Pound of Flesh is a journalistic project that uses data to assess of the state of personal debt, reckless lending, and overindebtedness in South Africa – including an understanding of the debt-to-income ratio of everyday South Africans. This investigation revealed the personal equivalent of a “fiscal cliff” scenario for credit consumers, and contextualises this within broader economic data and statistics, finding that South Africa has more people who owe money than people who earn it; that almost a third of credit-active South Africans spent more than 30% of their monthly income on servicing debt; and 5.5% of South African credit consumers spend 100%+ on servicing their debt – leaving them with zero take home pay for sustaining themselves.
This project was supported by the impactAfrica fund of Code for Africa. Initially, the project planned to explore South African data about garnishees – a common and highly politicised debt collection tool. Garnishee use has been shown to further entrench indebtedness and income inequality, and is predominately used against poorer people who don’t have assets to use to recuperate unpaid debts. After the landmark 2016 Constitutional Court ruling that addressed some of the loopholes in the law around garnishee use, the decision was taken to broaden the scope of the Pound of Flesh project, and delve deep into South African consumer credit data, including an attempt to answer: How much debt are really South Africans in? What are safe levels of debt for consumers? And what does this mean for our broader economy?
Pound of Flesh is a data-driven, journalistic project – collating stories of consumer credit, and demystifying and contextualising the related data. The website (poundofflesh.org) brings together various elements from the grant – including news coverage links, personal debt stories from real consumers, and multimedia such as a social video (more multimedia elements will follow). The reporting output is initially published through independent publications, on their own platforms, and the Pound of Flesh website includes extracts and redirects readers to the original publishers. There are three long features to have come out of Pound of Flesh so far. Two of these appeared in the print and online versions of the Business Day – a daily national newspaper in South Africa – including a feature on credit growth outpacing job growth (https://www.businesslive.co.za/bd/economy/2017-09-12-indebted-consumers-on-a-credit-knife-edge/), and a look at the effect of and legality of garnishees as a debt collection tool (https://www.businesslive.co.za/bd/opinion/2017-10-12-how-garnishees-keep-gouging-debtors/). The latest is a six-page cover story package on the state of consumer credit in South Africa (as well as a look at the role of the credit regulator, and draft legislation on a potential credit amnesty currently being debated), published by the Financial Mail weekly magazine (in March 2018) and on their site (PDFs of this have been emailed to the judges).
What makes this project innovative?
This series of stories (and website) explores over-indebtedness, reckless lending, debt collection practices, and the legal framework around credit provision, as well as questioning and critiquing the categories used in the “official” reporting of consumer credit statistics (from our National Credit Regulator).
It also tells a longer term story, exploring personal credit and debt trends over ten years, and casts forward through looking at relative growth rates in terms of both employment and credit consumer stats.
But critically the story works on a consumer level – demystifying jargon and taking out the “legalese” commonly seen in financial stories – and a business level, speaking to two target audiences: one that is most directly affected (credit consumers), and those at a corporate and government level who are directly involved in making decisions that affect the first group. We did this through tone of the writing, and the use of multimedia – such as a social video that focuses on the “debt spiral” that overindebtedness can trigger.
What was the impact of your project? How did you measure it?
Source and methodology
I also drew information from “The Incidence of and the undesirable practices relating to garnishee orders in South Africa” (2008, 2013 update) from the University of Pretoria (http://archivedpublicwebsite.up.ac.za/sitefiles/file/47/327/2013%20garnishee%20orders%20follow%20up%20report.pdf). This document is considered the “bible” of garnishee research in South Africa. With this one, I extracted the garnishee numbers across industries into my own spreadsheet, and worked backwards from the percentages the report provides to arrive at a minimum figure of the number of people with garnishees against their debt in the South African workforce.
I also sourced figures from several annual reports (including the Credit Ombud, and the National Credit Regulator). Most financial reporting on the subject of personal finance focuses on rand (currency) value of credit categories, but here I focused on types of credit as volumes, and this changes the narrative substantially as it allows us to see what type of credit is being primarily accessed (unsecured, short term and credit facilities, rather than secured credit and mortgages). By shifting the view in this way, it removes the skewing effect that the large rand amounts involved in mortgages introduces to the figures.
Beyond the hard data, I also spoke to several credit consumers, activists in this space, and sources in the National Treasury, the National Credit Regulator, the Association of Debt Recovery Agents, and several lawyers operating in the space of consumer credit collection and credit provision.
Throughout, my approach was one of doing the legwork to bring together a very broad range of sources and voices in order to present a broader view of consumer credit, so that I could contextualise the numbers and issues for readers.
Rehana Rossouw (Commissioning editor at Business Day)
Malgosia Kijko (Senior producer, Business Day Online)
Rob Rose (Editor at Financial Mail)
Vuyo Singiswa (Designer at Financial Mail)
Daniel Manners (Video illustrator)