Debt relief: 'Poorest of the poor will pay a heavy price for SA's debt forgiveness legislation'

It may also have the unintended consequence of encouraging less financially savvy consumers to borrow more in the mistaken belief that the state will simply write off these loans if they can’t repay them.

What kind of message are we sending to the holders of South African bonds, the World Bank and the ratings agencies when this country is in desperate need of foreign direct investment to create jobs and to help grow the economy.Is that message that we will simply write off our loans if we don’t feel like repaying them?

Let us not kid ourselves: this is populism at its worst and the legislation was designed entirely to win votes at the cost of South Africa’s reputation internationally as having world class financial institutions. What is desperately needed is for everybody involved in the debt cycle to reach out to consumers in order to educate them on the finer points of the financial system including how to make debt work for them. In this case, the state should take the lead and introduce basic financial knowledge as a school subject.

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