Middelburg — Unregistered loan sharks are tightening their grip on Middelburg residents, charging extreme interest rates and using intimidation tactics to recover debts.

One of the victims who works in the retail industry, Dipou Mashabela (36), says her life spiraled out of control after borrowing money from an informal lender in 2022. What began as a small loan for casual expenses quickly turned into a financial trap that left her deeply indebted and living in fear.

“It started by borrowing small money mid-month when I had to go out with friends,” Mashabela recalled. “I thought it was a small amount I could pay back at month end, but I got addicted until I started borrowing a lot of money, amounting to R15,000.”

The informal lender charged her 50% interest and demanded full repayment as soon as her salary was paid. Missing a payment meant her debt increased rapidly, trapping her in a cycle she could not escape.

As debt mounted, the lender began showing up at her workplace to demand repayment, humiliating her in front of colleagues. He seized her household items and could only return them once she had settled the debt.

The harassment and financial strain took a toll on her and her family. She says she lost her dignity and became the subject of gossip among colleagues, while her children’s quality of life suffered.

Mashabela said she never reported the case to the authorities because she feared retaliation. With family support, she is slowly rebuilding her life and warns others against taking informal loans. “I wish someone warned me how addictive it is,” she said. “At first, it seems like small money, but you end up trapped.”

Loan shark speaks out

An unregistered moneylender, who spoke to Highveld Chronicle on condition of anonymity admitted that he operates illegally after being retrenched from work. He said the business, which began as a side hustle, has become his family’s main source of income.

“I lend out a minimum of R1,000 and charge 50% interest,” he said. “I don’t lend to people who are not working because they create stories when they must pay back. I know when someone is working, they’ll pay me once they get their salary.”

He takes valuables as collateral in case clients default on payment. “If a person refuses to pay me, I take something valuable as collateral, something that matches what they owe. They always come back because they want their things back.”

While he insists he avoids violence, the lender admitted that his operations expose him to legal risks. “Sometimes when I take collateral, the person opens a case against me. I end up returning the item because I know I can get arrested,” he said.

He argued that government regulations make it difficult for small informal lenders to survive. “We are limited in how we do business, but we’re just trying to put food on the table,” he said.

He claimed to have once lent as much as R200,000 to a client. “Some people come when they can’t pay their cars or house bonds. I keep records of all transactions to prevent disputes. Every time someone borrows or repays, they sign an acknowledgement.”

Despite the risks, he said the informal lending business has helped him support his family, though he hopes to one day register the business legally.

Authorities warn the public

Lieutenant Colonel Magonseni Nkosi of the Mpumalanga Directorate for Priority Crime Investigation (Hawks) said illegal moneylenders often target vulnerable people who cannot access help from registered credit providers.

“Illegal shark loans are the last resort for vulnerable communities who cannot be assisted by registered institutions,” Nkosi explained. “As plan B, individuals turn to unregistered shark loans that contravene the National Credit Regulator and are often linked to other serious crimes, including assault and unlawful seizure of property.”

He also warned that many loan sharks demand ID cards, bank cards or SASSA cards as collateral, an act that is criminal under South African law. “The money acquired unlawfully can also lead to charges like money laundering,” Nkosi added. “Due to the nature of aggression, people are scared to report, as some operators work as organised groups.”

The Hawks urged the public to report any illegal lending activities to the nearest police station or the National Credit Regulator (NCR). Winnie Rabathatha, Education and Communication Officer at NCR, said if a money lender is not registered with the NCR, any credit agreements or loan transactions entered into can be deemed unlawful by a competent court.

“All registered credit providers are required to display their NCR Registration Certificate and an orange NCR window decal or sticker at the entrance of their business premises,” she said.