Abstract
Financial inclusion is a global development goal aimed at extending access to credit and financial services to marginalised and previously excluded communities. However, this well-intentioned objective often obscures deeper concerns surrounding consumer exploitation, particularly through practices of reckless lending and the erosion of informed consent. While financial inclusion seeks to promote empowerment, opportunity and fairness, its implementation frequently reveals a paradox: the very mechanism designed to alleviate poverty and foster socio-economic mobility can simultaneously entrench financial vulnerability and dependency. Access to credit, when not accompanied by responsible lending practices, may transform from a tool of empowerment into an instrument of exploitation.
In South Africa, the extension of credit has expanded under the promise of inclusion. Yet, many low-income communities are being exploited by credit providers who offer easy credit at exorbitant interest rates, with limited transparency and inadequate affordability assessments, capitalising on consumers’ lack of financial literacy. This study critically examines how such practices undermine the objective of the National Credit Act 34 of 2005, which seeks to promote responsible lending and protect consumers from over-indebtedness. Furthermore, this study highlights how persistent socio-economic inequalities, weak regulatory enforcement, and profit-driven market dynamics continue to expose vulnerable consumers to financial harm.