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SAHRC challenges the powers and human rights violations in micro-lending


15th February 2014

Attention: Editors and Reporters

The South African Human Rights Commission (the Commission) is extremely concerned about the constitutionality and impact of the provisions of the Emolument Attachment Orders (“EAOs”) as articulated in the Magistrates Court Act 32 of 1944(MCA) on the poor, the vulnerable, the marginalized amongst other groups including, but not limited to, the pensioners and women.  In terms of the EAO a person’s salary, may be attached should they be in arrears and fail to make alternative arrangements regarding the settling of the debt. These attachment orders can be done by a Clerk of the magistrates’ court without the judicial oversight of a magistrate.

The Commission in its research has found that, despite the fact that many debtors have consented to an EAO that effectively translated into a judgment debt, the implications of such an order were never fully explained to them by the micro lenders. This has dire implications to the public who are at the mercy of the micro lending industry, as one of the consequences of a judgment debt, via an EAO, impacts on a range of socio-economic human rights.

Against the background of a pending court case set down for hearing from the 16th to the 19th of February 2015 in the Western Cape High Court, brought by the University of Stellenbosch Legal Aid Clinic in the case of The University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice and Others Case number 16703/14. The Commission duly assisted by the Legal Resources Centre, has found it imperative to join in the matter as amicus curiae to advance arguments in support of the challenge by the applicants on the constitutionality of some of the provisions of the MCA on the basis that they are inconsistent with the Constitution and the Rule of Law, since they do not provide for judicial oversight in the issuing of EAOs.

The Commission is concerned that the constitutionality of the provisions relating to EAOs in the MCA, impacts on the rights of the marginalised and the vulnerable and this is compounded by lack of judicial oversight by a magistrate in the issuing of EAOs, thereby putting the vulnerable groups into poverty traps which impacts on their human dignity. In line with its constitutional mandate contained in Section 184 of the Constitution which gives the Commission the power to monitor, advance and protect the observance of the human rights of everyone, the Commission is adamant that by joining this case, it will prevent future human rights abuses that are made possible by the lack of judicial oversight.

The Commission as amicus curiae seeks to advance arguments supported by international law principles such as the the UN Guiding Principles on Business and Human Rights (“the Ruggie Principles”) which places a duty upon states to take measures to prevent the abuse of human rights in their territory by business enterprises. The Commission will also rely on the International Labour Organisation’s Protection of Wages Convention which places an obligation on each state to prevent the violation of socio-economic rights by private actors in its jurisdiction.
Further, the Commission will advance the perspective of the African Charter on Human and Peoples’ Rights (“the Banjul Charter”) to which South Africa is a signatory party. The Banjul Charter requires member states like South Africa, to take legislative and other steps to protect persons against violations of their socio-economic rights by private actors. One such obligation is to provide effective judicial oversight roles and remedies to prevent such violations. Given that the Constitution in Section 39(1) (b) provides that courts must consider international law when interpreting the Bill of Rights, the Commission, submits that the international laws and norms highlighted above must be taken into account in the interpretation of the provisions of the MCA, so that it passes constitutional muster in protecting the rights of the marginalised and the vulnerable.

It is not for the first time that the Commission is interrogating the issues of transparency in business enterprises. In June 2013, the Commission hosted a Business and Transparency conference where the issues of unsecured lending, payroll lending or the ubiquitous micro loan schemes, were identified as some of the problems that plagued the community of Marikana in the run-up to labour unrest on the mines and the confrontations with the South African police (that ultimately led to the death of 44 mineworkers at the hands of the police). It was found that many mineworkers were taking home no salary because of EAOs.

During the conference, the then Minister in the Presidency, in charge of the National Planning Commission, Mr Trevor Manuel, spoke of a new kind of corruption, euphemistically called, unsecured lending, payroll lending or the ubiquitous micro loan schemes. Minister Manuel also related the tragedy of the borrowed money going into consumption noting that:

‘... when we see that, we have to pause and reflect on those commitments made in the preamble to the Constitution and what it means to live in an environment of social justice, and indeed what it means to free the potential of every person and how by the patterns of consumption and borrowing, we are denying the freeing of that kind of potential of every South African.’

It is on the backdrop of such kind of previous interventions that the Commission further intends on calling for a roundtable discussion on business and human rights that have been impacted upon by the unethical business practices, which are prevalent in the micro lending industry.

Issued by the SA Human Rights Commission
Isaac Mangena

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