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IOL News
4 days ago
- Business
- IOL News
Gauteng couple in financial distress blames Absa for reckless lending on R3. 2 million home loan
A Gauteng couple took action against Absa bank after alleging reckless lending practices that have led them into a spiralling debt of over R5.1 million. A Gauteng couple has launched legal action against Absa bank, alleging that reckless lending practices have pushed them into a spiralling debt of over R5.1 million. Christian Daniel De Klerk and his partner, who have been long-standing customers of the bank, argue that their financial well-being was jeopardised when they accepted a second home loan from Absa without receiving an appropriate affordability assessment. Initially, the De Klerks secured a R1.9 million home loan from Absa in 2011 and, for nearly a decade, they successfully met their repayment obligations. However, following the collapse of the husband's legal practice in March 2020 due to the pandemic, the couple were granted a temporary three-month payment holiday. Ironically, during the same month, they said Absa approached them with an offer for a second loan, amounting to R3.2 million. Despite their precarious situation, the couple accepted the offer. Meanwhile, the husband remained unemployed until June 2024 and the couple faced mounting debt because of missed repayments from 2022. They maintained that their current income was inadequate to service both the new instalments and the arrears. Nevertheless, they submitted that they could meet the loan obligations under terms similar to those agreed upon in March 2020.
IOL News
5 days ago
- Business
- IOL News
Financial distress: Couple accuses Absa of reckless lending after accepting R3. 2 million second home loan
A Gauteng couple took action against Absa bank after alleging reckless lending practices that have led them into a spiralling debt of over R5.1 million. Image: Oupa Mokoena / Independent Newspapers A Gauteng couple took action against Absa bank after alleging reckless lending practices that have led them into a spiralling debt of over R5.1 million. Christian Daniel De Klerk and his partner, long-standing customers of the bank, claim that their financial wellness was compromised when they accepted a second home loan from Absa without being given a suitable affordability assessment. Initially, the De Klerks secured a R1.9 million home loan from Absa in 2011 and, for nearly a decade, they successfully met their repayment obligations. However, following the collapse of the husband's legal practice in March 2020 due to the pandemic, the couple were granted a temporary three-month payment holiday. Ironically, during the same month, they said Absa approached them with an offer for a second loan, amounting to R3.2 million. Despite their precarious situation, the couple accepted the offer. Meanwhile, the husband remained unemployed until June 2024 and the couple faced mounting debt because of missed repayments from 2022. They maintained that their current income was inadequate to service both the new instalments and the arrears. Nevertheless, they submitted that they could meet the loan obligations under terms similar to those agreed upon in March 2020. In seeking respite, the couple brought their case before the National Consumer Tribunal (NCT), voicing their primary grievance against Absa's alleged failure to conduct a proper affordability assessment before approving the second loan. They argued that Absa did not request essential financial documentation such as proof of income, detailed expense records, or even a credit history report—critical assessments that would typically inform responsible lending practices. The couple contended that granting them a loan while the husband was unemployed amounted to reckless lending. In addition, the couple alleged that Absa also failed to provide clear information regarding the loan's terms, conditions, interest rates, and penalties for missed repayments, all of which they argue have contributed to their current financial hardship. As a result of these alleged contraventions, the couple said that they are suffering severe financial hardship, face the risk of foreclosure, and are enduring significant emotional distress, which has adversely affected their quality of life. In the answering affidavit, Absa argued the couple's application was time-barred as more than three years have elapsed since the alleged cause of action arose. Moreover, the bank submitted that the North Gauteng High Court in Pretoria enforced the loan agreement in September 2024 and ordered the couple to pay over R5.1 million including interests and declared the couples' property executable. The bank added that the couple's case was frivolous, vexatious, and constitutes an abuse of the Tribunal's process. In their reply, the couple disputed the assertion that the matter was time-barred. They argue that the cause of action only arose in 2022 when they began defaulting on their home loan repayments. On this basis, they contend that the three-year period should be calculated from 2022, not from 2020 when the second home loan was granted. They also disputed the contention that the high court judgment precludes them from pursuing the complaint before the tribunal. They argue that the issue of reckless lending, which forms the crux of their complaint before the tribunal, and it was not adjudicated by the high court. Looking at matter, the tribunal said by law, the limitation period must be calculated from 2020 March when the alleged reckless credit was extended. Having filed their application for leave to refer in February 2025—almost five years post the alleged reckless lending—the tribunal indicated that they would be barred from considering the complaint, potentially closing the door on their search for justice. As a result, the application was dismissed. [email protected] IOL News Get your news on the go, click here to join the IOL News WhatsApp channel.
