A review of individual credit-risk-assessment methodologies of South African unsecured lenders

Daniel Saksenberg, Director of Emerge Analytics will present this lecture.

The provision of credit by one party to another is always associated with the risk of partial or full failure of the borrower to repay the capital amount extended and/or any additional amounts in respect of interest and fees.

In South Africa, the unsecured credit market is a vital source of credit for much of the population and particularly lower-income individuals. However, over-indebtedness is a major concern with 44.9% of the credit-active population possessing impaired credit records.

This situation has been related directly in the press and by the National Credit Regulator to the shooting of mine workers at Marikana, who were desperate to secure higher incomes to cover their debt repayments to credit providers. Analogously, it is also probably somewhat responsible for pressure to secure higher public- and private-sector wages and associated labour union action.

Credit-risk assessment is the entry point to the provision of credit by unsecured lenders to individuals and is therefore critical to the financial and social outcomes of the credit market. This seminar, presented by Daniel Saksenberg, Director of Emerge Analytics, will deal with the methodologies for individual credit-risk assessment by South African unsecured lenders, consider certain potential shortcomings thereof and suggest possible improvements and areas for research.

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