Despite fear of violence and intimidation, desperate SA women are turning to loan sharks to keep their families from starving.

The latest household affordability index report by the Pietermaritzburg Economic Justice and Dignity Group has revealed the challenges women in poor communities are facing to keep their households fed.

The report, which is based on food price data and interviews with women in supermarkets, has found that families living on low incomes may be spending about 30% more on food in May than they did two months ago. 

“Government’s decisions on responding to the [Covid-19] pandemic via hard lockdown and the specific regulations related to these are impacting on, and changing expenditure patterns and consumer behaviours of, households living on low incomes very significantly,” the report stated.

Mervyn Abrahams, the group’s programme coordinator, said the research also found that with incomes having been suspended for many workers and insufficient top-ups on social grants, women with no savings buffers are having to take on higher levels of debt, primarily through loan sharks, at interest rates of 40% to absorb food shortfalls.

“This means that not only are households having to spend more on food, but they are having to borrow money to buy this food, and at very high interest rates.

“While our data is localised, it is not unlikely that this picture is playing out across South Africa,” he said.

According to the report, the amount of debt women have incurred “is increasing”.

They typically draw on three main money sources — loan sharks, spaza shop credit and cash loans, or stokvel savings and loans.

“Loan sharks, who used to charge a 30% interest rate on loans, now charge 40%. This is consistent with a higher demand for the money they have available to be loaned out and profiteering off a crisis. 

“Women are taking higher loans because more money is needed,” the report states.

While stokvel savings and loans appear to be the best options, women have reported that accessing money from this source has become difficult because “the savings pot has dried up or [is] drying up fast”.

“Loans, too, are harder to get because all money that can be loaned out has been loaned out.”

It means the most common source is through a loan shark.

According to the report, loan sharks take Sassa grant cards (with the pins) as collateral.

“They simply draw out what is owed to them, return the rest to their client and keep the card.

“Where Sassa grant cards are not available or not proffered up as collateral, loan sharks repossess your TV or oven, or fridge, or whatever they can take. 

“Bashing in your kneecaps with a hammer and a gentle wisp of a knife edge against the neck is not out of place either. 

“Fear and intimidation, of course, are part of this game. Women are as well versed at this game as the sharks. Women employ all sorts of strategies to stay ahead of the nearest payment date and most vicious collector,” says the report.

A common strategy, it states, is to borrow from several loan sharks and try to move the money around. 

“It is true that most of these relationships end badly, bridges get burnt and other loan sharks, with higher interest rates and sharper teeth, must be found.”

Abrahams said while many people looked at loan sharks with derision, they lent money when nobody else would.

“As much as they might not be liked, they are very necessary when your children are hungry.

 “It is clear that the lockdown has escalated the debt problem.

“Invariably, going into debt for a consumption item such as food is just not going to end well. 

“The magicians (women) will eventually exhaust their repertoire of tricks, but they will run it for as long as bearably possible.

“When the end comes, it is hoped that safer, fairer, less destructive financial options will be in place to assist women to feed their families,” said Abrahams.