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Manuel: Too many caught in debt trap

Nov 03 2011 10:57 Sapa

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Johannesburg -  South Africa is a nation of highly indebted families, Minister in the Presidency Trevor Manuel said on Thursday.

"The move from living hand to mouth... is a death trap," he told delegates at the national consumer forum at the Gallagher convention centre in Midrand. "What we will earn next year is already spent."

Manuel said there are 18.84 million credit active people in South Africa, double the number of people in formal employment.

About 8.8 million of the 18.84 million are described as having impaired credit.

"They are in trouble," said Manuel.

"It's a scary number but a number that arises from circumstances." This is because of spending.

"We've spent money we haven't earned yet and we've spent it on goods that we don't need. We (are) trying to keep up with the Kunenes," he said.

This is why South Africa finds itself in a debt trap. Manuel said the protection and rights of consumers need to be exercised.

"We don't provide every single citizen with protection."

However, Manuel asked whether trying to help people not get into debt is taking away their freedom as consumers.

"Maybe we (are) looking for the wrong solution," he said.

South Africa has a low savings rate and so people borrow money at emergency rates.

"There is no cushion," said Manuel. 

trevor manuel  |  saving  |  money  |  debt
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