Cape Town - Illegal lending practices are fuelling wage disputes in the country, Trade and Industry Minister Rob Davies said on Thursday.
He was updating the media on investigations by the National Credit Regulator (NCR) into complaints of irregular practices by micro-lenders in the Marikana area following raids this week.
Davies said preliminary indications were that mine workers had high levels of debt, because of unsecured loans.
"Much of that is at levels which make it unsustainable, which erode deeply into the incomes of those communities and fuel high demands for salary increases by those workers," said Davies.
A total of 13 micro-lenders were identified in what Davies called a "smallish community". The NCR visited 12 of them.
At face value, two were found to be operating within the law.
The other 10 were identified as being engaged in practices that were in direct contravention of the National Credit Act.
"A number of them were engaged in illegal practices like charging interest rates above the prescribed maximum, taking people's bank cards, pins and ids and a series of illegal garnishee orders," said Davies.
In one case, a worker making R9 000 a month took home less than R3 000 because of illegal garnishee orders, he said.
This was adding to the pressures on low income workers to demand higher salaries.
"A small increase in pay is not going to make a huge dent in their living standards when a huge part of that income is eaten up by garnishee orders or high interest consumer loans."
NCR CEO Nomsa Motshegare said several credit providers found in possession of workers' documents were arrested at Marikana.
"There will be referrals to the National Consumer Tribunal for the imposition of administrative fines and refunds to consumers," said Motshegare.
She and Davies indicated that the crackdown on reckless lending practices would be extended to other mining and low-income communities.
"I believe we cannot allow reckless lending and the unwarranted preying on the weaknesses and vulnerability of low-income people," said Davies.
He said the institutions involved in illegal lending in Marikana would not be named at this stage.
However, he warned that the NCR would take action without fear, favour, or prejudice.