Informal Finance and Its Regulation: A Comparison of South Africa and Zambia

Abstract

Unregulated or weakly regulated financial institutions remain important providers of financial services across Sub-Saharan Africa. This study examines how such institutions operate in South Africa and Zambia, which represent contrasting regulatory approaches-restrictive and enabling, respectively. Drawing on qualitative interviews with providers and users, this research finds that group-based savings-and-credit associations and private money lending remain central in both contexts. In South Africa, savings groups are more closely connected with banks, while private money lending is criminalized. The findings suggest scope for regulatory convergence toward a more plural and competitive financial sector, one that actively supports savings groups while adopting less punitive approaches to private money lending.