Written by Bonelwa Nogqaza
The COVID-19 pandemic has inflicted deep wounds on rural women, impacting them through the loss of family members, jobs, increased Gender-Based Violence (GBV) and heightened spiritual insecurity. One of the most persistent and damaging economic impacts of the pandemic on rural women has been debt entrapment in loaning schemes, leaving many women with no choice but to participate. The opportunity to access new lines of credit is closely linked to the growing presence of foreign nationals in rural villages since the pandemic. This piece reflects on some selected stories of rural women and their reality of being trapped in loaning schemes since 2020.
Figure 1: Officials set up tables at Women RISE workshops to assist rural households with accessing available SASSA cards, May 2024
The Impact of the Pandemic on Rural Women in Tsolo
Limited savings and lack of access to credit make it difficult for many poor people, particularly women in low-income countries, to become self-employed or undertake income-generating ventures (Khandker, 1998). In the early 2000s, research has found that microcredit programs for women have the potential to serve as both a solution to women’s limited access to credit and a strategy for poverty reduction and women empowerment (Hashemi, Schuler, & Riley, 1996). However, in situations where women are unable to earn like that of the pandemic, the consequences of borrowing money can be catastrophic, leaving rural women in places like Tsolo, South Africa, deeply entrapped in debt. Before the pandemic, credit schemes existed in Tsolo, but the women there reflect on the pandemic era as a major financial turning point that trapped them in endless debts. Job losses, the deaths of breadwinners, and the rapid increase in the cost of living forced many women to turn to these schemes as a last resort. Financial association groups, known locally as Imigalelo yemali, which allowed women to collectively save money throughout the year and distribute it among themselves at the end of the year, were dismantled during the pandemic. This was a devastating blow, as these women are often the primary caregivers and financial anchors of their households, with the added burden of caring for unemployed or sick relatives, often relying solely on grant money.
Current Credit and Loan Schemes Opportunity in Tsolo
One of the most prominent credit schemes in the village is a group called SEF (Small Enterprise Foundation). SEF is a registered loan provider with representatives who operate in local communities. The executive members of SEF ensure that the records of borrowers are kept up to date and host monthly meetings with those who are part of the SEF group. The women who borrow from SEF use the money for various needs. Some use it to support their children’s education, especially those in universities or colleges, while others use it for home renovations or construction.
One woman revealed that the maximum amount she ever borrowed from SEF was R20,000, which she used to cover the expenses of her son's umgidi (a traditional ceremony) and to buy a cow for the event. Although not all women disclosed their outstanding debts, many mentioned the difficulties of repaying SEF, noting that "you never really fully complete paying off SEF because the debt keeps on accumulating." Some women resort to selling SEF products, such as perfumes or handbags, to generate profits that can be used to repay their debts.
In addition to SEF, there are other local loan sharks in the village to whom women owe money such as the Somali nationals who run the local spaza shops. In these cases, women leave their South African Social Security Agency (SASSA) cards and identification documents as insurance. Some women keep their cards at these shops for years, with shop owners deducting repayments directly from their social grants. There are also a few independent loan sharks in the village whom women turn to when in need of emergency financial assistance. These local credit schemes, while providing immediate relief, often trap women in an accelerating cycle of continuous debt.
Debt Stress
While these credit schemes trap women in continuous debt circles, women also acknowledge the benefits of these schemes in times of urgent need, such as funerals or communal affairs. However, the psychological toll of debt is significant, contributing to ‘silent depression’ and stress among these women. I interviewed a group of young Makotis (newly-wed women) who were headed in my direction, going to the household that had a funeral that weekend. The conversation was centred around the issue of women that are drowning in debts. The responses from these women revealed the psychological effect that loans have on these women, through their isolation and desperation, later builds up to what they term a 'silent depression’. Throughout my collection of these life histories, the issue of debts came out strongly and they commented on it as a major factor contributing to their stress. One of the Makoti’s commented that when you are in debt, you want to keep it a private matter so that you do not get criticised or undermined. The burden of debt often strips them of financial freedom, particularly for single mothers or those with unsupportive partners. My other observation is that those drowning in debts are mostly unemployed women who rely on the social grants of their children.
The few men I spoke with had differing perceptions, with one older man suggesting that for some women, debt has become fashionable—a topic of conversation and a source of social comparison. However, this view is not widely supported, as these women are perceived as the pillars of their households and are well aware of the financial needs that drive them to take out loans.
Conclusion
The entrapment of rural women in credit schemes during the COVID-19 pandemic highlights the urgent need for more sustainable financial solutions in rural areas. Among community members and development experts it is widely acknowledged that the current associations women belong to including burial societies and savings groups (stokvels) have withered away during the pandemic and are only now starting to be rebuilt. What is less often acknowledged in the psychological effects of long term ‘debt stress’ on women’s resilience and mental health. The nature of this entrapment in current conditions carries a heavy psychological load for rural women, many of whom are still recovering from family death, spiritual insecurity and persistent unemployment.
References
Hashemi, S.M., Schuler, S.R. and Riley, A.P., 1996. Rural credit programs and women's empowerment in Bangladesh. World development, 24(4), pp.635-653.
Khandker, S.R., 1998. Fighting poverty with microcredit: experience in Bangladesh (pp. xii+-228).
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