South Africa: No More Loan Sharks

Community group learns about saving in Xaxazana district of Eastern Cape, South Africa
29 August 2011

There are 10 people in Noamen Nongezi's household, including her husband and their three children, two children orphaned when her two sisters died of Aids, a child that her husband had with another woman, her husband's cousin and a live-in domestic worker.

Nongezi and her husband, who works on the mines near Johannesburg, also support her husband's brother, who is HIV-positive, as well as relatives who live elsewhere. Nongezi has no formal job, like 70 percent of those living in South Africa's poorest province, and cannot rely on her husband to regularly send her money.

Yet all of the six children in her care are attending school.

Nongezi prides herself on being a good saver from the money she earns from selling fruits and sweets as well as funds from the government grants she gets for each of the six children. She says her life changed three years ago when she joined a savings and credit group run by SaveAct, an NGO that helps poor people improve their personal financial management.

Before this, Nongezi was forced to borrow from a micro-loan business to pay the funeral costs when three family members passed away. The loan, an equivalent of U.S. $1,500, carried an interest rate of 40 percent per month. But now she is able to take loans at only 5-10 percent interest, which Nongezi uses to invest in her small business, expanding stock and selling in town during the summer months.

Unlike so many of her friends and family members Nongezi is not HIV-positive, but she suffers from health problems caused by the traumatic birth of her youngest child. This prevents her from selling much stock during the winter months, but since joining SaveAct she is now able to plan for this by saving and taking occasional loans.

Nongezi greatly values the support for saving that she gets from the members of her group. She says the best things about SaveAct are her access to loans at any time, and the fact that she no longer has to borrow from micro-loan offices or loan sharks, known as "mashonisas" in the Nguni language she speaks. She is also able to buy at shops in cash, as opposed to buying on credit, another way she now avoids paying interest.

This story was based on a case study compiled by researcher Annie Rose Barber, University of Bath, UK. For the main story please see Savings Groups Help Rural Households Affected by HIV/Aids.

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