, QUESTION ONE: Read EXTRACT A below and answer the question that
follows. Extract A Editorial: Financial illiteracy breeds debt By Editorial Millions
of South Africans are drowning in debt. Consumers owe more than R2.5
trillion to their creditors Millions of South Africans are drowning in debt.
Consumers owe more than R2.5 trillion to their creditors. And that’s just what
can be estimated from legal sources. Debt is debilitating. It tears families
apart, fuels crime and destroys lives. We cannot allow ourselves to be
comfortable with the fact that so many of us are scraping by to meet monthly
interest payments. Innumerable micro- and macro-economic factors have led
us here — and rarely are two individual situations alike. We are a grossly
unequal country. Debt doesn’t discriminate by class; it ensnares some in their
interminable pursuit of the excesses of modern life, and captures others who
hope only to put food on the table. But one factor continues to float to the top:
financial illiteracy. We are continually taken aback by the lack of
understanding of monetary matters across all sections of society. This
perception is borne out in reliable data. According to a 2015 survey by the
Financial Sector Conduct Authority and Human Sciences Research Council,
South Africa has a financial literacy rate of 51%. In 2021, the Organisation for
Economic Co-operation and Development put that number at 42%. A dearth
of understanding first creates debt and then entrenches it. It is an intractable
problem. Such an environment allows the nefarious to flourish. Mashonisas
(loan sharks) and other unscrupulous fly-by-night microlenders lurk in
newspaper classifieds and online running adverts that read something like:
“Need a loan? Blacklisted? No problem.” Despite the ubiquity of debt, we are
afraid to talk about it. A lack of understanding breeds stigma, forcing many to
suffer in silence until it is too late, or turn to the dangerous informal sector. We
have to collectively change that thinking. As the late anthropologist David
Graeber wrote: “If history shows anything, it is that there’s no better way to
justify relations founded on violence, to make such relations seem moral, than
by reframing them in the Page 2 of 6 CONFIDENTIAL ENG2612 OCT/NOV
2024 language of debt — above all, because it immediately makes it seem
that it’s the victim who’s doing something wrong.” There is a vast market of
some 10.09 million consumers with impaired credit records, according to the
National Credit Regulator, a number that rose 2.7% during the first quarter of
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