Access to affordable credit is essential for financial inclusion, which plays a critical role in improving financial stability and driving economic participation in South Africa. While regulation ensures the integrity of the financial system, outdated or overly rigid rules can inadvertently limit access to credit, particularly for lower-income and under-resourced communities.
“Protecting and educating users of financial services are two of the most important elements of financial inclusion,” says Leonie van Pletzen, CEO of MicroFinance South Africa (MFSA). “But for regulation to truly serve the needs of consumers, it must keep pace with societal shifts, technological innovation, and the changing cost of doing business.”
South Africa’s regulatory environment is generally sound, yet some key areas — such as prescribed interest rates and fees — have not been updated in nearly a decade. With operating costs increasing and pricing models frozen, many responsible lenders are struggling to sustainably serve their clients.
“When credit providers cannot price risk appropriately, they’re forced to tighten lending criteria – which has very real consequences,” explains van Pletzen. “This means fewer consumers qualify for legal credit, pushing them toward informal and unregulated lenders.”
According to van Pletzen, MFSA is currently making submissions to both the Department of Trade, Industry and Competition and the National Credit Regulator as part of the ongoing review of credit rates and fees.
“The collaboration with both entities is progressing positively, with constructive engagement taking place throughout the process,” she shared. “These submissions highlight the pressing need to revise outdated fee structures that no longer reflect the realities of lending costs in today’s economy.”
A critical element that MFSA believes government should explore is the adoption of a tiered regulatory model — a forward-looking framework that introduces flexibility by differentiating between types and sizes of credit providers. MFSA is calling for this approach to be investigated and considered as part of a broader regulatory reform.
“A tiered approach would allow for more proportional regulation,” explains van Pletzen. “Instead of a one-size-fits-all model, regulation would be tailored to match the risk profile, business model, and size of a credit provider — whether large, medium, small, or developmental.”
This approach reduces barriers to entry for emerging and developmental lenders, incentivises responsible innovation, and ensures that small players can participate meaningfully in the financial sector without being overburdened by compliance requirements designed for much larger institutions.
A tiered system also creates a more competitive and inclusive credit market, which drives economic participation, supports job creation, and reduces reliance on illegal lending. By aligning regulatory expectations with operational realities, tiered regulation strengthens both consumer protection and lender sustainability—two vital pillars for long-term economic growth.
MFSA and its members play a pivotal role in South Africa’s development finance ecosystem, supporting micro and small enterprises, enabling income-generating activity, and offering financial solutions in communities often overlooked by traditional banks.
“By enabling the survival and growth of ethical lenders, we’re not just protecting businesses — we are expanding economic opportunity and empowering consumers,” concludes van Pletzen. “Fair regulation builds a robust financial system—and ultimately a stronger, more resilient South Africa.”
About MFSA
MicroFinance South Africa (MFSA) represents South Africa’s registered microfinance institutions, advocating for ethical lending, consumer protection, and financial inclusion. Through industry leadership, MFSA promotes responsible credit practices that empower individuals, support small businesses, and drive economic growth.
About Leonie van Pletzen
Leonie van Pletzen is the Chief Executive Officer of MicroFinance South Africa (MFSA), a leading voice for the microfinance sector in South Africa. With nearly 15 years of experience in the industry, Leonie is recognised as a passionate advocate for ethical lending, financial inclusion, and regulatory reform. Having risen through the ranks at MFSA since 2010, she brings a wealth of expertise in industry advocacy, corporate governance, stakeholder engagement, and sustainable development.
Leonie has played a key role in shaping policy dialogue between government, regulators, and the private sector, and is an active contributor on various national committees, including the National Credit Regulator’s Credit Industry Forum and the Banking Sector Education and Training Authority. Her leadership is defined by a commitment to protecting vulnerable consumers while ensuring the long-term sustainability of responsible credit provision in South Africa.
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