Loan sharks exploit vulnerable communities amid rising living costs

COMMUNITY leaders have sounded the alarm over the rise of loan sharks who offer loans at high interest rates – sometimes as much as 50% - to people who are struggling to make ends meet due to the rising cost of living.

They are calling for a clampdown of loan sharks and more awareness around people getting trapped in a cycle of debt due to the high interest rates.

Pastor Cyril Pillay, chairperson of the Chatsworth Spiritual Crime Prevention Forum, said loan sharks were preying on the community.

“In recent months, loan sharks have become a deeply troubling trend that has been surfacing across our communities in Chatsworth and the broader Durban south region. It is a growing crisis that should alarm not only our civic leaders, but all who carry a heart for the broken, the poor, and the desperate. 

“Loan sharks, or ‘mashonisas’, as they are commonly known, are mushrooming at an alarming rate. Their business transactions are dodgy, interest rates crippling, and their presence is both a symptom and a cause of our community’s growing despair of financial burdens,” he added.

Pillay said it was no secret that many families in Chatsworth were faced with economic hardship due to the high unemployment rate and social grants failed to cover essential needs. 

“With limited access to formal loans due to poor credit scores or lack of collateral, many feel they have no option but to turn to informal lenders and loan sharks who promise quick cash but at huge cost. I have counselled families who have fallen prey to these predators. Their stories are gut-wrenching.

"Some borrow to put food on the table. Others are trying to cover school fees, medical costs, or rent arrears. There are those, particularly women in single-parent households, who borrow to keep the electricity on or to buy school uniforms. These are not lavish or luxurious expenses. They are the bare necessities of life,” added Pillay.

He said loan sharks also often targeted the elderly, pensioners, and those receiving government grants. 

“They offer small loans, which are sometimes as little as R200, but with monthly interest rates that can be as high as 50%. 

“Repayments are often collected directly from bank cards, with threats of violence or public humiliation for those who default. In some cases, identity documents and SASSA cards are withheld as security. This is not lending, it is entrapment,” he added.

Pillay said young people were also seeking loans for various reasons.

“With youth unemployment at a staggering rate, some borrow money for transport costs to attend job interviews or to start small businesses. Sadly, one misstep in the loan repayment and they are caught in a spiral of debt that haunts them for years.

“This crisis is not only financial. It is also moral and spiritual. It reflects the erosion of community trust, the breakdown of support systems, and the exploitation of vulnerability. The mushrooming of loan sharks in Chatsworth is a mirror of the pain our people carry daily. A pain compounded by the lack of adequate financial education, employment opportunities, and mental health support,” he added.

He said urgent interventions were needed.

“As a spiritual and community leader, I urge the community to stand together in support of one another. We must call upon authorities to crack down on illegal lending practices and offer more accessible alternatives through ethical microfinance, community saving schemes, and educational programs. Religious organisations, non-government organisations and civic groups must step in to counsel and assist those in crisis before they fall prey to this dark underworld,” Pillay said.

Beaver Shanmogum, a community activist in Isipingo, said the issue of loan sharks was a national crisis.

He said many were at the mercy of loan sharks who “ripped them off because of their financial distress”.

“Loans have become a lifeline for people, as the cost of living is high. Ten years ago, it was only people who had gambling and substance abuse problems that looked for a loan shark. Today, there are loan sharks in every community, and the people who go to them are just struggling to put food on the table,” he said.

Shanmogum said if loan sharks were not paid back timeously, they were physically attacked or had items of value taken from their homes.

“We have had cases in the Isipingo area where loan sharks have become violent, unruly, and disrespected the borrower by using vulgar words and death threats to get their money back. In one case, a loan shark entered a person’s house when they did not make payment, and the person was kicked and slapped repeatedly,” he added.

“Borrowing money from a loan shark is like selling your soul to the devil. Interest rates range from 30 to 50%. It traps the person in a cycle of borrowing and repaying for a long time. The loan shark thinks he is a good samaritan by giving the borrower a life line. He is actually giving them a line to hang themselves. 

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