Mines, industries expected to shed jobs
CONSUMERS are in for a tough ride in 2018with major price increases for food and other essential commodities on the cards, as well as a sluggish growth rate predicted for the new year.
This was according to Neil Roets, CEO of Debt Rescue, a large debt counselling company, who added that their statistical analysis of the debt situation in South Africa showed that consumers would notch up record levels of debt in the new year.
Unemployment, now at 27,7%, was expected to rise with key sectors, including mining and the industrial sector, expected to continue shedding jobs at “unprecedented rates”, he said in a statement.
On the positive side, the election of Cyril Ramaphosa as president of the ANC and the implications it holds for greater political and economic stability, as well as the likelihood he may become the next president of the republic, meant there was a greater possibility of at least some foreign direct investment coming into the country next year.
SA Reserve Bank governor Lesetja Kganyago recently said that although the unemployment rate was already among the highest in the world, it was expected to further increase in 2018.
The only other comparable countries to have such high rates, according to data by the International Monetary Fund, are Spain and Greece.
“It seems sad that we have to be so pessimistic at such a happy time of the year, but the sooner consumers realise the economy is in trouble and tighten their belts, the fewer of them will have to come to us to bail them out by placing them under debt review,” Roets said.
Many South Africans who barely make ends meet during the year have plunged themselves deeper into debt over the holiday season by spending money on expensive holidays and generally having a good time – often on credit cards or with money borrowed from moneylenders at exorbitant interest rates, Roets said.
He said experience over time had shown that January was the month of the Great Reckoning when these chickens came home to roost.
“We see more new clients seeking help with the repayment of their outstanding debt in January and February than during any other month of the year because of additional debts that had been stacked up during the holiday season,” he said.
“Parents suddenly realised that they have to pay school fees that had not been budgeted for and with credit cards maxed out on luxuries in November and December many have no choice other than to seek relief by going under debt review to prevent debt collectors from seizing their property”
Roets warned 2018 was going to be a tough year and consumers who had difficulty making ends meet in 2017 were going to find it much harder in the new year.
He said almost half of all South Africa consumers are three months or more behind in their payments. The major culprits are credit and store cards followed closely by unsecured debt.
The only measure of relief for consumers who are in over their heads is the legally binding system of debt review, which allows deeply indebted consumers to repay their debts over a longer period of time in smaller installments, often at a discount.