The Debt Recovery Industry – In support of South Africa Inc.

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With the rising trend of inflation and the increasing cost of living, it is no surprise that a growing number of households are struggling to meet their financial obligations. In many instances, despite various avenues available to the consumer to seek assistance, households avoid it, leaving debt to spiral out of control.

Various myths surround fundamental questions, such as the source and causes of arrear consumer debt, who the stakeholders are, as well as the impacts of unmanaged arrear consumer debt. Similarly, the role and purpose of debt recovery practices are greatly misunderstood. To better understand this national problem, its causes, challenges, and solutions, we turned to industry experts, Marius Jonker, CEO of the Association of Debt Recovery Agents, and Steven Maier, Chief Brand Officer for Amplifin, for answers.

What is the source of household credit exposure?

Consumer credit exposure and arrear debt are usually only viewed as resulting from private sector financial products such as personal loans, credit cards, retail store credit facilities, and the like. In reality, less than 45% of the average consumer’s monthly credit obligations stem from credit agreements entered by consumers in terms of the National Credit Act (“NCA”). As the NCA compels credit providers who grant credit in terms of the NCA to report such transactions to credit bureaus, credit bureaus reflect only data on consumer credit exposure resulting from this act. Credit bureau data reflects the smaller portion of the average consumer’s total credit exposure and arrear debt obligations.

Consumer debt due to the public sector, including central government, municipalities, various government departments such as public education, healthcare, traffic departments, and a host of SOEs, exceeds arrear consumer debt due by the consumer to the financial and retail sectors. As services rendered by the public sector are basic and essential in nature, they are often ignored in discussions on consumer debt.

For instance, South African households owed a whopping R305bn in arrears to local municipalities as of December 2022, significantly impacting service delivery and contributing to major challenges. For example, arrear household indebtedness to municipalities resulted in municipalities being in arrears in their financial obligations towards Eskom in the amount of R56.3bn. This, in turn, significantly contributes to Eskom’s incapacity to render its mandated service, which we experience as load-shedding. According to an Investec Report, the cost of load shedding to the SA macro economy amounted to approximately R300bn during 2022.

In another oversimplification, the debt spiral is often considered exclusively from the consumers’ perspective. Yes, if left unmanaged, debt has a spiralling effect on individual consumers and households, but that is only the beginning of the spiral and one of the drivers of a bigger national problem that affects all of us. Unpaid or delayed consumer payments have far-reaching effects on all citizens, not just the indebted individuals. It directly impacts inflation, affecting everyone. Both public and private sectors account for projected losses from non-payment, leading to increased costs of services, goods, and credit for all. The public sector compensates for shortfalls through taxes and levies, further straining household income. In cases where losses cannot be recovered from indebted consumers or distributed to all citizens, service delivery suffers.

Non-payment of consumer debt drives financial hardship, particularly in the financial and retail sectors. Debt recoverability is crucial for a business’s solvency, as it affects its assets and liabilities. Unpaid debt can lead to business insolvency and liquidation. According to Stats SA, 1748 legal entities were liquidated from Jan 2022 to Nov 2022, with the financial, insurance, real estate, and business services sector most affected (574 or 33% of the total). These closures affect corporate creditors and lead to more unemployment and consumers being unable to meet repayment obligations, perpetuating the debt spiral.

Addressing Household Indebtedness: Debt Recovery’s Vital Role

The debt recovery practice is the last resort for many public and private sector creditors to mitigate the negative impacts and spiralling effects of unmanaged household indebtedness. 

The debt recovery industry, at the instruction of its public and private sector clients, assists a multitude of consumers to restructure their debts and manage them back to financial well-being. In the process, consumer inquiries and disputes are resolved, and the spiralling and negative impacts of unmanaged arrear consumer debt are mitigated. The relationship between a business and its consumer is preserved, and financially rehabilitated consumers are returned to full economic activity. In the process, consumers are educated on household budgetary discipline and the consequences of unmanaged arrear debt. Hopefully, through processes such as this, the South African payment culture can be improved.


