1. Telkom Submission on the National Credit Bill
17 August 2005

2. Delegation
Adv. Benito Lekalakala - Executive Regulatory and Public Policy
Nozicelo Ngcobo - Senior Manager (Parliament)
Adv. Francois Slabbert - Senior Specialist: Legislation & Policy
Maphelo Mvunelwa - Specialist: Legislative Lobbying
Mark Henderson - Manager (Customer Services)
Kenny Pasensie - Specialist: Regulatory Research

3. Discussion Points Objects of the Bill Application of the Bill
Telkom Recommendations
Concluding Remarks

4. Introduction
Telkom welcomes the opportunity to comment on the Bill and applauds the work done on the Bill thus far
Telkom supports the objects of the Bill to engender responsible credit provision and avoidance of over indebtedness
We trust our comments and recommendations will find favour with the Committee
Telkom welcomes the opportunity to make submissions to the Parliamentary Portfolio Committee on Trade and Industry on the National Credit Bill, pursuant to an invitation for comments.
Telkom supports the objects of the Bill as cited in the preamble and in the objects clause. For purposes of realising the objects of the Act however, and in order to avert unintended consequences from arising, Telkom seeks to point out certain elements of concern.
In its submissions Telkom restricted itself to only those provisions that could have the effect of markedly and unfairly affecting service delivery and cost.

5. Application of the Bill …
Uncertainty with respect to the extent of the Bill’s application to telcos
Unintended obligation on telcos to register as Credit Providers
Potential inhibition on utilities to provide public service infrastructure and services efficiently
Exclusion of providers of ‘incidental credit’ from the application of the Bill
In its present formulation, the Bill creates some apparent uncertainty as to the extent of its application to telecommunications operators .
If applied to its full extent, telecommunications operators would inter alia be obliged to register as credit providers with the National Credit Regulator; failing which they may not enter into any credit agreement, and any agreement entered into notwithstanding will be unlawful and void.  
It is apparent from the objects of the Bill that such unintended consequence is not within the contemplation of the legislature.
Instead, the primary intention of the Bill is to regulate the consumer credit industry and the consumer credit market, rather than inhibiting utilities in terms of delivery of basic services and cost.
Prior to the latest rendition of the definition of “credit facility” in particular, the intention was clearly to exclude providers of “incidental credit” from application of the credit industry specific parts of the Bill. Currently the position is somewhat obscured in that respect; hence the necessity for clarity of formulation.

6. Credit Facility…1
The inclusion of ‘goods and services’ in the definition of credit facility is unfortunate
A credit facility should bear no reference to goods and services
In terms of section 4, the Bill applies in essence to every credit agreement between parties dealing at arm’s length. Moreover, any agreement or transaction pursuant to section 8(3) and 8(4) of the Bill constitutes a “credit facility” or “credit transaction”; both of which constitutes credit agreements “proper” within the application of the Act.
The subsequent inclusion of “goods and services” in the definition of “credit facility” is, in our view, unfortunate and responsible for much of the current perplexity for telecommunications operators. It overshadows to an extent the exclusions created under the definition of “incidental credit”, to the extent that the “facility” and not the nature of the constituent “credit” determines to what extent the Bill applies to an operator or not.
A credit facility in its proper meaning should, in the context of the Bill read as a whole, refer to an agreement or instrument that outlines terms for the repayment of a debt pursuant to money’s advanced by a credit provider to or on behalf of a consumer.
The proposed and apparent meaning is evident from its consistency with references inter alia to the value of a credit facility (section 80), reduction and increase of the credit limit of a credit facility (sections 118 and 119) and the settlement value of a credit facility (section 113).

7. Credit Facility…2
The Bill envisages differentiated treatment of the sale of goods and services to the treatment of the provision of credit as such
Recommendation: All reference to ‘goods and services’ should be omitted from the provisions of subsection 8(3)
Moreover, the definition of “credit provider” contrasts “the party who extends credit under a credit facility” with “the party who supplies goods or services under a discount transaction, incidental credit agreement or instalment agreement”. Hence it is clear in terms of both the legislature’s intention and the tenor of the Bill to treat the sale of goods and services, and more specifically, the rendition of essential type services by utilities on quite a different basis from the provision credit “proper” under a credit facility.
Whence Telkom suggests that the provision of goods or services are correctly linked to discount transactions, incidental credit agreements or instalment agreements and also that the specific treatment of incidental credit under the exclusions provided for in section 5 of he Bill is therefore both logical and warranted.
It logically follows that all reference to “goods or services” should be omitted from subsection 8(3) of the National Credit Bill.

8. Incidental Credit
The rendition of utility-type goods and services should be treated as incidental credit
Inasmuch as both utility services and incidental credit warrant differentiated treatment in terms of the Bill, Telkom suggests that it rationally follows that credit afforded pursuant to the provision of goods that are logically associated with and incidental to the rendition of utility type services should be treated as “incidental credit” for all purposes under the Bill.

9. Conclusion Telkom reiterates its support of the objects of the Bill
We trust that our suggestions will be considered in the interest of unencumbered service delivery
Telkom reiterates its support of the objects of the Bill; in particular the promotion of fair and non-discriminatory access to consumer credit, the introduction of measures to prevent over-indebtedness and the curtailment of abuses by micro-lenders.
Telkom trusts that its suggestions will be considered in the interests of unencumbered service delivery of affordable telecommunications services, without compromising the rendition of credit in a responsible and non-discriminatory manner.

10. Thank you
Telkom SA
Telkom Tower North
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