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Consumers in for a very tough time

With fuel price hikes, carbon tax and an unemployment crisis on our hands.

Although the petrol price is only expected to rise by about 7 cents a litre in June, with diesel likely to increase by about 12 cents a litre, the overall economic outlook remains bleak with unemployment predicted to increase and consumer debt expected to climb.

It’s time for consumers to tighten their belts and brace themselves for difficult times ahead.

All of the main economic indicators are showing that things are going to get a lot more difficult before there is any chance of light at the end of the tunnel.

With Eskom’s debt approaching R500 billion and the utility failing to sell enough electricity to cover its daily expenditures, it is going to fall on consumers to keep it from imploding and sinking the country’s entire economy.

Read: SA’s debt surge must stop – Moody’s

With a variety of taxes now chewing up 53% of the fuel tax, consumers should brace themselves for the introduction of the carbon tax in June which is going to add 9 cents a litre to the petrol price and 12 cents a litre to the cost of diesel. 

In most cases, budgets are stretched to the limit and it is difficult to see where the money is going to come from to deal with the latest round of price increases that are going to follow hot on the heels of the latest fuel price increases.

Most consumers cut out luxuries from their spending some time ago and will now have to start cutting on basic necessities just to stay alive. 

Another hugely worrying factor is the growing unemployment rate which reflects that almost half of all young people are out of work with the official unemployment figure standing at 27.6%, showing an increase of 0.5%.

Read: SA’s unemployment rate rises to 27.6%, near 15-year high

One curious factor was the announcement by the Long4life group of companies that showed that South Africans ware still splurging on sporting goods and manicures with Sportsmen’s Warehouse and salon chain Sorbet showing strong growth. 

It was also painfully evident from the rapid growth of Debt Rescue that an increasing number of consumers are falling behind in debt repayments and resorting to the process of legal debt review.

Aside from making life much more difficult for motorists, the petrol increase is going to have a wider impact on consumers as the vast majority of goods in South Africa are transported by road.

We are seeing records set daily by the number of distressed consumers who are knocking on our door to be placed under debt review.

With gross consumer debt at around R1.73 trillion and the government’s gross loan debt at R2.2 trillion in the 2016/17 financial year, it is clear that South Africans are in for a very rough ride. 

A major issue for the next few months is going to be whether ratings agencies are going to further downgrade South Africa’s sovereign debt. This could have a dramatic impact on the cost of state borrowing.

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 instalments often at a discount.

Lenders are sometimes willing to take a cut if it means they can avoid having to involve debt collectors or foreclosing on the fixed properties of debtors.

Another major issue is going to be load shedding and whether a post-election government is going to be able to keep the lights on. Given the mess that Eskom is in, this seems increasingly unlikely and all of us are going to feel the pain.

Dawie Roodt, chief economist at the Efficient Group and Neil Roets CEO Debt Rescue.

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COMMENTS   13

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COMPANIES SHOULD BRING FINANCIAL FITNESS TO THEIR EMPLOYEES!! They have employee’s coming in to work broke (monetarily and spirit) and too many H R people do nothing about it. They would rather replace people who leave for more money THAN fix the employee’s problem. Sad, such a beautiful country.

Corporate SA is looking like the employer of indentured laborers.

Why pay carbon tax if it will not be used to reduce carbon from the atmosphere and grow forests?

We are not a first world country, we cannot even fix a traffic light and the economy is busy shutting down.

Consumers who need to be placed under debt review is a special kind of stupid. No sympathy from me.

Stoffel:

I hope you have even less sympathy for the knowledgeable experts that sell unaffordable debt. If not, feel free to invest in Capitec and their equals at the bottom of the gene pool. No sympathy from me when that house of cards implodes in steinhoff style

Agree Johan, like the Rupert’s on their high horse whilst selling booze and cigarettes (both drugs of course), the PSG boys sell cheap debt to the poorest of the poor. Predatory lending at best

The socialist Freedom Charter is the manifesto of the ANC. The National Democratic Revolution is government policy. Our national leaders are the only backward group of people in the world who still call one another “comrade”. A redistributive tax regime is a national policy. The tax system is used to address “inequality”. Government has the power to use the law and the criminal justice system to enforce these policies. The people who consider themselves to be “the most unequal in the world”, and to be “victims of apartheid, victims of colonialism, victims of African migration, victims of capitalism, victims of Eurocentric education and victims of private property rights, have the power to appoint the government.

When any independent observer looks at this combination of circumstances he will come to the logical conclusion that it won’t be long before people of different levels of society, whether employed or not, will only have the purchasing power of the social grant. The purchasing power of those who earn more than the social grant will be taxed away, and those who earn less than the social grant will benefit. This process will continue until the assets of the nation have been redistributed, and nobody remains to fund the social grant.

The decimation of the consumer is actually stated as government policy if you read between the lines. All political-economic systems have a pre-determined outcome. The system that was forced upon us, by the economically ignorant with the slave mentality, is slowly but surely, taking us all down to the social grant level. You see, there is this law of unintended consequences that determines that people with a slave mentality tend to earn nothing more than a slave’s wage, if even that.

The “carbon tax” is a clever way of taxing the air we breathe. Had to happen sooner or later.

CRY FOR HELP FOR SOUTH AFRICANS!

What a coincidence that a couple of friends and I were discussing some of the points highlighted in this article in the past few days.

We don’t believe that all South Africans actually understand the dire position this government has put its citizens in.

What forum could one use to bring this information to the people to understand the issues and the problem this country faces? Also, to raise our opinions to raise the collective consciousness.

What action can be taken against those people or Political party that pull/pulled the strings to get us in this debt trap. How do we get them to be removed from their positions i.e. like the board of directors of this country to be removed and replaced with effective Business people and entrepreneurs? How, how, how can we do this?

How on earth can South Africans get out of this debt trap. We have no confidence that anything is being done at this point time as it seems that every page you turn to in this book of corruption and mismanagement gets worse and worse as each time new information comes to the fore.

There is no road map for any of this dire position to be changed and many articles predicting that it is still going to be worse.

The amount of tax – levies that we are paying every month is ridiculous. How can every SA person be a participating owner of the countries debt, bankrupt SOE’s and not have any power to stop this madness from bankrupting SA.

People have worked their life time to retire in SA only to find out that their entire effort possibly is in vain and their lives destroyed financially and many already living below the bread line.

Let have your advice!.

You are correct. In business, one should choose one’s parters wisely. In a democracy, one should choose one’s fellow citizens wisely.

Consumers ARE already deep into the very toughest times in living memory.
If i had money i would invest in companies that are supplying medication for anxiety and depression as the vast majority of South Africans have been screwed over by corruption and gross incompetence.

The Post Office is getting a banking licence. The plan is to lend to people that can’t loans. That will save us all.

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