Stay away from unregistered money-lenders

by | Jan 20, 2021 | Personal Finance

Loan sharks – or mashonisas as they are also known as – are ruthlessly preying on financially struggling South Africans.

There is nearly 50 000 of these unregistered credit providers in South Africa. Mashonisa is a Zulu term rooted in the word Shonisa – which means to impoverish. And with interest rates of between 50% – 120% that is certainly what they are doing to the most vulnerable in our society.


Unfortunately for South Africans, the fiscal stimulus we were promised at the beginning of the first lockdown has not been forthcoming. There simply isn’t any money and sadly, far too many people are still waiting for their UIF and SASSA payments, with little hope in sight. The SASSA and UIF queues are getting longer, the price of petrol and food is rising and load shedding has returned to haunt us. 2021 has not got off to a good start for consumers.

The banks have granted as many payment holidays as they possibly could. As payment terms return to normal, it is now clear that consumers cannot cope with their required payments. Debt collectors are also now out in full force – causing great anxiety and distress for over-indebted consumers.

With the banks tightening up their lending criteria it has become increasingly hard to access loans (from a reputable institution) to kickstart the year and try and purchase the essentials our children require as they return to school. This is forcing more and more people into the unregulated loan shark market – further adding to their financial woes.

How they operate

Unregistered lenders typically offer very small loans from R50-R5,000 over a short term.

Their interest works like this. If they charge you 50% interest on R1000 loan then you have to pay them back R1500.

60% interest – payback R1600 etc. until you get to the 100% interest (which many charge). This means that you will owe the mashonisa literally double of what you borrowed. (If you borrow R1000, you will have to pay back R2000).

Social grants

Pensioners and other SASSA grant recipients are also a vulnerable group who are often targeted by loan sharks who lend them money and keep their Sassa cards and IDs as surety.

Though this practice is illegal, and some money lenders have been arrested and jailed for it – it sadly still happens very often.

In addition to the current shambles that SASSA finds itself in, Minister of Social Development, Lindiwe Zulu has said that there would be no extension to the payouts of either the temporary disability grant or the Covid-19 relief grant which comes to an end on January 31.

The reality is that the majority of families rely on social grants to put food on the table, but sadly this is just not enough. An entire family simply cannot live on just a social grant. This makes them particularly vulnerable to these cruel financial lenders.

There are dangerous individuals who work and lurk in the unregulated area of informal money lending.
Unlike banks, loans sharks/ mashonisas give no payment breaks when things get tough. And some of them resort to unsavoury methods of getting their monies back. This sometimes mean going into people’s homes and taking their belongings as collateral until payment is made. It is a terrible, traumatic space for already struggling consumers to be in.

Yet many people simply have no choice but to resort to this type of borrowing, as they have no access to any other registered loans at lower interest rates.

Pay day loans

Even those who are lucky to be employed, fall prey to these money-lenders, as their salary simply isn’t enough to sustain their families from one month to the next. Taking out these pay-day loans might be a quick-fix solution. But it can see you enter a cycle of debt that is very, very hard to break free from.


Anne-Carien Du Plooy from the NCR has warned consumers to be vigilant when taking out loans. “It is the time of the time of the year when some consumers will feel like ‘Januworry’ is three months long because of their financial situation. Consumers who might need to borrow money or take out credit should read and understand their credit agreement before signing.”


Sebastien Alexanderson, CEO of National Debt Advisors urges South Africans to stay away from unregistered money-lenders and rather look at what their options are before turning to loan sharks.
“People need to become financially informed and empowered to avoid making bad decisions (like going to a loan shark) which could haunt them for a long time. Debt counselling is a registered industry and a good debt counsellor can restructure and lower your debt repayments and definitely take financial burden off your shoulders.”

NDA has been voted SA’s number one debt counsellor. For a free assessment to find out if you are over-indebted, please contact us.

Free Call Back Form

We'll Contact You!

"*" indicates required fields

Accept terms and conditions?*
This field is for validation purposes and should be left unchanged.

Related posts

Nearing Mid-Year: Checking In on Your Debt-Free Goals

Nearing Mid-Year: Checking In on Your Debt-Free Goals

As we edge closer to the middle of 2024 it's the perfect time for a little pause and reflection as we revisit those financial New Year resolutions. Starting the year with a goal to tackle your debt head-on was a big step. Now, halfway through, let's take a moment to...