Business, 28(3), pp. 561-582.
Legislation
Consumer Protection Act 68 of 2008 as amended.
Credit Agreements Act 75 of 1980.
Financial Intelligence Centre Act 38 of 2001 as amended.
Financial Institutions (Protection of Funds) Act 28 of 2001 as amended.
Financial Sector Regulation Act 9 of 2017.
Financial Services Board Act 97 of 1990 as amended.
National Credit Act 34 of 2005 as amended.
South African Reserve Bank Act 90 of 1989.
Usury Act 37 of 1926.
Usury Act 73 of 1968.
Usury Laws Act 57 of 1996.
Published
2020-10-30
How to Cite
Chitimira, H. (2020). Historical Aspects of the Statutory Regulation of Financial Inclusion for the Poor and Low-Income Earners in South Africa: Array. Acta Universitatis Danubius. Œconomica, 16(5). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/605
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Section
Financial Economics
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