IOL News
27-05-2025
- Business
- IOL News
The wobbly table problem: can Stablecoins fix global payments?
But the question for me isn't whether stablecoins will disrupt his cross-border payments orchestration business model—it's whether that disruption will prove liberating or merely transfer control to new gatekeepers, says the author. Image: flickr We've all been there. You're at a great restaurant, the food is exceptional, the company is sublime, but the table wobbles incessantly. Every time you reach for your drink, it rocks. Every bite of food becomes an exercise in careful coordination. The solution is simple—slide a matchbook under the short leg—but somehow no one ever does it. Instead, we spend the entire evening managing around the dysfunction, accepting the irritation as part of the experience. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ The global financial system suffers from the same wobbly table problem, only instead of disrupting dinner, it's costing African businesses billions and perpetuating economic exclusion on an industrial scale. The matchbook solution might finally be at hand, in the form of stablecoins. But the questions surrounding this fix demand careful scrutiny. $286 billion blind spot The $286 billion (R5.1 trillion) trade corridor between Africa and China represents an enormous market served by infrastructure that treats African businesses as an afterthought. Ola Oyetayo, Nigerian co-founder and CEO of Verto, revealed during a recent African Tech Roundup Podcast conversation that 96-97% of business cross-border payments still flow through traditional banks. It's a statistic that exposes the profound resistance built into global finance. 'Traditional banks have no incentive to fix this,' Oyetayo observed. 'The current system works perfectly well for developed markets. Why would they engineer solutions for markets they've systematically excluded?' This exclusion isn't accidental; it's architectural. Correspondent banking relationships, designed when emerging markets were peripheral to global trade, remain stubbornly unchanged despite those markets' growing centrality to the future of global trade. Banks close on weekends. Settlement periods stretch interminably. Capital controls create regulatory mazes. Since coming out of Y Combinator (YC) in 2019, Verto has grown into what Oyetayo calls a profitable, cashflow-positive fintech company playing across several African markets. The firm recently made waves after bagging the prestigious USD 1 million Milken-Motsepe Prize in FinTech. When asked what prepared him for cross-border payments work, Oyetayo's response was revealing: 'The honest answer is none of those [previous finance] roles. Sometimes the people that end up solving bigger problems are folks that literally fall into it very naively.' Perhaps naivety is required because anyone who truly understands the system recognises that the dysfunction serves specific interests. Deliberate dysfunction The system isn't broken, it's working as intended. Financial institutions operate through closed networks of trust, brand, and credibility built over time. This isn't about competence; it's about control and access. Controlled access. The traditional financial system creates a privilege paradox: markets needing alternative payment solutions most have the least access to infrastructure that makes adoption seamless, while markets with seamless traditional finance have little incentive to adopt alternatives. Walking through the City of London, where Oyetayo built his institutional finance career, you realise how small that world actually is. Yet this small bubble controls trillions in global flows. The exclusion of African businesses from efficient cross-border payments isn't a bug—it's a feature preserving existing power structures whilst extracting maximum fees from those with the fewest alternatives. Enter stablecoins—with strings attached This is where stablecoins become seductive, though not necessarily liberating. Opera's MiniPay has attracted over 7 million wallets across 50+ countries, enabling dollar transfers for less than USD 0.01 in under two seconds. For comparison, traditional remittances in Africa can cost up to 20% of transaction value. Fintech leaders have praised stablecoins for their potential in addressing cross-border payment challenges the world over. However, Oyetayo offers a contrarian insight: 'Stablecoins solve liquidity, volatility, and capital control challenges that banks simply ignore, but there's no case for them in developed markets. People talk about disrupting Visa and MasterCard—I don't see that coming anytime soon.' Stablecoins don't appear