South Africa’s NINA debtor plight: Lessons from the Scottish consumer debt relief system post the Covid-19 pandemic

• Citation: (2023) 35 SA Merc LJ 27
• DOI: https://doi.org/10.47348/SAMLJ/v35/i1a2
• Published date: 27 February 2024
• Pages: 27-48
• Author: Boterere, S.G.
• Date: 27 February 2024

SOUTH AFRICA’S NINA DEBTOR PLIGHT:

LESSONS FROM THE SCOTTISH CONSUMER

DEBT RELIEF SYSTEM POST THE COVID-19

PANDEMIC

SHAMMAH G BOTERERE*

Postdoctoral Fellow, Faculty of Law, University of Pretoria

ANDRÉ BORAINE

†

Professor, Department of Mercantile Law, University of Pretoria

Abstract

In this article, the authors consider the plight of the so-called No

Income No Asset (NINA) debtors against the backdrop of debt relief

measures provided for this category of debtors who find themselves in a

debt trap. It is a well-known fact that South African insolvency law

does not provide sufficient debt relief measures for all types of debts,

and those, like the NINA debtors, who are effectively excluded from the

relief afforded by the sequestration and ultimately rehabilitation

procedures of the Insolvency Act 24 of 1936 have no proper statutory

measure to provide a discharge of debt in instances where they may

desperately need it. It is submitted that the debt restructuring

mechanisms provided by the administration procedure and debt review

measure, are not sufficient since these do not offer a discharge.

Reference is made to the newly proposed debt intervention procedure

that may provide some relief in this regard, but it is argued that the

legislature needs to consider further procedures to deal with their

plight. With the view of making some recommendations for reform,

aspects of mainly the Scottish system of debt relief measures are also

considered.

Keywords: No Income No Asset (NINA) Debtors; debt relief measures;

sequestration; debt restructuring; Covid-19 pandemic; rehabilitation;

administration; debt review; debt intervention; discharge

* LLB LLM LLD (Pret). Postdoctoral Fellow, Faculty of Law, University of Pretoria. This

article is partly based on Boterere Debt relief as part of the social safety net: A comparative

appraisal of the regulation of No Income No Asset debtors in Zimbabwe (LLD thesis, University

of Pretoria, 2022).

†

LLB LLM LLD (Pret). Professor, Department of Mercantile Law, University of Pretoria.

27 https://doi.org/10.47348/SAMLJ/v35/i1a2

(2023) 35 SA Merc LJ 27

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I INTRODUCTION

South Africa is plagued by extreme consumer over-indebtedness

1

coupled with abject poverty.

2

The latter has resulted in many debtors

being perpetually trapped in debt because they lack the means to meet

their f‌inancial obligations or to access the debt relief system.

3

This has, at

times, culminated in debtor intimidation by creditors seeking to enforce

their debts. Among the distinct categories of debtors, the so-called No

Income No Asset (NINA)

4

debtor category, which comprises overcom-

mitted debtors in dire f‌inancial circumstances is the most susceptible to

intimidation because of the lack of statutory protection afforded to this

group.

5

In the main, debtor protection may be facilitated by accessing the debt

relief system, which in turn may result in a concomitant discharge of

debts. In light of the above, this article outlines the protection afforded

to NINA debtors within the South African natural person debt relief

system and contrasts it with the protection afforded to this group within

the Scottish personal insolvency system. This comparative analysis is

important because of the comprehensive protection afforded to low or

no income earners within the Scottish debt relief system.

6

This analysis is

positioned in the background of the devastation caused by the Coro-

navirus Disease 2019 pandemic, which has had a ripple effect on

debtors.

7

Therefore, highlighting the comprehensive protection of the

Scottish relief system may guide law reform in South Africa to ensure a

safe landing for debtors who are recovering from the negative impact of

the Covid-19 pandemic. In summary, the main aim of this contribution

is to highlight the forward-looking NINA-specif‌ic reform initiatives

implemented in the Scottish relief system which may inf‌luence law

reform for a developing system like South Africa.

The Covid-19 pandemic affected many sectors of the global economy

1

See the National Credit Regulator, ‘Credit Bureau Monitor’, available at https://

www.ncr.org.za, accessed on 27 January 2023 for an indication of the over-indebtedness in

South Africa.

2

See Stats SA, ‘Five facts about poverty in South Africa’, available at https://bit.ly/

3HDALjf, accessed on 27 January 2023.

3

See Coetzee, A comparative appraisal of debt relief measures for natural person debtors in

South Africa (unpublished LLD thesis, University of Pretoria, 2015) 157.

4

NINA debtors may also be referred to as Low Income Low Asset debtors (LILA),

however, the term NINA debtors is preferred in this article.

5

See, in general, Coetzee, ‘Does the proposed pre-liquidation composition proffer a

solution to the No Income No Asset (NINA) debtor’s quandary and, if not, what would?’

(2017) 80 Tydskrif vir Hedendaagse Romeins-Hollandse Reg 18.

6

See s 2(2) read with schedule 1 of the Bankruptcy (Scotland) Act 2016 (‘Bankruptcy

Act’).

7

Coronavirus Disease 2019 (‘Covid-19’).

https://doi.org/10.47348/SAMLJ/v35/i1a2

(2023) 35 SA MERC LJ28

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