Raw deal for consumers

During my tenure at The Pretoria News, interactions with ambassadors some new and some who had been there for a while, was a norm. A general sharing of information about our countries would follow and often one could get an insight into the state of affairs in their respective countries, politically, socially and economically.

During one such meeting, it transpired that schools in Peru go for a three-month break every year starting in September. Teachers use the break to upgrade their qualifications, so once schools re-open they would qualify for promotion and, therefore, more money.

So teachers in Peru had performance assessments followed by promotion or salary increases. This system ensured that teacher training did not disrupt the curriculum as teachers used schools holidays to upgrade their qualifications.

The other important piece of information I gleaned during these meetings was on cellular phone service providers and the kinds of structures that benefit customers including businesses in Peru.

According to my source, a husband with a wife and children for an example, gets a contract with a cellular phone service provider, the terms are such family members on that contract get free phone calls to each other. It is only when they phone other people outside their contract that they are charged call fees and all.

The same goes for businesses. If a business gets into a contract and then registers all its employees, when these people call each other or text each other, they do it for free.

The moral of the story? In SA where the majority of the people are poor and unemployed, the cellular service providers are making a killing only because when they were awarded operational licences, authorities didn’t see it prudent to push for the best deal for consumers.

It seems that when the deals were structured, those who had been tasked to lay down the rules and regulations were only interested in themselves, judging by how things have turned out – they were not looking out for the poor.

Why else are we paying so much for phone calls? If you recall, the former Minister of Communications Sphiwe Nyanda had to intervene to force MTN, Vodacom and Cell C to reduce peak hour rates by 36c from R1.25/minute to 89c/minute.

Nyanda also instructed that a further 40c/minute reduction be implemented by 2013. Yet a major player in the industry even suggested that 15c/minute could be the ideal figure and that cellular service providers won’t close shop because they would still post handsome profits.

What this should be telling us is that we were ripped off from the start. We should have started at 15c/minute and then worked our way to 40c/minute. The fact that we were forced to start at a top rate just goes to show that nobody had the welfare of consumers at heart. Had it not been for the wisdom of former minister we wouldn’t have been any wiser.

But then in this country those who are in business are famous for making obscene profits for the services they provide and they are the first to threaten retrenchments when workers demand more money.

Take the banks. What happened to the commission of enquiry that was set to decide whether bank charges are reasonable or not?

It’s been more than two years since people were invited to road shows to give input about bank fees. I am wondering about the ATM charges right now at a time when the guys who ferry money from banks to ATMs were on strike.

Most ATMs had been shut down because of the strike. So when you get to a place and you find your bank’s ATM closed, what do you do? You go to the next available one. You don’t drive for kilometres to see if your particular ATM is up and running at the next shopping mall.

The same happens when a certain bank is offline. Do you wait for a day before you can withdraw money, or do you use an ATM that is fully-functional irrespective of the bank? The answer is obvious but the reason why you have to be charged for the failure of a bank to provide service at that particular time baffles the brain.

And what makes it worse is that banks get away with this daylight robbery, and the poor consumers can’t do anything to change the status quo because the banks are only answerable to the Reserve Bank.

If the Reserve Bank is happy with the fees they levy, including the interest rate they charge most customers – a whopping 3 percent above the repo rate, who are you to complain? And from where I sit, there were murmurings about another inquiry about the difference between the repo rate and the rate the banks charge interest to customers.

Imagine how beautiful this land would be if the Reserve Bank were to instruct the banks to pass on the same rate of interest to mortgage lenders, and not hike it, as many people would be able to keep a roof over their heads, instead of the massive house sales we are seeing on the market this year. After all, a house is a basic need.

It is not my intention to be unfair to anyone, but it is worrisome when the people who are elected by the poor majority get themselves shares in financial institutions and service providers, basically make themselves serious players in big business.

This is where ordinary people get shortchanged. We all know how poor people pay more for bank loans than the rich because the poor – like the miners in Marikana – go for high-interest bearing unsecured loans. The rich will negotiate interest rates because they have collateral. It becomes a vicious circle in which the poor get poorer while the rich prosper.

It was reported shows that the Lonmin miners were paying loans from micro lenders, such as Unibank to mention one, at the rate of 30 percent or more per annum. Compare this to a wealthy person who is required to pay up to 13 percent for using a credit card.

Why on earth does our legislation allow financial institutions to charge people 30 percent on loans? It is criminal. And if you look around, places that offer instant cash loans have mushroomed all over the place making it easy for poor people to drown themselves in debt.

Displaying the NCR certificate is not enough. At the end of the day, people are being ripped off and some lose their valuable assets because of the huge cost of debt that they will never be able to service at the going rates of interest.

Now when you read that an ANC consortium stand to make almost a billion rand profit from its share of one of the “people’s banks” then you know why consumers are not a priority in this country. What this really says is that when all the big deals are structured, it’s never about you and me and how we will benefit; it is always about how the pockets of the few are going to be lined up from here to eternity.

Again to quote one of the ambassadors I have had a pleasure to dine with; when a group of business editors had lunch with him, they were all trying to impress him by saying on labour costs in SA that are making it very expensive for business to thrive, as opposed to countries such as India where labour is cheap, they said in unison. Talk about great minds.

His Excellency gave a short but intelligent answer: “South Africans expect the impossible; of course bread in India is 20 rupees while bread in South Africa is R10.”