Debt councilors are showing an exponential increase in the number of clients seeking protection under debt review.
This is according to Neil Roets, CEO of debt management firm, Debt Rescue, who said that while a 22c per litre decrease in the petrol price on Wednesday (4 June), will lighten the burden of middle class South Africans, it would have little impact on the more than 25% of South Africans who are unemployed.
The wholesale price of diesel is expected to drop by 23.58 cents a litre, with illuminating paraffin set to decline by 10 cents a litre.
“South Africa is a deeply indebted country with the total consumer debt totaling R1.47 trillion. This means that most South Africans owe more than 75% of their gross monthly income to creditors,” Roets said.
“With more than a quarter of South Africa’s work force unemployed, it is going to take much more than a drop of 22 cents a litre in the price of fuel to bring meaningful relief to consumers who are falling ever deeper into debt,” he said.
Dawie Roodt, an independent economist with the Efficient Group, said: “In our case we see a quarterly increase of about 20% in the number of clients knocking on our door for help. We know from discussions with our opposition that many of them are showing much the same growth rate.”
He added that in addition to the petrol price drop later this week, there may be further decreases down the line if the Rand continues to improve against the US Dollar.
“Our currency has been performing well against the Dollar and there is every indication that this will continue to be the case for the foreseeable future. This will result in further decreases,” the economist said.
Roodt said that one glimmer of hope in the long term would be if fracking in the Karoo proved to be viable, as it could add significantly to the local supply of crude oil which might help to stabilise fuel prices.
“We are already seeing a reduction in the world price of crude thanks to substantial new production from fracking in the United States and elsewhere,” Roodt said.
He predicted that these increased supplies would force the price of crude to below US$100 a barrel.