to challenge the fundamental architecture of global finance. They do, however, make it more efficient while concentrating control. They address pain points without necessarily tackling power structures, solving immediate problems while potentially creating longer-term dependencies. Mar-a-Lago whispers Behind closed doors, more ambitious theories circulate. The rumoured Mar-a-Lago Accord—described as the strategic foundation of Trump's tariff-led trade policy—could theoretically involve stablecoins to maintain US dollar dominance through a proposed sovereign wealth fund. This theory suggests widespread stablecoin adoption could enable a coordinated global reset, allowing heavily indebted nations to restructure obligations while preserving the dollar's reserve currency status. Foreign holdings of US Treasuries could be converted into long-term bonds, easing fiscal pressures while stablecoins handle commerce flows. Such speculation remains unverified, with no concrete evidence of such coordination. The surveillance premium Stablecoins' efficiency comes with a surveillance premium. In a digital economy where every transaction can be monitored, we're courting scenarios that erode financial privacy and personal freedoms. Traditional cash transactions, for all their inefficiencies, preserve anonymity. Stablecoins enable platforms and governments to map economic relationships and scrutinise financial decisions comprehensively. MiniPay's user-friendly interface, with onboarding via Google or iCloud accounts, simplifies access but raises privacy concerns. The service is built on Celo, a public blockchain where transactions are fully trackable and transparent. While non-custodial, the setup could still enable transaction tracking, creating a potential panopticon where every economic move is visible. Innovator's dilemma Meanwhile, for cross-border payments fintech businesses like Verto, stablecoins represent a Faustian bargain. Their business model navigates the wobbly table of traditional finance, but the stablecoin 'solution' replaces it with one owned by different interests. Oyetayo, an early advocate for stablecoins, remains optimistic. But the question for me isn't whether stablecoins will disrupt his cross-border payments orchestration business model—it's whether that disruption will prove liberating or merely transfer control to new gatekeepers. Opera's MiniPay, by abstracting crypto complexity and focusing on usability, creates a parallel financial system that bypasses traditional infrastructure while fostering dependencies on Silicon Valley platforms and American monetary policy. Price of efficiency What are we willing to sacrifice for stability? Stablecoins might democratise access to global finance, enabling African businesses to participate in international trade without traditional gatekeepers. But they also create sophisticated dependencies, tying emerging markets to dollar-denominated systems controlled by American interests. Both narratives may hold true: stablecoins could solve immediate pain points for African businesses while reinforcing structural dependencies. They might reduce transaction costs while increasing surveillance and control. They might enable financial inclusion while facilitating new forms of exclusion. The matchbook solution is here, promising to stop the table from wobbling. But when we slide it underneath, we might discover we've traded one dysfunction for another—this time, with monitoring capabilities built into every transaction. As African businesses navigate expensive, slow, and unreliable cross-border payments, the promise of sub-cent transfers in under two seconds proves irresistible. But in our rush to fix the wobbly table, we should ask who's designing the replacement—and what they plan to do with all the data it will inevitably collect. Andile Masuku is Co-founder and Executive Producer at African Tech Roundup. Connect and engage with Andile on X (@MasukuAndile) and via LinkedIn. Andile Masuku is Co-founder and Executive Producer at African Tech Roundup. Image: Supplied BUSINESS REPORT Visit:
The Citizen
22-04-2025
- Business
- The Citizen
ArcelorMittal SA's perfect storm of woes
