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Debt relief Bill a double-edged sword – study

Publish date: 16 September 2019
Issue Number: 841
Diary: IBA Legalbrief Africa
Category: South Africa

The debt relief Bill's impact on society and the economy is ‘net negative’, an independent study commissioned by the government has found. A Fin24 report says the socio-economic impact assessment was conducted by Genesis Analytics for the Department of Trade & Industry. Genesis collected evidence from January to March 2019 and the report was finalised in April. Members of the sixth Parliament's Committee on Trade & Industry were briefed on the socio-economic impact assessment study last week. The National Credit Amendment Bill was originally drawn up by members of the committee in the fifth Parliament and was assented to by President Cyril Ramaphosa in August. Genesis' assessment noted that although the Bill seeks to benefit the over-indebted with debt relief mechanisms, it also has ‘unintended consequences’, chairperson Duma Nkosi said in a statement following the briefing. According to Nkosi, Minister Ebrahim Patel has undertaken to address the unintended consequences and the committee will continue to support the Bill's implementation. Genesis' findings indicate that although the Bill intends to address financial inclusion, the impact would be the opposite. ‘Parliament may not have had sight of all the unintended consequences of the Bill. We respectfully suggest that the proposed solution may not be the most appropriate to achieve the laudable goals of helping vulnerable consumers; in fact it is likely that the proposed solution will ultimately harm the wider group of lower income earners,’ the report read.

Full Fin24 report