James Moore: South African siren song is just as discordant

Outlook Remember the vuvuzela? The sound of thousands of those one-note plastic trumpets being blown together became a feature of the last football World Cup and drove millions of English fans to distraction.

Fear not. Vengeance is coming. Over the next few months the South African airwaves are going to be bombarded by an English version of the vuvuzela: Wonga.com ads.

Just like those plastics trumpets, these are loud, intrusive and impossible to escape. Unlike the vuvuzela they have the potential to do far more damage than simply causing headaches.

Wonga's strategy for expansion in South Africa is depressingly familiar: charge poor people who find it hard to get credit from other sources a small fortune for small, short-term loans while trying to make a virtue of the fact by claiming it is being honest by spelling out its charges. Which happen to be ruinous.

Wonga's own worked example demonstrates this. By the standards of the industry, its interest rate sounds semi-reasonable, if the equivalent of 60 per cent per annum can really be considered reasonable. But there's more: a "service" fee of R50 (£3.70) a month. And an "initiation fee" of 15 per cent on the first R1,000, plus 10 per cent of any amount borrowed over R1,000 up to a maximum cost of R1,000. Plus VAT at 14 per cent. All there at the click of a mouse...

Even at those prices there would seem to be a ready market for this sort of thing in an increasingly internet-savvy country which has a depressingly large number of people with extremely limited means and thus extremely limited access to credit.

But perhaps Wonga should have a care. Exporting this sort of "service" to SA has been tried before by a more traditional (but no less immoral) provider of short-term, high-cost loans: Provident Financial.

Its executives once gushed about the potential of South Africa, when they were in the midst of an international expansion programme. They ultimately spun off their overseas businesses as International Personal Finance. Perhaps part of the reason for that spin-off was because the expansion into South Africa proved to be every bit as expensive as some of Provvie's products. The business was closed, at a big loss, because the land of the vuvuzela bit back. Here's hoping lightning strikes twice.