Surging electricity and transport costs, cheap imports, and state subsidies for competitors threaten the steel producer's longer-term future. The ArcelorMittal SA factory in Vanderbijlpark, Gauteng. Amsa also has a steel plant in Newcastle KZN. Picture: ArcelorMittal The decision by ArcelorMittal South Africa (Amsa) to wind down its long steel business in the face of cut-price imports from China has blown a R1.1 billion hole in its balance sheet, contributing to the R5.1 billion headline loss for the 2024 financial year. The R1.1 billion operating loss in its long steel business is nearly double the R600 million reported in 2023. Another blow to the income statement was the 209 000 tonnes in lost production due to blast furnaces being out of operation for several weeks. Amsa's troubles were aggravated by its crippling reliance on state-owned suppliers of energy and transport. It spent R3.2 billion buying electricity from Eskom in 2024, up 14% on 2023. Over the past decade, energy tariffs paid by Amsa have gone up 835%, while poor performance by Transnet Freight Rail resulted in lost production and sales, with rail tariffs outstripping inflation over the last three years. ALSO READ: IDC saves ArcelorMittal days before furnaces switched off Read more IDC saves ArcelorMittal days before furnaces switched off 'We continued to pay state-owned enterprises (SOEs) what we maintain are excessively high tariffs for rail and electricity,' says Amsa's annual report. Source: Amsa 2024 Annual Report Amsa hit the panic button last year when the scale of imports from China began to threaten the viability of its long business. It called on government to raise tariffs on steel imports to save SA's domestic steel production, and to review its subsidisation of scrap-based steel makers that compete with it. ALSO READ: Government still talking to ArcelorMittal while Seifsa identifies challenges Impairments The group's deteriorating cash position – aggravated by R2.7 billion in impairments in the long business over the last two years – was softened when the parent company increased its shareholder loan in Amsa to R5 billion from R3.7 billion. To further preserve cash, Amsa cut back on its capex by almost a third to R902 million. The Industrial Development Corporation (IDC), which is heavily invested in competing scrap mills, stumped up a R1 billion short-term loan for Amsa, another R380 million loan and an additional R1.68 billion shareholders' loan with the intention of extending the life of its longs business. Amsa has agreed to defer the winding down of its long steel mills, giving the IDC time to conduct due diligence on the best path forward for the company. Meanwhile the International Trade Administration Commission of South Africa (Itac), which monitors SA's tariff regime, is undertaking a massive review of steel tariffs which it expects to complete by June. Amsa will require recapitalisation and refocusing its business around the profitable flat steel markets. Despite the liquidity challenges, there is no threat to its going concern status. ALSO READ: Did government policy kill SA's steel industry? 'In the short term, we are doing everything we can to put our Flats business and market coke operations on a more sustainable footing,' says CEO Kobus Verster. 'It is indeed gratifying that our Longs business will continue to operate for at least a further six months. 'The global trade and tariff environment faces considerable uncertainty in the coming months, likely resulting in a new world trade order,' Verster adds. 'Current trade flows are characterised by large low-cost imports which are being addressed by almost all countries with the imposition of extraordinary measures.' Amsa chair Bonang Mohale says a scaled-down, focused Amsa will be able to make a meaningful contribution to economic growth and redistribution. The company's troubles have been exacerbated by a prolonged period of economic stagnation. 'As much as we have struggled to remain profitable in the recent past, the South African economy has barely limped along, GDP rarely growing by more than 2% per annum [apart from the post-Covid bounce back]. At the same time, the country's population has grown at a rate approximating the paltry increases in GDP. 'In real terms, South Africans' purchasing power has gone backwards and our unemployment rates are worse even than some countries that are at war or facing serious civil strife,' says Mohale. 'In our country, poverty and inequality are only getting worse.' Source: Amsa 2024 Annual Report ALSO READ: Newcastle to lose 37% of its jobs: Devastating consequences of ArcelorMittal closing Amsa's net assets are now R5 billion smaller than in 2022, and there may be further impairments to come. The chart above shows the percentage of apparent steel consumption has fallen about a third since 2000, while imports now account for 33.6% of local consumption. World steel production for 2024 dropped 0.9% on top of declines of 1.7% and 4% in 2023 and 2022. With a surge in exports out of China, net realised prices fell to levels last seen in 2015. This article was republished from Moneyweb. Read the original here.
