Being at present in South Africa, I have had the chance to visit one of the townships springing up around Cape Town and to pass the enormous areas of ‘informal settlements’ (doublespeak for shanty towns).
My companion on the journey told me that surprisingly the people who live in these corrugated iron dwellings in what we would consider atrociously difficult conditions are often remarkably clean and smartly dressed, something I had myself observed in Moroccan shanty towns. Indeed, it is not unusual for such people to be better dressed and cleaner than many UK citizens who would consider the shanty town dwellers utterly impoverished and bereft. But how can that be?
One thing that occurs to me is that these people although poor are not in debt; it is entirely unknown to them and they probably could not get a debt even if they wanted to, whereas most modern people are used to living in debt (interestingly, the idea of a negative number troubled Europeans for some centuries, even while they worked with it in their trade, for how can there be a number less than nothing?).
So although these people have almost nothing, they have more than us who have less than nothing, who have minus wealth, who live in debt. Who’s the beggar now?
2007 –
“Household debt reached record high levels of 76.0% of disposable income in the first quarter of 2007, up from 47.6% in 2003; Another measure designed to make borrowing more difficult was the June 2007 introduction of regulations requiring credit providers to assess applicants’ income, monthly financial commitments and prospects”
At the introduction of the NCA there were provisions for debt relief for the large numbers of impoverished people. I’m not sure if it made it into the final enactment, but essentially there is debt in the townships – mainly for clothing and appliances. An example of the extent of this debt is that Ellerines Group, a furniture and home appliances retailer servicing the impoverished communities, was able to buy one of the largest shopping malls and real estate developments for R1.2bil in cash. It should be noted that the primary business of these retailers are not selling goods, the vast majority of their income comes from the terms / “higher purchase” agreements they sell these inferior quality goods for.
Thank you for this dose of reality for my incorrigible romanticism. Of course, the only difference in debt between the poorer and the wealthier groups is the extortionate interest that the poorer people have to pay for their tiny debts, often amounting to 240% (I am not joking). This is as true on some housing estates in the UK as it is in the so-called third world countries. Indeed, this was the historical rate paid in pre-Calvin Geneva and was what Elizabeth II was paying to Italian bankers.