“I am Scared of Loans” Financial Challenges of Beneficiaries of Cash Transfers in the Informal Economy in Soweto, South Africa

The COVID-19 pandemic highlighted that access to financial capital is a significant challenge for operators of informal income activities, exposing financial inequality. However, there is a need to understand why operators are not disposed to access loans even when offered. Drawing on qualitative research in Soweto, South Africa, beneficiaries of cash transfers who also engage in various income-generating activities were found to be sceptical of loans, even when the receipt of transfers in cash would allow them to borrow. This paper contributes to the debate about strengthening participation in the informal economy as a mechanism for dealing with poverty, unemployment, and inequality.