Recognise the picture? At pension paypoints, wage paypoints and shopping centres, the loanshark is there, ready to provide you with the money you need to buy something that you cannot afford.
There is death in the family and the person that comes to the rescue is the microlender charging from 30% interest per month.
When it’s repayment time at the end of the month, you cannot pay. You go to another money lender and then to another one to pay the other one and the problem spirals out of control.
Savings and Credit Co-operatives (Saccos) try to prevent the debt spiral. At the heart of Saccos is the drive to save.
Loans After being a member for six months, members can borrow up to three times their savings. Borrowers must repay the loans over three years with interest at 28% per year.
Savings accounts give a guaranteed 6% interest per year. Compare this to banks where the average interest earned on small amounts is as low as 2%, and for amounts of over R10 000 is only 4,5% – still below CME’s 6%.
The Christmas savings account pays 8% interest. Members contribute from January to November.
The school savings account helps cover a family’s education costs and back to school expenses. Members contribute from February to December.
The prestige club account is a specialised account for groups like burial societies, saving clubs, spaza shops and informal traders.
Savings and credit housing product offers members access to govt subsidies, especially for housing needs, and encourages self-improvement.
A group funeral plan will cost you less than R20 per month for coverage of R10 000.
“We encourage people to start saving small amounts,” says Victor Botha, the manager of one of 28 Saccos across the country, the Cape Members and Employees (CME).
“The difficult part is to start. Once you start then it becomes easier to increase your monthly contributions,” he says.
But CME members, like other Saccos, “are more than just customers,” says Botha. “They are owners of the financial institution.” When you put money into the Sacco, a portion of your money goes to buying a share in the Sacco.
The 10-year old CME Sacco is one of the biggest in the country. With just more than 1 000 members and assets of nearly R3m, it provides different kinds of services to its members that are common to other Saccos.
At any one time, 80% of the members’ money is spread amongst its members in the form of loans.
Not a pyramid scheme
If CME offers such good services, why is it that they have so few members? “People are worried that we are a pyramid scheme,” says Botha. “But that is not the case. We are a registered organisation with the registrar of co-operatives, we have exemption from the Banks Act and we fall under the Micro Finance Regulatory Council (MFRC). We are member-controlled and get audited every year.”
Retrenchments have also hit the Sacco badly. As workers have lost jobs, no more savings are possible. Other companies have refused to give stop order facilities.
SACP launches Sacco
Meanwhile the SA Communist Party has launched its own Sacco. The Dora Tamana Savings and Credit Co-operative is still being registered, but people that are interested in joining should phone Inkululeko Media and Marketing on (011) 339 3621.
It also plans to offer similar services as CME like:
Sheshisha Loans – loans of up to R750 granted quickly repayable after 30 days at reasonable interest rates
long term loans with a 3 month to 24 month repayment period. Loans will start from R750 up to a maximum of R10 000.
If you live in the greater Cape Town area and want to find out more about CME, contact Victor Botha on 021-949 1429.
If you want to join a Sacco in your area, contact the Sacco federation, Saccol, on 021 410 7258.
Employers watch out!
Phase two of Numsa’s membership computerisation project is on track with the addition of the financial part of the programme.
This will enable Numsa to track which employers are behind in their subscription payments and then to send them an invoice.
Retirement Fund Trustees Conference
On September 9-10, Nedlac will hold a national conference of retirement fund trustees.
Labour, with participation of some Numsa trustees, has already had its own conference to prepare its position. It will put forward the following proposals:
trustee training should be labour friendly, controlled and accredited by sectoral training authorities with the help of Ditsela and trade unions
Funds’ investment strategies should strive to maximise returns while ensuring an element of socially responsible investment as well. Funds should also increase their investment in infrastructure development.
housing loans should be made available against funds and people with HIV/Aids or terminal illnesses should have access to benefits.
Members must be informed at least once a year of their fund’s performance.
The Retirement Funds Act must be rewritten to include the provision of minimum benefits in all schemes, there must be compulsory membership for atypical workers like contract workers, as well as a code of conduct to eradicate corruption.
Numsa trustees are learning
The Metal Industries Benefit Fund is leading the way with trustees training with a trustees’ course that started in 2003.
It gives an introduction to retirement funds and is accredited in terms of the National Qualifications Framework.
Meanwhile a few Numsa worker trustees, including Thulani Mthiyane, Isaac Phaahla, Frank Malesa and Omar Gire, have also registered with the University of South Africa to study a Pension Funds law course on NQF level 7.
Public service wage talks flounder
As Numsa News went to print, settlement on wage talks in the public sector was no closer as both parties stuck to their positions that they last put on June 21.
Government is offering 5,5% (with 0,1% taken from the housing subsidy). If unions reject the 0,1%, then the offer stands at 5,4%.
In year two and year three of the agreement, workers will get an inflation-linked increase.
It says it cannot increase the offer because that is what the Minister of Finance has allocated to them in the budget and they cannot exceed the budget.
Government has undertaken to phase in housing subsidies for the vast majority of workers who currently don’t receive them over a period of four years.
Other burning issues it referred to task teams to deliberate until next year. These will deal with pay progression, medical aid, allowances and leave.
Seven trade unions under Cosatu, who organise nurses, teachers, doctors, police and other public sector workers, have rejected the entire offer and are sticking to their demand for 8,5% on wages, with a plea to government to “seek more money from National Treasury”.
Government must also improve the inflation-linked wage offer for year two and three of the agreement.
It also condemned the delaying tactics of referring issues to task teams and “locking the parties into interminable meetings”.
Condemning the continued threat of down-sizing, it is urging the Minister to redeploy, re-skill or retrain the 11 000 excess staff instead.