- President Cyril Ramaphosa approved the National Credit Amendment Bill this week
- The debt-relief bill aims to take the burden off of heavily-indebted consumers who earn less than R7500 a month
- The bill has been met with backlash from the Democratic Alliance, which has deemed it 'flawed and possibly unconstitutional'
President Cyril Ramaphosa has green-lighted the National Credit Amendment Bill, seeking to relieve over-indebted citizens with low incomes.
BusinessLIVE reports that consumers who bring home a maximum of R7 500 and have unsecured debt of a minimum R50 000 will see some much-needed relief.
Treasury forecasts that the proposals may result in R13 billion to R20 billion worth of write-offs under the new law.
Both the banking industry and the Democratic Alliance have raised objections to the new bill, with the opposition party claiming that the president has signed off on a 'deeply-flawed and possibly unconstitutional' amendment:
“The DA is concerned that this act will increase, instead of decrease, the appetite among low-income earners to incur more debt with no intention of ever paying it back, creating a massive moral hazard, as long as they remained within the legislated threshold of indebtedness.”
The banking sector claimed that the proposal would end in a credit restriction to low-income citizens, with credit providers increasing tariffs to price in the new risk.
Briefly.co.za reported that South Africa is battling both low employment rates and a contracted economy, with the president expected to announce the way forward in the next few weeks.
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