Fin24

South Africans borrow to buy food

2012-10-24 14:05

Johannesburg - South African consumers are borrowing to meet their basic needs such as food and transport, a credit and over-indebtedness summit heard on Wednesday.

"It is no longer that consumers are borrowing to buy a new car, but to get food on the table. That is why there is an increase in unsecured lending, because it is used for consumption to survive," said University of SA (Unisa) personal finance research unit head, Bernadene de Clercq.

"We've got increases in the petrol price, electricity prices. Now that their expenditure commitments are too high, they don't have the income to support that growth," she said.

De Clercq told the summit in Midrand that most South African consumers borrowed from credit providers just for consumption purposes and "to keep up with the Joneses".

She said that when consumers acquired debt in the past two years, they had not thought that electricity and fuel prices would increase, hence they were now unable to pay their debt.

A FinScope Consumer Survey conducted by FinMark Trust last year showed that 26% of consumers borrowed from credit providers to buy food.

About 16% borrowed to pay for transport, 7% acquired credit to pay school fees, and 5% to pay electricity bills. Only 4% of consumers borrowed to renovate their houses.

Consumers were also struggling to pay school fees, medical expenses and municipal services, De Clercq said.

She said over-indebtedness did not apply to the entire population, but mostly low and middle-income groups who had too many accounts with a variety of credit providers.

Recent figures released by the National Credit Regulator showed that there were 60 million accounts belonging to only 19 million consumers in the country.

She said consumers put saving at the bottom of their priorities when they received their incomes. This led to over-indebtedness and consumers could not enjoy the current low interest rates environment.

"We need to teach people to manage their finances," De Clercq said.

      

Comments
  • magomarele - 2012-10-24 14:17

    Not suprising considering their very own government is stealing from them and giving to the President and his family. The president is using tax-payers' money to compete with wealthy business men. That's what happens when an idiot is voted into power.

      andres.dewet - 2012-10-24 14:28

      Exactly. People may not equate the corrupt actions of the current government with their own plight to buy food, but here's how it impacts. R30billion wasted in 2011/12 according to Auditor General; Pres spending R250mil on Nkandla; private jets hired for government officials etc. This could all instead go to the following: Paying off SANRAL's debt for the Gauteng Freeways; Assisting ESKOM with their capital expansion programme; improved public health and education. All these things are costing consumers money, that could be put back into South Africans' pockets. The government has to shoulder a huge portion of the blame for the spiraling cost-of-living.

      hannes.mamparra - 2012-10-24 15:43

      What gets me down is that in 2014 they all vote for this crowd.

      moriri.mosweu - 2012-10-24 17:09

      In the context of third world comparisons, South Africans come first when it comes to driving expensive cars which some inhabitants of first world countries cannot afford to buy and own, they rather feed their expensive mobile phones than to feed their mouths. So you tell me about poor prioritization. BO MPONENG...

      orania.betaenduro - 2012-10-24 18:50

      Ja and soon there will be no food produced in South-Africa thanks to the wonderfull ANC that cannot or will not look after our farmers.

      mongwadi - 2012-10-24 18:53

      Can someone please forward this article to the \president\! Ooh I forgot, he can't read

      art5SA - 2012-10-24 20:39

      Heard the STAFF of the Zulu king purchased more than R600 000-00 worth of groceries, FOR THEMSELVES, on his account.... Wonder if they will get laid off?

      warren.slater.353 - 2012-10-25 07:07

      "We need to teach people to manage their finances," De Clercq said. Actually we need government and parastatals to learn how to budget and not loot the funds, then we wouldn't have services like Eskom having to increase tariffs by 16% pa till 2018. Especially since they've effectively already doubled their tariffs in the past few years, had bailouts and loans that the taxpayer is funding. All this while Zuma who earns about 2.5 mill proudly exclaims how he'll forgo an increase this year while the taxpayer builds him a mini city for 200 odd mill....uuuuugh!

  • bruce.williams.1044186 - 2012-10-24 14:17

    Surely it is obvious that when the price of petrol and electricity increase, everything must follow. Transport and storage will be affected and so will everything that goes with it. The government are screwing us over for their own greater good.

      bruce.williams.1044186 - 2012-10-24 14:34

      It's because they have to buy on credit. If you had no money to feed your family you would do anything and credit is their best option. I believe that it is better that theft.

      norman.depluhm - 2012-10-24 14:44

      Bruce, if you really had no money I'm not sure the banks would give you any more than that. I do feel for the plight of those who cannot feed their family, but have seen it all too often that wage/salary earners dropping their wads on entertainment/casino/clothes/booze etc, then take those payslips to loansharks so they can take some bread home. The loansharks don't care if you can't pay them back, it's a rat race for garnishing rights... The responsibility for those who fall into this category is firmly upon their own shoulders. Those who truly have no money can't really borrow, even from a loanshark, and those are the guys that deserve charity. Take the lonmin R12,500 brigade, they earned plenty enough before the raises, but complained how they have too much debt to pay. Where did that debt come from? Certainly not living within your means, which in their case was R8kish in their pockets after housing, retirement, tax, UIF etc is paid for by the co...

      art5SA - 2012-10-24 20:40

      Iwas told that some people buy a days groceries, on their Credit Cards.... and charge it to their BUDGET ACCOUNT!!!!!!!! How IDIOTIC or NEEDY are those people?

      francois.lejeune.58 - 2012-12-21 15:02

      I find it strange that in Holland and the rest of Europe, whether the price of petrol goes up or down the price of food stays the same. And if it does go up because of transport costs it still comes down once the transport prices come back down again...unlike in the RSA...go figure how many ways you are being screwed!

