Neil Roets, CEO of Debt Rescue, said the situation was unfolding against an increasingly difficult economic backdrop.
“This crisis is unfolding against the backdrop of high unemployment, wages and salaries that are not keeping up with inflation, escalating food and petrol costs and soaring paraffin prices, placing unbearable financial pressure on already vulnerable households,” Roets said.
“For these families, paraffin is not an alternative option, it is a fundamental for survival. When the price of paraffin escalates to a point, as it has, where it becomes unaffordable, we are looking at a national emergency. It goes without saying that these households have long since not been able to afford electricity.”
Energy costs push consumers further into debt
Roets said the situation was placing households under unbearable financial pressure.
“This is not as a result of overspending, far from it,” Roets said. “The fact is, people are turning around every cent, but are simply unable to make ends meet every month, and are using their store and credit cards to fill the gap.”
“The sad fact is, that every additional rand spent servicing debt is a rand that is no longer available for groceries, transport or other household necessities,” he added.
The pressure is reflected in household debt levels, with more than half of South Africa’s population reportedly spending over 40% of their take-home pay servicing debt.
The growing reliance on credit means rising energy costs are not simply an affordability issue. They are also contributing to a wider consumer debt problem.
A recent Debt Rescue survey found that:
- 39.6% identified food and groceries as the most difficult household expense to afford.
- 28.6% identified fuel and transport.
- 19.6% identified electricity and utilities.
- 12.1% identified debt repayments.
The figures illustrate how energy costs are competing directly with other essential household expenses.
Roets said consumers needed to distinguish between borrowing that supports financial progress and borrowing that simply allows households to survive until the next pay cheque.
The latter can create a cycle in which more income is diverted towards debt repayments, leaving less available for essentials and forcing consumers to borrow again.
A structural problem requires more than temporary relief
Roets said consumers experiencing sustained financial distress should seek professional assistance rather than relying increasingly on short-term borrowing.
As a registered debt counsellor, he said structural debt problems require formal and regulated intervention before financial obligations become unmanageable.