South African Miners Are Trapped by Debt

In 2008, platinum miner James Ntseane borrowed 8,000 rand ($886) from African Bank Investments to pay for his grandmother’s funeral. Soon after, he took out two more loans, totaling 10,000 rand, for a sofa and house extension. Four years later he owes at least 30,515 rand, according to text messages he gets from African Bank, South Africa’s biggest provider of unsecured loans. Under a court-ordered payment plan, his employer garnishes about 13 percent of his monthly 12,600-rand salary for the lender. He doesn’t know how much interest he’s paying. “They are taking too much money,” says Ntseane, 41.

Ntseane is one of more than 9 million South Africans mired in debt. African Bank, Bayport Financial Services, Capitec Bank Holdings, and other firms have led a boom in unsecured lending, charging interest as high as 80 percent a year, as is allowed there. Last year a series of strikes led to at least 46 deaths, the country’s worst mining violence since the end of apartheid. “One of the contributing factors to all of these strikes has been this surge in unsecured lending,” says Mike Schussler, chief economist at the research group Economists.co.za, echoing an October statement by Trade and Industry Minister Rob Davies.