  • dewalds3 - 2012-10-24 14:23

    "We need to teach people to manage their finances," De Clercq said. Start with government. When you are done there, come preach to us.

  • steven.botha.14 - 2012-10-24 14:24

    19 Million consumers... imagine all of those 19 million where actually working and not just receiving grants. How can you have accounts (not talking about normal municipal accounts and phone ect) if you don't earn a salary for doing something constructive.

      beverly.young3 - 2012-10-24 14:30

      I worry so about my children. No employment, as they are not.........err.......anyway. The point is, 'we' collectively, as elderly parents are having to support our children. I dont mind, if I can help I do, but what is the future? Look, it applies across the board hey?

  • rjdkolb - 2012-10-24 14:24

    How is it possible to manage one's finance when food, electricity , petrol etc prices increase at much higher rate than salaries do ? If you earn the same salary you did two years ago like many of us do how is saving possible ? Or even if your salary kept up with 'inflation'. Short term savings tax incentives need to be put in place or else this will just get worse. e.g. If a person saves R500 a month, R250 is taken off tax. This person needs to keep the money saved for at least 6 months in a real interest bearing account. 4%+

      wendy.webb.980 - 2012-10-24 19:33

      How do you arrive at that figure of R250 for tax?

      art5SA - 2012-10-24 20:44

      Good question... who charges 50% tax on savings? A LOAN SHARK?

      zs5zk - 2012-12-23 10:44

      If you are able to save, save that Money in your safe at home and you can not be Taxed if you have money in the bank. Today it is a detrimental situation for the Normal wage earner to use Banks as Tax Man is there to take Half, no matter what you earn or how you suffer to be able to save. Back to the OLD Days and distrust towards all Banks. Pay Cash and you pay vat, that is enough for this DISHONEST ANC Government. There are many ways to use big amounts of your savings to side step the Taxman as the Taxman does not take in consideration that you lived under the Breadline for many years to save to buy a Car for Instance, and suddenly want`s to know where you get all that Money from. They will not except your explanation although you are in your legal rights. They will call it Money Laundering and screw you. No empathy for the taxpayer that pay`s the Gov. Officials Wages and High Living.

  • tresor.mpika.9 - 2012-10-24 14:24

    The problem with South Africans, especially blacks, is that they eat too much and work less, we are among the most obese nation in the world. maybe if people like khulubuse Zuma could start cutting down on diet maybe we won't even have to borrow money for food but give away food to Zim

      buzz.bar.16 - 2012-10-24 16:35

      If Khulubuse eats less, KFC will go out of business. As it is, I hear they are planning a new menu item - the "28 piece khulubuse bucket"

      art5SA - 2012-10-24 20:45

      And that bucket will be a BREAKFAST SNACK SPECIAL!!!! ROFLMAO!

  • helpu.debtcounsellors.7 - 2012-10-24 14:27

    "We need to teach people to manage their finances". In our industry we also experience this to be increasingly true. Many consumers seem to be unaware of the implications of obtaining repeated unsecured lendings.

  • frank.vankaapstad - 2012-10-24 14:29

    This is tragic and the situation is only going to deteriorate. The default rate on these loans is going to be astronomical. It is not in the majority of South Africans culture to save and this has to change. The days of having 10 children to look after you when you are old are long gone. Education is key and this needs to be taught from primary school level. The irresponsible lenders dishing out credit to anyone and everyone also needs to be kept in check and Government needs to set firm boundaries, set up a better credit monitoring system and punish unscrupulous lenders severely.

  • grootrot.vanzyl - 2012-10-24 14:30

    What is keeping up with the Joneses in this regard? Rump steak? The people of Nkandla must never go in debt for food - for R 200 mil they can buy all the food they want.

      kenpeg.dawson - 2012-10-24 14:36

      Not many people realise that the Joneses are trying to keep up with them.

      derekneilmaclachlan - 2012-11-07 17:01

      I dont bother keeping up with the Joneses anymore.....Iam the Joneses...lol

  • eva.walle.75 - 2012-10-24 14:32

    How many of these people are borrowing to put food on the table because they recently bought a fancy new car because they just had to have it, or a bigger house because your mate recently upgraded his house? It's true that many people are struggling despite their best efforts, but a lot of them don't know how to prioritise.

      gregory.jurgens - 2012-10-24 14:50

      That's all fair and well . But your income will be obliterated by ever increasing food, electricity and essential purchases. You may be stable now , give it a few years at this rate, even you will be in the same sinking boat. Unless u related to Zuma .

      eva.walle.75 - 2012-10-24 15:57

      Fortunately not related to Zuma. Unfortunately I will soon be one of the many feeling the crunch. My point is just a lot of people still don't know how to manage their spending, making their lives even worse.

