New data reveals that South Africa’s non-bank lenders are at the forefront of financial inclusion

The International Committee on Credit Reporting (ICCR) Spring Plenary 2025 recently held in Cape Town spotlighted the urgent need to unlock broader access to credit. This is especially important through non-bank lenders that currently provide access to finance for nearly half of South Africa’s micro, small and medium enterprises (MSMEs).

The ICCR is a global body established in 2009 to develop international standards for credit reporting, promoting financial inclusion and stability. It operates as a permanent structure within the World Bank and serves as the only recognised international standard setter for credit reporting, aiming to enhance the effectiveness and efficiency of credit reporting systems worldwide.

New data presented at this year’s plenary revealed that:

• 48% of South Africa’s business owners access credit through non-bank financial service providers (NBFIs);

• Even among formally registered MSMEs, 41% rely on NBFIs, nearly equalling the 51% served by banks;

• The majority of informal and microbusiness owners are forced to borrow in their personal capacity, as they still face significant barriers to accessing affordable and formal credit.

“Non-bank lenders are the boots on the ground in advancing South Africa’s financial inclusion journey,” reports Leonie van Pletzen, CEO of MicroFinance South Africa (MFSA). “They assist business owners and underserved consumers where others will not, yet they are doing so under some of the heaviest compliance and cost pressures.”

A dual challenge: data access and unsustainable pricing

Plenary discussions highlighted that while non-bank lenders are pivotal in bridging the credit gap, they face systemic challenges:

• Limited access to quality data, which hampers accurate credit assessments and leads to higher-risk pricing; and

• High operational costs, coupled with prescribed interest rate caps and static fee structures, make it increasingly difficult for ethical lenders to operate sustainably.

"The national review of rates and fees that is currently underway with input from industry stakeholders, the National Credit Regulator, and the Department of Trade, Industry and Competition, is no longer just a necessity, it is urgent,” expresses van Pletzen.

“If we do not get the pricing right, we run the high risk of driving ethical lenders out of the market,” she warns. “The detrimental impact of this is that vulnerable consumers will be pushed back into the hands of illegal and often predatory lenders.”

A call for balanced regulation

The plenary underscored the need for:

• A national framework for NBFIs that fosters innovation, sustainability, and responsible lending;

• Proportional regulation that accommodates the realities of smaller, inclusive lenders; and

• Fair, risk-based pricing models to ensure that the cost of compliance does not become a barrier to access.

Recognised as a reputable and credible voice within the South African microfinance industry, MFSA is advocating for a regulatory approach that protects consumers without unintentionally undermining financial inclusion.

“We strongly support the implementation of robust consumer protection standards, as this ensures a fair and stable financial system,” states van Pletzen. ”It is critical, however, that these are matched with policy tools that enable legitimate, regulated lenders to remain sustainable in the local market.”

“As the microfinance sector continues to expand access to development finance opportunities across South Africa’s underserved communities, rural areas, and informal markets, the message from the ICCR plenary is clear,” she concludes. “Non-bank lenders are doing the work, but it is time that the regulatory system works with them, not against them.”

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.

For further information contact:

Claire Watt

The Friday Street Club

Tel: 082 490 3796

Email: claire@thefridaystreetclub.co.za