Cosatu members at the federation’s national congress. Picture: TYRONE ARTHUR
Cosatu members at the federation’s national congress. Picture: TYRONE ARTHUR

Pressure is mounting on parliament’s trade and industry committee from all sides to either substantially change or expedite the adoption of a bill providing debt relief to the heavily overindebted.

The Congress of SA Trade Unions (Cosatu) fears huge pushback is under way against the adoption by the committee of the National Credit Amendment Bill, which is approaching finalisation.

The federation has written to President Cyril Ramaphosa asking him to intervene to ensure that this bill, and the Public Investment Corporation Amendment Bill, are adopted.

Cosatu parliamentary co-ordinator Matthew Parks said the letter was prompted by rumours that the ANC members of the committee had been summoned to ANC headquarters at Luthuli House in order for the bill to be quashed or delayed.

DA trade and industry spokesman Dean Macpherson said he was aware of these rumours, but they were strongly rejected by committee chairwoman Joan Fubbs.

Fubbs said the ANC members of the committee intended to brief the ANC’s economic transformation committee on progress made with the bill later this week. This was normal procedure. "We have never been summoned by Luthuli House, never," she said.

The bill was proposed and developed by the committee itself over the last two and a half years and not by the department of trade & industry as is normally the case. If the bill were not adopted by parliament, it would not be carried over to the next parliament, but lapse. "We are rapidly running out of time," Parks said. Adoption of the bill kept on being delayed, he said.

The Banking Association SA (Basa) has also entered the fray, calling for a substantial rewrite of the bill. The association’s MD, Cas Coovadia, said on Friday Basa had made a submission to Ramaphosa on issues affecting the industry, but had not asked him to intervene with the bill.

He said Basa had engaged substantively with the committee throughout its deliberations on the bill, but its concerns had been disregarded. If the bill were adopted in its current form by the National Assembly and the National Council of Provinces, Basa would petition Ramaphosa not to sign it into law.

The bill provides for the extinguishing of the debt of heavily indebted consumers who earn a gross monthly income of no more than R7,500; have unsecured debt amounting to R50,000; and who have been found to be critically indebted by the national credit regulator.

The Treasury estimates that the debt-relief proposals could result in the write-off of R13.2bn-R20bn in debt, which is the total amount of debt falling under the debt-extinguishing provisions of the bill.

The banking industry is opposed to the proposal on the grounds that it will result in a restriction of credit to the low-income section of the market and that the extinguishing of debt represents an unconstitutional deprivation of property. It would also mean that credit providers would have to price in the additional risk.

In a statement Basa urged the portfolio committee to act in the interests of all South Africans by dealing with the unintended consequences of the bill and "helping to ensure that the credit market can continue to provide financial services to those in need, in a sustainable and fair manner".

"Consumers that have entered debt review have received voluntary concessions on interest rates from banks, beyond those required by the existing National Credit Act, of R3.4bn in 2016 and R3.976bn in 2017," Basa said.