Un­se­cured loans the way out for many

Sunday World - - World Of Jobs -

UN­SE­CURED credit is an un­likely hero in the story of how or­di­nary South Africans are try­ing to rise above the cur­rent eco­nomic and ed­u­ca­tion crises fac­ing the coun­try, ac­cord­ing to the lat­est UCT Unilever In­sti­tute Aspi­ra­tions Re­port re­leased in Dur­ban.

John Simp­son, pro­fes­sor of ad­vanced mar­ket­ing at the UCT Unilever In­sti­tute, said all in­come groups in South Africa were fac­ing an un­prece­dented cri­sis of aspi­ra­tions and in­come im­mo­bil­ity” fu­elled by the cur­rent eco­nomic, po­lit­i­cal and ed­u­ca­tion tur­moil rock­ing the coun­try.

It was widely ac­knowl­edged across in­come groups that ed­u­ca­tion and en­trepreneur­ship were two levers that could push one up­wards eco­nom­i­cally, and that un­se­cured credit had a ma­jor role to play in fund­ing th­ese two en­deav­ours.

The study based on 8 000 in­ter­views across five in­come groups found that most South Africans were still part of the pre-mid­dle class, whose aspi­ra­tions to break into the mid­dle class were largely de­pen­dent on the qual­ity of ed­u­ca­tion and other eco­nomic driv­ers they could af­ford.

Asked what was hold­ing them back from reach­ing their aspi­ra­tions, they name lack of jobs, lack of as­sets which give them ac­cess to se­cured credit, black tax” and lack of ac­cess to qual­ity ed­u­ca­tion.

In­for­mal forms of fi­nance such as bor­row­ing from fam­ily and un­se­cured credit are used to fund a bridge into the mid­dle class, such as ed­u­ca­tion, mak­ing home im­prove­ments in or­der to rent out rooms, buy­ing a car (which pro­vides mo­bil­ity, ac­cess to more job op­por­tu­ni­ties and abil­ity to gen­er­ate in­come) in or­der to qual­ify for a bet­ter job, start­ing a small busi­ness from home, get­ting off the grid to be­come self­sus­tain­ing, and play­ing as­set catchup in­clud­ing pay­ing a de­posit on a low­cost house.”

The study re­vealed that only 12% of re­spon­dents re­lied on bank loans, while 22% be­lieved start­ing their own busi­ness would im­prove their for­tunes. In ad­di­tion, 38% felt that fam­ily re­spon­si­bil­i­ties were hold­ing them back. UCT Unilever In­sti­tute

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