South Africa has experienced a boom in unsecured personal lending in the past five years. The government has largely encouraged the market’s growth, seeing it as a way of bringing more South Africans into the banking system and enabling many who are too poor to take on asset-backed loans to access credit for the first time.
The chief actors in the rise of unsecured lending have not been the country’s ‘Big Four’ lenders, which dominate the overall market. Rather, the pioneers have been African Bank and Capitec.