South Africa’s R350 Billion Credit Opportunity, and What’s Standing in the Way

A modest regulatory adjustment could unlock hundreds of billions in formal credit, create jobs, and boost tax revenue. So why hasn’t it happened?

South Africa’s policymakers are frequently in search of levers that could meaningfully stimulate economic growth without requiring large amounts of government spending. Brett van Aswegen, CEO of South African credit juggernaut Wonga. believes he has identified one, and it requires little more than updating a fee schedule that was last revised a decade ago.

Van Aswegen laid out a calculation that is striking in its scope: an inflation-linked adjustment to the fee caps governing formal credit providers could, he estimates, unlock approximately R350 billion in additional formal credit per year. The knock-on effects, for employment, for small business formation, for tax receipts, could be substantial.

The Opportunity in the Gap

The starting point is the gap between credit demand and credit supply in South Africa’s formal market. The National Credit Regulator publishes quarterly statistics on credit applications and approvals. The current picture is stark: around 13 million applications per quarter, with only 5 to 5.5 million approved. More than 8 million applicants per quarter are declined.

Those 8 million people do not stop needing credit. They simply obtain it elsewhere, in the informal market, at rates of 50% per month. The economic value being generated in that informal market is real, but it flows to unregulated lenders rather than into the broader economy, and it comes at an enormous cost to the borrowers themselves.

Van Aswegen’s argument is that this is not an immovable reality. It is a policy outcome, and policy can change it.

What an Inflation Adjustment Would Actually Cost

The barrier to bringing formal credit to more South Africans is not, in van Aswegen’s analysis, primarily about risk or appetite. It is about pricing. The fee caps that govern what formal lenders can charge, covering the costs of account opening, credit bureau checks, loan administration, collections, and compliance, have not been updated since 2015.

In that time, inflation has compounded to more than 55%, and new compliance requirements under DebiCheck for example have roughly doubled operational costs. The result is that for lower-income and first-time borrowers, formal lenders lose money on every loan they make. The rational response is to stop making those loans, which is exactly what has happened.

The fix, van Aswegen argues, is straightforward: adjust the fee caps for inflation. Based on modelling presented to both the Department of Trade, Industry and Competition and the National Credit Regulator, that adjustment would add approximately R49 to the monthly instalment on an average loan of R3,000. That is the cost of bringing the regulatory framework into line with economic reality.

R350 Billion: How the Number Stacks Up

In exchange for that R49 adjustment, van Aswegen estimates the industry could bring formal credit rejection rates back down from their current level of over 72% to closer to 55%, the level that prevailed a decade ago. The credit volume released by that shift is, on his modelling, approximately R350 billion per year.

To put that in context: that is R350 billion currently flowing through an unregulated, untaxed, informal lending market, redirected into a formal economy where it is subject to oversight, where borrowers have legal protections, and where a portion of the economic activity it generates feeds back into government revenues.

The multiplier effects beyond the direct credit impact are harder to quantify but significant. Access to formal credit enables small business formation and expansion. It smooths household cash flow in ways that support consumer spending. It builds credit histories that allow borrowers to access progressively better terms over time. The R350 billion figure is a floor, not a ceiling.

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Why This Hasn’t Happened Yet

The obvious question is why this adjustment has not already been made. Van Aswegen acknowledged that the industry has engaged with regulators, presenting its case to the DTIC and the NCR, but that movement has been slow.

Part of the answer likely lies in the political optics of raising the cost of credit, even marginally and even in service of expanding access. Regulators and politicians can be understandably cautious about any change that could be characterised as making borrowing more expensive for South Africans who can least afford it, even when the evidence suggests the status quo is producing far worse outcomes.

Part of it may also reflect a regulatory system that moves slowly by design, one where the processes for amending fee structures and credit act provisions are long, consultative and subject to multiple rounds of stakeholder input.

The Policy Window Is Open

President Ramaphosa‘s State of the Nation address, which included a commitment to amend the National Credit Act to improve access for women and youth-led businesses, opens a window. Van Aswegen is calling for the government to move in two stages: first, a rapid regulatory adjustment to fees, which he says could be implemented quickly given that regulators already have all the information they need; second, a broader legislative review to address structural issues like income verification requirements that exclude informal economy participants.

The economic case is already made. Wonga’s modelling has been put before the relevant authorities. The question now is whether South Africa’s policymakers can move quickly enough to convert a well-documented opportunity into reality, or whether another cohort of millions will cycle through the informal credit market while the regulatory process runs its course.