Abstract:
The National Credit Act 34 of 2005 (“NCA”) is applicable to three main categories of
credit agreements, the credit facility, credit transaction, and the credit guarantee. The
credit guarantee in terms of section 8(5) is an undertaking or a promise by a person
to satisfy the obligation of another consumer in terms of a credit facility or a credit
transaction to which the NCA applies.
The purpose of the dissertation is to investigate the NCA credit guarantee as an
instrument to promote access to credit to small and medium enterprises (“SMEs”) in
South Africa. A discussion of the guarantee as an international instrument to
advance SMEs’ access to credit, and of the characteristics of the independent
guarantee versus the suretyship agreement, is preceded by a brief discussion of the
NCA’s field of application. This is merited by the interrelatedness of the section 8(5)
credit guarantee with the other main types of agreements subject to the NCA. The
nature of the section 8(5) credit guarantee is discussed next, which in my opinion is
an independent guarantee. The question is also addressed whether the credit
guarantee in terms of the NCA, similarly to the other credit agreements subject to the
Act, is classified into sizes.
The dissertation is concluded with remarks on the use of the credit guarantee in
terms of the NCA as an instrument to address SMEs’ access to credit. It is
recommended that the definition and size classification of the credit guarantee in the
NCA must be clarified, which will enhance the use of this powerful instrument to
achieve the Act’s purposes.