By Wiehahn Koch, Head of Purpose Lending at Capitec

For most, the word credit evokes negative feelings because it is associated with the risk of debt. But when we are talking about its role in an economy, a fundamental distinction is often missed: the difference between lending for general consumption and lending for a specific, productive purpose. The first approach is broad and unfocused – typically resulting in the burdensome scenarios that lead to the fear associated with credit. The second, in our view, is the most responsible and constructive way to align finance with the real economy. When a loan is tied to a clear goal like education, a vehicle or business cash flow, we begin a productive dialogue about a purpose-led model.

This shift in focus is critical in South Africa's current environment. We are a nation defined by a profound capacity to adapt. We see it in the Gogo who uses her banking app to manage her social grant, in the parents who provide a foundation for their children’s ambitions, and in the millions of young, digitally-savvy South Africans, who are using their phones to launch side hustles in a tough job market.

For too long, the formal financial system has struggled to keep pace with this dynamic economy. The traditional model, built for a world of single, formal payslips, was not designed to serve them. This is where the purpose-led model becomes more than a theory but rather a practical necessity.

Let’s be clear: credit isn’t harmless. Used badly, it can place people and their families under pressure; used well, it can open doors. When a loan is clear, fair and tied to a tangible life goal, it becomes useful rather than risky. At its best, credit helps people move forward, not put them on the back foot.

The payslip problem

A primary barrier to accessing well-structured credit is that traditional systems often fail to see the full picture of a person's financial life. The gig economy and side hustles create a payslip problem, so an application may be declined because it cannot process the income from an e-hailing service, an online store, or income from renting out a backroom.  Entrepreneurial leadership is a key driver of economic transformation, yet these are the very people legacy systems are most likely to exclude.

This is where innovation must be focused. Modern loan agreements which look at a client’s complete earnings and cash flow rather than just their payslip, can help to unlock fair access to credit for millions of people who earn an irregular income. Repay- as-you-earn models allow clients to pay smaller amounts throughout the month, rather than locking them into large monthly repayments, which might be better suited to entrepreneurs and those earning in the gig economy.

Capitec interim results data shows that data-driven loans to clients earning from multiple income sources grew by 81% in the six months ending August 2025.

Lending for life’s milestones

This purpose-led approach aligns the bank’s incentives with the client’s own plans. It’s no longer a question of how much you can borrow, but about what you are trying to do, and what it would take to get you there.

We see this play out across three areas:

• Education: Education is still one of the most reliable ways for someone to improve their earning potential. For many families, the barrier to education is the cost and the paperwork that comes with further study. A straightforward, affordable student loan can give someone the breathing room to take that next step without putting the household under further strain.
• Mobility: In much of South Africa, mobility is directly tied to income. A vehicle can open the door to work – or to a better job – and for e-hailing and delivery workers, it is the job. Responsible lending means looking beyond the instalment to the full cost of keeping a car on the road: fuel, tyres, maintenance, insurance, licence renewals, unexpected repairs and the other day-to-day running costs that add up. Ensuring that the vehicle remains an asset requires realistic, long-term budgeting.
• Home ownership: A home is usually the most stable asset a household can build over time. But beyond the initial house purchase, purpose-driven finance supports the preservation of that asset value, allowing owners to access capital to make improvements over time.

In the first half of our 2025 financial year, Capitec saw purpose lending in education, mobility and home-improvement finance rise 188% to R1.84 billion, which shows that clients want credit tied to real, long-term goals rather than general borrowing.

Fuelling the economic engine

This same principle applies to the engine of our economy: the small and medium enterprise (SME). As BASA notes, “the business of banking is inherently developmental”.

For some entrepreneurs – a significant barrier to growth is often cash flow. A financial partner will understand this and develop solutions that serve clients with, for instance, an affordable card machine that gets them their money the next day, not in a week, because they know that speed-to-cash is what allows a business to buy stock and pay suppliers.

Financial partners also need to take the time to understand the business, not just the balance sheet. They get seasonality, from a coastal restaurant in winter to a clothing designer scaling up for a summer launch. This partnership approach changes an entrepreneur’s outlook. It gives them the confidence to invest in new stock before the festive season, knowing they have a partner who understands their cash flow, not an algorithm that will penalise them for a slow winter. Real, sustainable growth is supported not just with capital, but with understanding.

We see a South Africa defined by its opportunity. The role of the finance industry is to participate actively, remove barriers, and provide well-designed tools that support the people who are building our country's future.