SA's debt battle to continue

Cape Town - More than 100 000 people were summoned for debt in November.

This was 7.6% more than in November 2008, according to Statistics South Africa.

Investec economist Kgotso Radira says there has been a slowdown in the rising number of summonses, compared with their steep growth earlier in 2009.

Debt judgments against individuals and enterprises are however still increasing sharply, in November swelling 19% to 64 254 - and these were mostly against individuals.

The value of the debts for which judgments were passed increased by 24% to R649.2m.

The quarter to end-November saw single-digit growth compared with double-digit in previous quarters.

Radira says this could be the result of consumers aggressively curtailing their spending to repay debt.

But levels of indebtedness remain very high. They represent 79% of disposable income, which means that 79c of every rand of disposable income goes to pay off debt, says André Snyman, chief executive of Consumer Assist, a debt counsellor.

Radira does not believe that bad debts have peaked, despite the slowdown. Small bonuses and minimal salary increases probably resulted in households incurring even more debt over the festive season.

He expects a further increase in the summonsing of individuals in the next six months.

Households' money affairs continue to look bad and the prospects of salary increases and bonuses in 2010 are not good, while more job losses could take place.

In November 13 683 organisations were summonsed for debt - 12% more than in 2008.

He said businesses' profits came under serious pressure in the past year, leading to higher defaults, especially among smaller companies with very limited budgets.

Banks' restriction of credit facilities to businesses also had an impact.

- Sake24.com

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