[DEBATE] : (Fwd0 SA consumer debt getting much worse

[Patrick Bond]

www.iol.co.za

Debt crushing SA

June 21, 2008 Edition 1

BRONWYN GERRETSEN

Within 48 hours of getting paid, three million South Africans have a 
bank balance of below zero.

Four million South Africans have adverse credit records and about 15 000 
people are undergoing debt counselling.

This, says debt counsellor Richard Marsden, is the stark reality as 
people struggle to survive rising fuel costs, food prices and interest 
rate hikes. And, with two more interest rate increases expected this 
year, the situation does not look set to improve, especially with 
Eskom's 13.3% electricity increase that was granted this week. Property 
owners also need to find extra money for next month's rates increase.

Even middle-class South Africans are giving up their luxuries as they 
battle with the plummeting economy. Interviews with middle to high- 
income professionals made it clear that even the relatively well-heeled 
were struggling with the effects of the soaring cost of living. Banks 
are desperately trying to assist people to restructure their debt so 
they don't lose their homes while auctioneers are selling more vehicles 
as people try to avoid repossession.

Ian Wyles, owner of Ian Wyles Auctioneers, said there had been a 30% to 
40% increase in the number of vehicles up for auction.

However, the company had not seen a huge increase in the number of 
property auctions as financial institutions realised the situation 
people were in. Floods of property sales did not help either the 
property market or the financial institutions, he said.

Claudine Field, manager of First Trust Auctioneers, said it had seen 
about a 40% increase in the number of people wanting to auction their 
properties.

Downgrading

"Of this, nearly 40% to 50% are because they are downgrading to smaller 
properties which are more affordable," she said.

Marsden, CEO of Durban debt counselling company Your Debt Helpline, said 
from January to May this year, there had been an 80% increase in the 
number of people it was counselling.

Randall Adams, debt counsellor and CEO of Johannesburg-based Ubuntu Debt 
Rehabilitation, said it had also seen an approximate 80% increase in 
clients.

"These are diligent people who have a budget. They want to pay their 
creditors and put food on the table, but they are now finding themselves 
short of, for example, R3 000 a month. People are coming into our 
offices and wanting to commit suicide," he said.

Dick Mhango, head of Nedbank's strategy and business communications at 
Nedbank Personal Loans, said, since June 2007 the bank had had 8 574 
credit agreements in rehabilitation, amounting to more than R550 million.

Riana Scott, spokesman for Metrorail, said there was anecdotal evidence 
that there had been an increase in passenger numbers.

It was difficult to assess the size of the increase, but staff had 
noticed that there were more people on the trains.