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New survey finds consumers in South Africa are in deep trouble

A new survey by debt counselling firm Debt Rescue released on Monday found that 85 percent of South Africans needed help either financially, emotionally, or both as a result of the Covid-19 pandemic.

South Africa entered a national lockdown on March 26 in response to the pandemic. From June 1 the national restrictions were lowered to level 3, with some economic restrictions still in place, causing financial disruption.

Neil Roets, the chief executive of Debt Rescue said, “We have known for some time that things were bad, but the results of this survey just bowled me over. It showed clearly and emphatically that virtually the entire population of this country is in deep trouble and have no idea where or how help is coming from.”

With gross consumer debt at around R2.8 trillion (2018/19 Stats SA), it was clear that South Africans were in for a very rough ride, Roets said.

A further 55 percent required financial assistance, but had no access to credit, while 96percent were stressed about their health, finances, or both.

Roets said only 26 percent of the respondents reported that they had successfully applied for a payment holiday while 51 percent said they had no savings to fall back on.

“The fact that 85 percent of consumers polled in the survey said that their finances had been directly impacted by Covid-19 showed that most of us were in the same boat,” he said.

The fact that only 11 percent of those polled believed they could pay normally after their payment holiday ended shows emphatically that there is a major problem in the offing, Roets said.

He also said the 25-basis point drop in the prime lending rate would bring some relief to consumers who were repaying outstanding bonds. However, the bulk of those savings would be offset by the expected 50 cents a litre increase in the fuel price, he said.

The survey also found 45 percent of people have been affected by either retrenchment, temporary layoff, or salary reductions.

Roets said it was imperative to get the workforce back to work.

“While we fully understand that some issues are beyond the reach of the government, it is nonetheless important to get people back to work.”

He said the combination of an expected multibillion-rand revenue collection shortfall and the Covid-19 economic meltdown spells trouble for the state’s ability to sustain society and should be seen as a ticking time bomb that could lead to widespread social unrest.

“The unemployment rate could go as high as a record 50 percent. This means a smaller tax pool and less revenue for the government to spend on development and social programmes such as education, health, and social grants,” he said.

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