As Minister of Trade, Industry and Competition Parks Tau prepares to deliver his department’s Budget Vote speech tomorrow, 26 May, Prime Loans hopes he will use the opportunity to announce meaningful progress toward reforms that expand access to safe, regulated short-term credit and help protect financially pressured South Africans from being pushed toward illegal lenders.

This comes as South Africans continue to face mounting cost-of-living pressures. Latest inflation data released by Stats SA showed annual consumer price inflation for April 2026 rising sharply to 4%, driven largely by significant increases in fuel prices, transport costs and broader household expenses.

These economic pressures are increasing reliance on short-term credit, particularly among lower- to middle-income consumers who are often excluded from traditional banking products such as credit cards and overdrafts.

“At a time when more South Africans are relying on credit simply to manage monthly expenses, it is critical that consumers are able to access safe, regulated lending options rather than being pushed toward illegal and unregulated operators,” said Nita Morgan, Director at Prime Loans.

The formal short-term lending sector continues to play an important role in supporting financial resilience and inclusion. However, the sector is facing increasing structural pressure due to an outdated regulatory pricing framework that has not been meaningfully updated since 2015.

Over the past decade, inflation, compliance obligations and operational costs have increased significantly, while regulated caps on interest rates, initiation fees and service charges have remained largely unchanged.

The result is an increasingly constrained lending environment where regulated lenders are becoming more risk-averse and rejecting larger volumes, up to two-thirds, of credit applications.

“In many cases, consumers whose applications are declined do not stop needing credit. Instead, they are pushed toward informal lenders and loan sharks operating entirely outside the regulatory framework, often at far greater financial and personal risk,” Morgan said.

There is an estimated 50 000 illegal lenders operating across South Africa, often targeting financially vulnerable consumers with promises of quick cash and little to no oversight. Unlike regulated lenders, these operators are not subject to affordability requirements, pricing transparency or consumer protection measures under the National Credit Act. In many instances, borrowers are exposed to exorbitant interest rates, intimidation, coercive collection practices and the unlawful withholding of bank cards, IDs or personal belongings as collateral.

Prime Loans supports the ongoing work being led by the Credit Association of South Africa (CASA), which has engaged constructively with government and the National Credit Regulator on proposals to modernise the pricing framework governing short-term credit.

We hope the Minister’s Budget Vote speech will outline progress toward reforms aimed at strengthening access to regulated credit and supporting a more sustainable lending environment. Key areas for consideration include:

• Reviewing and modernising the pricing framework governing short-term credit, including caps on interest rates, initiation fees and service charges;
• Ensuring the regulatory framework reflects current economic realities, including inflation, compliance obligations and operational costs;
• Strengthening enforcement and action against illegal lending operations operating outside the National Credit Act;
• Supporting greater consumer education and financial literacy around credit, debt review and responsible borrowing; and
• Expanding safe, regulated access to credit for financially underserved consumers.

“This is about ensuring that South Africa’s regulatory framework keeps pace with current economic realities while continuing to protect consumers,” Morgan said. “A balanced approach that supports sustainable lending, strengthens enforcement against illegal operators and improves financial literacy will help expand safe, regulated access to credit for financially underserved South Africans.”