Thanks to ever-increasing costs in South Africa, there has been a dramatic surge in clients on the verge of bankruptcy seeking help from debt counsellors, says Neil Roets, Debt Rescue chief executive.
“Most have been relying on expensive credit for everyday items and many are receiving default notices and are facing impending legal action now that the payment holidays have come and long gone – and creditors are expecting payments.
“With 34% of South Africans having lost their jobs, 22% being retrenched, 17% receiving a pay cut (Debt Rescue Survey April 2021), and the official unemployment rate at 32.6%, this is not surprising,” said Roets.
During the hard lockdown period in 2020, when they weren’t earning their full or even any income, thousands of South Africans applied for payment holidays on their debt repayments.
While this provided some form of temporary relief, many are now expected to catch up on those arrears payments – pushing many into further financial difficulty.
Given almost half have used up all of their savings since the start of the pandemic, and 28% did not have any savings to start with, it leaves them in a very difficult position to meet these expectations, he said.
The fuel price has a considerable knock-on effect on the cost of living as so much depends on fuel, not least the transportation of goods which is immediately felt on consumers’ pockets.
So with a 91 cents per litre increase having come into effect this week for petrol – and 56 cents per litre for diesel – consumers need to once again brace themselves for a series of price increases.
This follows the trifecta of increases experienced last month thanks to the combo of fuel, rates and electricity hikes.
“All in all, since January, we have experienced a price hike of over 20%, with petrol climbing 23% in just eight months,” said Roets. “This is an extraordinary increase and consumers will feel the brunt of it at the till-point, with the direct impact on the cost of transport, as well as the indirect impact on the cost of goods.”
“Following the disastrous shut-down of the economy thanks to Covid-19, we need this like a hole in the head at the moment,” he said.
“While we fully understand that this is outside the control of the government, it is nonetheless going to slow down any hopes of a revival of South Africa’s economy battered by the ongoing lockdowns and the recent riots.”