Progress in garnishee order investigations - CNBC Africa

Progress in garnishee order investigations

Southern Africa

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A garnishee order may be useful in the unsecured lending space.

“We’ve developed a set of criteria to determine how garnishee orders would be applied for in future. We’ve done some work on what the current state of affairs is in Garnishee orders and how we’re going to deal with those, and we’re interacting with treasury on this,” the Banking Association of South Africa’s managing director Cas Coovadia told CNBC Africa.

“We just have to discuss how we actually implement this, how do we devote criteria if agreed – going to regulations or do we do it through some voluntary code. We’re quite confident that we’ll have dealt with the crux of the problems in the emolument attachment order environment, if we get through all of that.”   

A garnishee order is a court order requiring the employer to withhold part of the wages owed to a debtor. It is aimed at ensuring that the employee makes some payments towards a debt they owe.

It has been said that it could be useful in the unsecured lending space, where consumers seem to be borrowing more than they can afford to pay back.

The CEO of South Africa, Kevin Hurwitz however, recently came out and said that there is no unsecured credit bubble in the country.


“We’ve always maintained that, as has the industry, the National Treasury and the Reserve Bank. Unsecured lending is still about 11 per cent of total lending, there’s absolutely no credit bubble, there’s no systemic risk in the system at the moment,” Coovadia indicated.  

“Inefficiencies have been identified in the unsecured lending environment and the industry is working with National Treasury and the Credit Regulator to deal with those. I would agree with Hurwitz.”

Coovadia believes that appropriate regulation is not a problem in the unsecured lending space, but that unregistered micro lenders are.   

“The regulators need to begin to make an impact on those micro lenders who are not in the system at the moment, who are not registered with the credit regulator. I think the regulator needs to devote more resources towards identifying those people, bringing them into the net or closing them up,” he said.

“I think the NCA already has sufficient feet and if the NCA fully applied, we can get a more efficient and a properly-regulated industry.”

Consumer spending is tight at the moment and Coovadia added that South Africa’s recovery in this area may depend on the overall economy.

“Economic growth is very sluggish at the moment, unemployment remains unbearably high so people’s disposable income is limited. I think as the economy starts turning around, and as we start making an impact on employment, that obviously creates a market for housing,” he explained.

“We’re certainly working with authorities to see what role we can play in actually addressing some of the broader economic issues.”