More consumers struggling with debt

Published Mar 29, 2017


Johannesburg – An increasing number of financially-stressed

South Africans are turning to debt review, says Neil Roets, CEO of Debt Rescue.

His comments come despite inflation slowing to 6.3

percent in February – from the 6.8 percent seen a few months ago, and the South

African Reserve Bank effectively holding the prime lending rate stable at 10.5 percent

over the past few months.

Roets says the company has seen a 20 percent growth rate

over the past 12 months in clients applying for debt review.

His remarks follow those of Capitec Bank, which on

Tuesday noted that applications for debt review grew 19 percent in the year to

February, while 15 percent more clients submitted retrenchment letters to the


Capitec notes, in its statement to shareholders, that the

“financial stress and economic difficulties experienced by clients during the

year were evident.”

The bank, now SA’s third largest, also said there was an increase

in clients who received their salaries late or experienced reduced or no

inflows. It also experienced clients who wanted to reschedule their loans.

Roets says, based on the substantial increase in those

seeking debt review, it is clearly evident that times are tough – and he

expected even rougher seas ahead for consumers following the debacle with

finance minister Pravin Gordhan.

“This time round it is not just the poorest of the poor

but the middle class and the well-heeled who are feeling the pain.

“It is also not limited to a specific age group although

the 18-35 old age group is showing a slightly higher rate of distress.”

Read also:  Gordhan's sacking appears imminent

Roets adds there has been a higher rate of repossessions

of both fixed property and other goods such as motor vehicles this past year

than in previous years.

More than 250 families were losing their homes on a

weekly basis to sales in execution because they fell into arears with their

bond repayments.

Johan Muller, MD of Problem Bond South Africa, said the

problem of homes being sold in execution was growing. Specialising in assisting

distressed homeowners who are on the verge of losing their properties, he said

the situation was dire and getting worse.

“If the unstable political situation in South Africa

persists – or is aggravated by the present spat between the finance minister

and the president – we expect many more home owners to default on bond

repayments with a strong possibility of ultimately having their properties sold

out from under them.”

Roets said it was clear that there was no sign of relief

for the immediate future.

“Things are going to get a lot tougher for consumers and

now is the time to tighten our belts and knuckle down for the financial storm

that is going to hit us.

There were a number of major problems looming anyone of

which could further derail the economy.

“If things go sour any further between the finance

minister and President Jacob Zuma this could lead to downgrades by the three

ratings agencies. It could also lead to a massive outflow of foreign investment


The continuous hammering on the subject of expropriation

of land without compensation was making this country look more and more like a

socialist state that would see investors fleeing in droves leading to massive

job losses and further distress for consumers.”

It was hugely important to budget for unexpected expenses

and to avoid using high interest-bearing credit and store cards.

Roets said total consumer debt was now standing at almost

R1.6 trillion (according to the latest figures released by the South African Reserve


“A recent World Bank index has also shown that South

Africa is one of the most indebted countries in the world.”



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