Predatory innovations are harmful to South African consumers
NEW credit-based services from prepaid electricity providers and mobile networks claim to help cash-strapped South Africans, but these "innovations" may actually deepen debt cycles while failing to address the root causes of economic inequality. As companies increasingly monetise consumer desperation, is convenience becoming a dangerous form of exploitation?
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NEW credit-based services at the finger tips of the consumers, from prepaid electricity providers and mobile networks claim to help cash-strapped South Africans, but these "innovations" may actually deepen debt cycles while failing to address the root causes of economic inequality. As companies increasingly monetise consumer desperation, is convenience becoming a dangerous form of exploitation?
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Last month, one of the country's largest prepaid metering company launched an in-app electricity advance feature.
Mobile phone network operators are offering similar services too, allowing subscribers who are short of prepaid electricity tokens to purchase them on credit and repay the amount the next time they top up.
What began as a simple mechanism to advance airtime and data has now morphed into a credit-based platform for essential services such as electricity.
At first glance, this may look like convenience, an innovative way to help cash-strapped consumers stretch their finances until payday. But in reality, it is not the lifeline it appears to be.
In 2020, a private company launched a system that allows employees to access a portion of their salaries before payday, effectively a salary advance, repackaged as innovation. These ideas are not solutions; they are symptoms of a deepening crisis. They reflect an economy in distress, unresolved inequality and entrenched poverty.
Financialisation is increasingly being marketed as a fix for structural problems, but using credit to conceal a failing economy is not innovation; it is parasitic. Instead of addressing the reasons people cannot afford electricity, transport or groceries, the market is finding new ways to monetise their desperation.
If this model spreads, creditors could soon infiltrate every layer of essential spending. Imagine a scenario where credit-based micro-transactions become so embedded that people are buying bread and milk on credit through airtime advance mechanisms, extending the debt trap even further into daily survival.
This is not progress. It is a predatory form of innovation that extracts more from those who already have the least, much like online gambling, which continues to expand with minimal regulation and significant social harm.
Dressing up debt as convenience does not change its nature. It merely deepens vulnerability while allowing the structural failures of the economy to go unchallenged.
Lately it seems most companies look to the poor to expand their market. The unfortunate part is that these expansions do not alleviate the situation of communities in low-income segments. They only make it worse.