The increase in the petrol price of 84 c a litre from next Wednesday as well as the impending introduction of tolls is going to sound the death knell for many deeply indebted consumers who are barely managing to make ends meet.
Neil Roets, CEO of debt counselling firm Debt Rescue, said the substantial increase in the cost of goods and services because of the fuel price increase is going to add considerably to the total consumer debt now topping R1, 44-trillion (according to Statistics South Africa).
“With SANRAL seeming to be hell-bent on forcing through the toll issue, this will add another R450.00 a month to the already diminished income of consumers. This together with the fuel price hike is going to have dire consequences for the majority of consumers.
“For many, their only option is to seek out loans at extortionate rates from illegal loans sharks that are still widespread in especially rural areas.
“If we take into account the fact that the economy is slowing down and that gold pundits predict that the price of the yellow metal will bottom out at US$1000 an ounce consumers are facing a bleak future.”
Roets said another consequence of the fuel price increase as well as worsening economic circumstances is going to be that it is going to push many thousands of consumers into debt counselling to try and avoid bankruptcy or getting judgements against them and having their salaries docked by garnishee orders.”
He said the number of clients seeking help from his company, Debt Rescue, had almost doubled over the past six months.
“There are so many people on the knife edge that the fuel price increase is just going to be the last straw that breaks the camel’s back.” Roets, who is also a lawyer and an accredited solicitor in the United Kingdom, said the situation has become dire and was confirmed as such in a statement from the National Credit Regulator.
“It’s a well-known fact that almost half of all credit-active consumers in South Africa have impaired credit records. In other words, about nine million consumers are in arrears (by three or more months) on at least one account, or have a debt judgment or administration order to their names,” Roets said.
“We are going to see this figure spiralling with even well-heeled consumers joining the ranks of the financially distressed middle-class and lower-middle class.
“Poor people, who are living on or below the breadline, are going to be the hardest hit with even the most basic foodstuffs out of their reach and a growing number of people going to bed hungry,” Roets said.