– What’s happening: Micro lenders in South Africa say the current interest-rate environment isn’t profitable anymore. Their funding costs and risk, plus rules meant to protect borrowers, make it hard to earn enough from small loans.

– Why this hurts borrowers: When lenders can’t earn enough, they slow down or stop lending. That means people who rely on small loans for urgent needs or everyday expenses may struggle. They might have to use more expensive or risky options, which can worsen their financial situation.

– The core problem in simple terms: Lenders feel the price of money (the interest they pay to borrow) and the risk of borrowers not paying back are higher than the money they can earn from small loans. If profits disappear, lending dries up.

– Why the problem matters for the whole market: Fewer loans mean less access to credit for poorer households, more financial stress, and potential growth slowdowns in small businesses. This can also push up the cost of everyday essentials for people who can least afford it.

– Possible fixes, in plain steps:

  1) Make rules clearer and fair: sensible limits that protect borrowers but don’t choke lending.

  2) Find cheaper funding: banks, guarantees, or blended funds to lower costs for lenders.

  3) Use better data: simple credit checks and affordable tech to price loans fairly.

  4) Flexible products: smaller, adjustable loans with easy repayment plans.

  5) Transparency: show all fees and total payback clearly.