An expected decrease in the price of fuel and the South African Reserve Bank’s decision to keep the repo rate at 6.75% is good news for indebted consumers‚ but there are still tough times ahead.
Neil Roets‚ CEO of Debt Rescue‚ said an anticipated fuel price decrease was especially welcome‚ with petrol expected to decrease by around 41 cents a litre‚ while diesel could drop by as much as 26 cents a litre during the first week of February.
“We are by no means out of the woods just yet. Despite the welcome resurgence of the Rand currency against other major monetary units‚ prospects for real economic growth look slim while unemployment and poverty would almost certainly be on the rise for the rest of the year‚” he said.
Roets cautioned that consumers should brace for tough times ahead.
“One of our biggest concerns are the hundreds of thousands of matriculants and new graduates who join the jobs market full of hope and expectation every year only to find themselves unemployed on a near-permanent basis‚” he said.
“Unless we can somehow kick-start the economy to create employment for these people and for the millions of other jobless South Africans‚ we could be facing major problems down the road that will include further political instability and more violent uprisings‚ eventually threatening civil order.”
Roets said most consumers had reached the point where they would have to accept that they could not maintain the same lifestyle they enjoyed in the past.
“It has now become a matter of survival. Opening more accounts and acquiring more store cards and credit cards is absolutely not the answer.”
Debt Rescue‚ he added‚ was showing a year-on-year increase of almost 25% in clients who wanted to go under debt review because they could not repay their debts.
Independent economist Dawie Roodt said one of the biggest dangers facing the country was the near certainty of further downgrades by the major ratings agencies later in the year.
“While what I call the Cyril effect (following the election of ANC deputy president Cyril Ramaphosa as president of the ANC) has undoubtedly played a role in the strengthening of our currency‚ there is a very long way to go to undo the damage that was wrought by our current president and his cohorts‚” he said.
“More than half of all South Africans are three months or more behind in their debt repayments‚ collectively owing some R1.71-trillion in debt (according to the latest National Credit Regulator stats).
“It is highly likely that there will be further downgrades to our sovereign debt by the ratings agencies reducing the status of our bonds fully to junk status.
“This will undoubtedly have an impact on the overall economy further reducing the trickle of foreign direct investment coming into the country which we so desperately need for job creation and poverty alleviation.”
-TimesLIVE
