In a recent interview with HOT Business with Jeremy Maggs, Neil Roets, CEO of Debt Rescue, discussed the organisation’s latest consumer survey. The survey revealed that 86% of South African households couldn’t afford electricity even before the April 12.7% tariff hike, painting a grim picture of consumer finances in the country.
Roets warned, “It doesn’t look good for consumers because the situation is just not getting better.” He explained that rising electricity costs are compounding the effects of high interest rates, fuel, and food prices, while wages remain stagnant.
For many South Africans, prepaid electricity has become the only option. Roets noted that this system places additional pressure on households: “People now obviously have to choose basically between either having food on the table or having their electricity on.”
He believes that targeted support is crucial, adding, “A subsidy can be given to households under a certain threshold,” given that basic needs are increasingly unaffordable.
The situation, according to Roets, pushes many into a dangerous debt trap. He stated, “A lot of people in South Africa are living on that knife’s edge, where electricity price hikes like this will push them over the edge.”
Despite this worrying trend, he remains hopeful about the assistance available through established financial remedies. “Debt counselling in terms of the National Credit Act… has helped thousands of people to pay off their debt without losing their assets,” he said.
Discussing the potential VAT increase, Roets added, “It’s going to have an impact on everything that they buy or pay for… but that does not mean that their salaries will go up in line with that.” This looming change is expected to further strain the already burdened finances of many households.
Roets also reflected on the deeper systemic issue of financial education. “One of the main reasons why South Africans are struggling so much is because of the fact that they’re not financially literate,” he explained.
On discussing the Two-Pot Retirement System, he stressed the need for proper guidance: He cautioned that early access to pension funds through the Two-Pot System “wasn’t coupled with financial education,” warning of future consequences when people retire with little left in the pot, “What is going to happen when these people are going to retire one day?”
This interview is a must-listen for anyone concerned about the rising cost of living and what options are still available.
