Contradictions in consumer credit: innovations in South African super-exploitation

Abstract

Half of the 20 million credit-active consumers in South Africa (out of 53 million residents) were, by the 2010s, experiencing over-indebtedness. ‘Impaired credit’ ratings soared to the point that ratings agencies were compelled to restore the borrowing capacity of 2.3 million (albeit without forgiving outstanding loans). The increase in the rate of unsecured credit extensions by a variety of lenders hit extreme levels and led to demands for a ban on garnishee orders. Underlying the surface explosion of consumer credit and resulting increase in social tension was the overall economic downturn since 2008. This reflected not only the prior five years of dramatic over-borrowing, but a generalised condition of ‘financialisation’ that emerged during capitalist crisis management in the context of political democratisation. The retail financial sector witnessed an unprecedented degree of liberalisation, especially higher interest rates and new credit products. Moreover, the National Credit Act of 2005 stressed the role of debt counsellors rather than shared liability for debt workouts. The growing contradictions in consumer credit have in the past generated fierce resistance. A quarter century earlier, a more aggressive collective default strategy characterised a similar era: the ‘bond boycott’. Whether the contradictions generate a similar collective reaction depends upon political agency, and the emergence of a 'United Front' can potentially relink labour and community self-interests in a decisive manner.