Exacerbated by frozen credit rates and fees, South Africa’s youth and MSMEs continue to struggle

PRESS RELEASE

[Johannesburg, South Africa, 08 September 2025] MicroFinance South Africa (MFSA) is calling on policymakers to urgently prioritise the review of outdated credit rates and fees, warning that without it, the financial sector will be unable to play its critical role in driving development finance, job creation, and youth empowerment.

New regulations gazetted by the Department of Trade, Industry and Competition have opened the door for development finance to expand into communities, micro, small and medium enterprises (MSMEs), and the township economy. MFSA members are already making a significant impact, with research showing that 40% of short-term unsecured loans flow directly into development finance.

However, MFSA cautions that the current fee framework makes this contribution unsustainable. Unless rates and fees are urgently reviewed, credit providers will not be able to expand into development finance at the scale needed to support government’s growth strategy.

“Credit rates and fees were last adjusted over ten years ago in 2015,” says Leonie van Pletzen, CEO of MFSA. “The stagnant fees make it unsustainable for lenders to provide loans, especially to higher-risk groups like youth entrepreneurs and MSMEs, which results in fewer loans being approved, stricter lending criteria, and overall limited access to credit for these groups.”

“This is about much more than lending. It is about jobs, about hope for young South Africans, and about the survival of township economies,” she continues. “Reviewing rates and fees will unlock billions in development finance, strengthen youth entrepreneurship, and create new opportunities where they are needed most.”

MFSA highlights the benefits of reviewing rates and fees:

· Fuel township growth: enabling micro-entrepreneurs and informal traders to access finance;

· Create jobs: as credit flows to small businesses that are the backbone of local economies;

· Empower youth: by supporting start-ups, side hustles, and youth-led businesses;

· Build the economy: through increased circulation of capital in communities.

MFSA reaffirms its commitment to working alongside government, regulators, and industry partners to design a credit environment that balances consumer protection with economic inclusion and growth.

“The high costs and limited flexibility in credit fees do not encourage financial responsibility or provide incentives for building good credit histories among our youth and small business owners,” concludes van Pletzen. “South Africa’s growth agenda is in danger unless credit fees are reviewed”

Ends

About MicroFinance South Africa

MFSA represents South Africa’s registered microfinance institutions, advocating for ethical lending, consumer protection, and financial inclusion. Through industry leadership, MFSA promotes responsible credit practices that empower individuals, support small businesses, and drive economic growth. For more information please visit https://www.mfsa.net/.

About Leonie van Pletzen

Leonie van Pletzen is the Chief Executive Officer of MicroFinance South Africa (MFSA), a leading voice for the microfinance sector in South Africa. With nearly 15 years of experience in the industry, Leonie is recognised as a passionate advocate for ethical lending, financial inclusion, and regulatory reform. Having risen through the ranks at MFSA since 2010, she brings a wealth of expertise in industry advocacy, corporate governance, stakeholder engagement, and sustainable development.

Leonie has played a key role in shaping policy dialogue between government, regulators, and the private sector, and is an active contributor on various national committees, including the National Credit Regulator’s Credit Industry Forum and the Banking Sector Education and Training Authority. Her leadership is defined by a commitment to protecting vulnerable consumers while ensuring the long-term sustainability of responsible credit provision in South Africa. 

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