As consumers fear the consequences of unmanaged arrear debt, many consumers act instinctively when contacted by a debt recovery practitioner, either by fighting/resisting or fleeing/avoiding the offer of assistance. The debt recovery practitioner must manage consumers’ emotions to enable the successful mediation and management of an arrear consumer account. Managing consumers towards financial rehabilitation is challenging, especially in the current depressed economic and labour conditions.

The debt recovery industry operates on low profit margins and relies on successful collections. Its vulnerability to disruptions is compounded by increasing legal compliance requirements, complexity, and operational costs. Considered one of the most regulated industries, debt recovery partners must navigate multiple industries’ unique legislative and regulatory requirements in addition to those applicable to debt recovery practices.

Legislative and regulatory measures rightly protect consumer rights, but sadly, consumer obligations and enforcement are often neglected. Well-intentioned consumer protection laws can sometimes have unintended consequences, adding to the debt spiral. Restoring a healthy balance between rights and obligations is vital for mitigating debt’s impact on South Africa Inc.

To address these challenges, the debt recovery industry must continually evolve. Providing consumers with secure, cost-effective, and efficient payment options demanding dedicated specialised expertise and infrastructure.

Maier explains that the company has witnessed excellent success stories with debt recovery companies that are making payments easier for their consumers and crafting payment solutions that work for the consumer.

Amplifin is a leading payment service provider with a focus on the consumer experience in making payments to all their creditors. Maier states, “It’s all very well rescheduling consumer debt, but you need to enhance the actual management of the plan to its logical conclusion. This requires multiple payment and consumer engagement options that meet the requirements of both the consumer and the debt recovery practitioner,” says Maier. “Debt recovery companies need to partner with a company that understands both the debt recovery and payments industries and who have the technology and the technical solutions to assist in the process.”

Jonker agrees, saying that efficient payment facilitation and an effective and positive consumer experience are central to successfully managing volumes of consumer arrear accounts. The digitisation and evolution of the National Payments System are fast-tracked in line with SARB policy and international trends and standards. And further payment channels are currently under development by the banks. In line with these same SARB policies, direct participation by non-bank entities is enabled. 

Consumer payments are no longer solely determined by businesses; they are driven by the demands of the payers. South Africa’s diverse consumer base, with different LSMs and generations, requires businesses to offer various payment channels and technologies. 

In this complex landscape, there is no one-size-fits-all solution. Prioritising the consumer experience, security, and ease of payment becomes paramount.

“Unless a debt recovery practitioner, or any business for that matter, has in-house dedicated experts and the requisite technologies, partnering with payment facilitation experts is essential. The payments world has become too specialised for navigating by a ‘Jack of all trades’.

The core function of the debt recovery practitioner is to reschedule consumer debt and efficiently manage the resulting repayment plans of its consumer base. To efficiently manage the financial rehabilitation of consumers, the debt recovery practitioner must meet these consumer expectations.

Embracing a Positive Change: Transforming the Perception of Debt Recovery

As we navigate the complexities of debt recovery, it becomes evident that a significant shift in perception is needed for both debt collector agents and consumers facing arrears debt. The image of debt recovery as something negative and unpleasant must give way to a new narrative that emphasises a willingness to resolve arrear debt issues and work towards financial well-being.

By embracing this change, we can profoundly impact the payment culture among those who are indebted. This collaborative approach between businesses and consumers preserves their relationship, fosters financial rehabilitation, and eventually returns consumers to full economic activity.

It is essential to recognise that improving payment culture extends beyond individual consumers. The consequences of unmanaged arrear debt ripple through various sectors, affecting service delivery, inflation rates, and the overall economy. We contribute to a healthier economic landscape for all by addressing consumer debt and promoting financial responsibility.

In conclusion, our shared responsibility is to reshape the perception of debt recovery from a negative experience to a positive opportunity for financial growth. Let us embrace this change wholeheartedly and collaborate towards a brighter future, where debt resolution is viewed as an empowering step towards financial well-being for all stakeholders in South Africa Inc. Together, we can create a payment culture that fosters responsibility, reliability, and trust in the financial landscape, benefiting individuals, businesses, and the nation as a whole.


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