4 things killing your wallet in South Africa right now

A number of South Africans are facing a ‘debt spiral’ as they battle with the cost of living in the country.

Neil Roets, CEO of Debt Rescue pointed to a 21% increase in applications for debt review in the first quarter of 2019 compared to the same period last year.

“All of the main economic indicators that we track show that things are going to get a lot more difficult before there is any chance of light at the end of the tunnel,” he said.

“With Eskom’s debt approaching R500 billion and the utility failing to sell enough electricity to cover its daily expenditures, it is going to be incumbent on consumers to keep it from imploding and sinking the country’s entire economy.”

Roets said for most consumers, it is difficult to see where the money will come from to deal with the latest round of price increases that will follow the latest fuel price increase.

Below BusinessTech looked at four common monthly expenses for consumers, and how they have increased so far in 2019.


Petrol

The country’s petrol price has climbed by 9.2% year-on-year according to Ghana Msibi, WesBank executive head of motor.

“The difference in fuel price since January this year is as much as R2.77 for every litre of 93 unleaded – which gives a very real sense of how much further salaries have to go,” he said.

While July could bring the first price cut this year, international factors like attacks on oil tankers in the Gulf of Oman means that the price is unlikely to fall as much as previously hoped.

The weakening of the local currency is also a factor. President Cyril Ramaphosa will deliver his second State of the Nation Address (SONA) on Thursday evening, following the success of the ANC in May’s general elections and his subsequent re-election as head of state. The rand is expected to take some direction on the president’s delivery.

Internationally, the US dollar will take its lead from from an interest rate announcement by the Fed on Wednesday.

“President Trump has been imploring the Fed to cut rates, and it seems that the economics are starting to show the need for an interest rate cut by the Fed. Markets have priced in two interest rate cuts this year. There could be a knee-jerk reaction to any movement by the Fed and we could see the rand trading a bit stronger following a rate cut,” said Andre Botha, senior dealer at TreasuryONE.

Month 95 Petrol 93 Petrol 0.05% Diesel (wholesale)
January R14.01 R13.79 R13.13
February R14.08 R13.86 R13.14
March R14.82 R14.60 R14.05
April R16.13 R15.94 R14.87
May R16.67 R16.48 R14.88
June R16.76 R16.57 R15.21

Food 

Millions of South African families cannot survive on the little money coming into the home and cannot afford the cost of a monthly basket of food.

According to the latest Pietermaritzburg Economic Justice and Dignity’s (EJD) latest Household Affordability Index, the average monthly food basket for a household with seven members (the average low-income household size in Pietermaritzburg) is now R3,051.11.

And data from a Nielsen shopping survey showed that South Africans spend around R11,650 on groceries annually – a 10% decline compared to July 2018.

This spend is spread out across 60 shopping trips a year, with the average basket value being R194 – R15 less than in July 2018.

The surveys also showed that South Africans are increasingly shopping on promotion, with 40% of respondents stating that they read newspaper broadsheets for specials, while 65% said that they actively compare prices across brands.


Medical aid

South Africa’s largest medical aid providers all increased their fees above inflation in 2019. Discovery Health Medical Scheme is the largest open medical scheme in South Africa, covering approximately 2.8 million beneficiaries, and with an open medical scheme market share of approximately 56%. The provider upped its prices by a weighted 9.2% across its plans.

Bonitas, the second largest open medical aid scheme, and third largest overall (below the government’s GEMS) accounts for 15% of the open scheme market with 731,500 beneficiaries. The group increased its prices by a weighted average of 8.9% in 2019. The average increase in contributions across Momentum Health‘s plans is 10.7% 2019.

A recent BusinessTech poll meanwhile, found that South Africans are paying a substantial amount of money each month on medical aid.

The poll, which had just over 4,800 respondents, found that a quarter of readers pay between R3,000 – R5,000 a month.

Just under 20% said that they pay between R5,000 – R8,000 a month, and 10% said that they pay more than R8,000 each month.

  • How much do you pay for medical aid every month?
  • R3000 to R5000 (25%, 1,184 Votes)
  • R5000 to R8000 (19%, 927 Votes)
  • R2000 to R3000 (18%, 871 Votes)
  • R1000 to R2000 (17%, 829 Votes)
  • More than R8000 (10%, 486 Votes)
  • Less than R500 (7%, 324 Votes)
  • R500 to R1000 (4%, 192 Votes)
  • Total Voters: 4,813
Loading ... Loading ...

Data and airtime

In April, the Competition Commission released its provisional report on its Data Services Market Inquiry, in which it prescribed new rules for mobile networks.

In its preliminary findings, the commission said that international benchmarking confirmed that South African data prices are high – particularly for mobile prepaid data.

Notably, the commission found that South Africa’s data prices are higher than other BRICS and SADC countries.

It also found that Vodacom and MTN charge higher prices in South Africa than other countries which they operate in.

Vodacom CEO Shameel Joosub recently however that the main reason for data prices not falling is that the government has not allocated new mobile spectrum for 14 years.

“Lengthy delays in completing the digital migration and allocating 4G spectrum has curbed the pace at which data prices could have fallen,” Joosub said.

A recent survey by Cable, a UK mobile broadband comparison website, found that South Africa placed 143rd out of the 230 countries with an average data price of R106.20 per GB.

According to the study, India offers the cheapest data prices in the world, with a price of just R3.84 per GB.

Below are the average prices for 1GB of data in various countries including South Africa. Prices are converted to South African rand and ranked from cheapest to most expensive.


Read: Most people will outlive their retirement savings by 10 years or more – here’s how much you need to save

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4 things killing your wallet in South Africa right now