Exclusive: Digital inclusion must also mean access to safe credit

Source: Supplied. Nita Morgan is director at Prime Loans.

For millions of South Africans, particularly lower- to middle-income earners and those operating in the informal economy, traditional banking products remain out of reach. Many consumers cannot access credit cards, overdrafts or personal loans through conventional banking channels, despite needing financial support to manage temporary shortfalls or unexpected expenses.

At the same time, economic pressure on households continues to intensify. Rising food prices, transport costs, electricity tariffs and broader cost-of-living pressures mean more South Africans are relying on credit simply to get through the month.

In this environment, digital lending platforms have become an increasingly important part of the financial ecosystem. Much of this innovation has been enabled by South Africa’s rapidly expanding mobile and telecommunications infrastructure.

Bridging financial gaps

Today, many consumers access financial services primarily through their smartphones, allowing regulated lenders to provide faster, more accessible and more secure digital lending solutions directly through online platforms and mobile apps.

In this way, digital lending can reduce barriers, improve convenience and widen financial participation, particularly for consumers in underserved communities.

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Platforms such as the Prime Loans app are helping streamline this process further, enabling consumers to verify their identity, submit documentation and access credit more efficiently through a secure digital platform thereby reducing friction and delays.

In many ways, digital credit has become part of the country’s modern financial infrastructure - a practical tool helping people manage financial pressure in real time. But digital inclusion is not simply about access. It is also about safety, transparency and trust.

And this is where South Africa faces a growing challenge.

Digital lending risks

As more financial services move online, so too do the risks facing consumers. Fraudulent loan offers, impersonation scams and fake digital lenders are becoming increasingly common, particularly on social media and messaging platforms. Consumers under financial pressure are often targeted with promises of instant approval or guaranteed loans, only to be defrauded or manipulated into sharing sensitive personal information.

This is why digital trust and security mechanisms have become increasingly important within the regulated lending environment. One-Time Pins (OTPs), identity verification systems and secure mobile authentication processes now form a critical part of responsible digital lending helping consumers ascertain whether they are dealing with legitimate, regulated providers.

This is because for many first-time borrowers, distinguishing between a regulated lender and an illegal operator is not always straightforward.

And, as access to formal credit becomes more constrained, many consumers are being pushed toward informal and illegal lenders operating outside the regulatory framework. These loan sharks exploit financial desperation, charging exorbitant interest rates and, in some cases, using intimidation or coercion to collect repayments.

Protecting young borrowers

For consumers already under pressure, the consequences can be devastating.

This risk is particularly acute for younger and digitally active consumers, many of whom engage with financial products online for the first time without fully understanding how credit works, what constitutes responsible lending, or the implications of processes such as debt review.

This is why financial literacy and consumer education must become a far bigger part of South Africa’s digital inclusion agenda. Access to technology alone is not enough if consumers do not understand how to identify regulated lenders, compare the true cost of credit, protect their personal information online or understand the consequences of the financial products they are signing up for.

For example, while debt review plays an important role for over-indebted consumers, there is growing concern that some individuals enter the process without fully understanding that they will be unable to access further credit until the review is completed. Greater financial literacy and clearer consumer education are therefore essential as digital financial services continue to expand.

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At the same time, the formal short-term lending sector is facing mounting pressure of its own.

The regulatory framework governing short-term credit has not been meaningfully updated since 2015. Over the past decade, inflation, compliance obligations and operational costs have increased significantly, while pricing caps governing interest rates and fees have remained largely unchanged.

Industry bodies such as the Credit Association of South Africa (CASA) have already engaged regulators and policymakers on the need to modernise this framework so that responsible lenders can continue expanding access to regulated credit sustainably. The reality is that consumers do not stop borrowing. They simply migrate toward unregulated alternatives, where there are few protections and significantly greater risks.

Digital systems play a vital role in enabling participation and resilience in modern society. In South Africa, digital financial inclusion must be central to that conversation..

Access to safe, transparent and regulated digital credit can help consumers navigate financial pressure, participate more fully in the economy and avoid far riskier alternatives.

But for digital lending to truly serve as a financial lifeline, the broader ecosystem must support it through balanced regulation, stronger consumer education and continued efforts to protect vulnerable consumers from illegal operators. Because in a digitally connected world, financial inclusion increasingly depends not only on access to technology but on access to safe financial tools within it.