  • Rob Allen - 2012-10-24 14:35

    yip suffering ahead thanks to all the sheeple

  • SarelJBotha - 2012-10-24 14:36

    Until people realize that they cannot pay for anything, as the lawful money does not belong to them, they will suffer. Why and how should a human being pay for anything if government owns the only lawful money that can actually make payment. Government as owner of the lawful money should thus pay for everything the human beings of the country wants or needs. bank notes are called "notes", as they are simply promises to pay when lawful money becomes available, but as it is available to government, they should pay.

  • carolyn.dewrance - 2012-10-24 14:41

    I am a pensioner on a Government grant, R1200.00 a month out of this I have to pay rent for the Garage I live in electricity water and food, as well as for my time on the internet. I dont have a credit card, as the banks would never give me one. but there are times when I go to be hungry, like many other pensioners, that may not be as lucky as I am or others that have huge pensions coming their way and their own homes. Yes the Government is to blame for a lot, and so is Zuma and his cronies. Would be nice to hear that they also one day get a social pension of the amount we get, and lets see who goes hungry then

  • markus.botha - 2012-10-24 14:42

    I'm a middleclass person. And I've stopped buying milk. It's just too expensive. The other day a store asked me R28.95 for Milk. That was about a month ago. I won't buy milk at that price. A reasonable price for a 2L Milk should be between R13.00 and R16.00. Africa is going down the tubes due to good people doing nothing.

      derekneilmaclachlan - 2012-11-07 17:03

      Milk is bad for you anyway....so you are better off....google it and see.

  • leonard.rom.7 - 2012-10-24 14:45

    it is disgusting what south Africans are paying for food , eskom bills ,petrol price and rates taxes disgusting what shocker!!!!!!!!!!!!!

  • michal.mierzwa - 2012-10-24 14:51

    SA consumers are drowning in debt under cANCer goverment. This article ties up very well with what The Economist wrote about South Africa!

  • markus.botha - 2012-10-24 14:53

    The reason why South-Africans need to borrow so much is because we are being suppressed by an evil government. Their aim is personal financial gain. Thus all sort of useless expenses are created aimed at the government recieving money for doing nothing. Examples of these expenses are: High Taxes, Property Taxes, Electricity price hikes, E-tolling, Drivers licence renewals, Car registration renewals, Taking a profit form the shares of yours which is profitable, VAT, etc. This is why you can't have nice things, and Zuma lives in a 203 million Rand house. This question now is "What are we going to do about this?"

  • John.Yossarian22 - 2012-10-24 14:53

    While realizing the importance of maths and science, basic economics/budgeting should also be prioritized in our schools. Even in so-called affluent society, it seems 90% of people have no idea about budgeting, or living within your means.

      rasthami.m1 - 2012-10-24 15:36

      Okay tell me john how do you live “within your means” when you earn 10000 after all deductions are inflicted you are left with only 4000 with 3 mouths to feed prior they go to school, bills awaiting your attendance ,transport fare which is constantly rising ,inflated pricing on food, undermining salary hikes which are below the percent of inflation ,with the interest rate on your bond doing you no favours...

      Onke Mdingi - 2012-10-24 17:45

      True John.

      wendy.webb.980 - 2012-10-24 19:17

      Rasthami, how do you get to only R4000 from a salary of R10000? And, bond rates are doing you plenty of favours. They are the lowest they've been in 40 years. I had to cope with a bond rate which went up to 24% in 1998 while I was "temping" after a retrenchment. I survived as an extremely modest earner because I'd lived within my means and put most of my retrenchment package into my bond, and had such a good record that I wasn't in trouble if there were months I couldn't pay, because the months that I did earn I paid in as much as I could. Current interest rates would have been a breeze!

      rasthami.m1 - 2012-10-24 23:24

      @wendy tax,medical just to mention a few ,interest rate have just recently dropped to the their lowest wendy what we are talking its a long term period fixation over here ,and another thing you were able to live within your means because everything which sustains life was affordable in 1998 its 2012 now wendy... point of correction the highest peak the interest rate it has ever reached in bond is 20.7 percent

      wendy.webb.980 - 2012-10-25 07:46

      rasthami - I suggest that you verify your facts re highest interest rates http://liberta.co.za/blog/prime-interest-rate-in-south-africa-current-and-historical/ They went up to 25.5% in July 1998, although mostly the financial institutions put up their bond rates at slightly slower rates peaking at 24 or 24.5%. You might also find the rates in the mid-1980s instructive.

      rasthami.m1 - 2012-10-25 08:06

      @wendy 23.99 in july point taken

      ryan.stephen.07 - 2012-10-26 01:09

      Absolutely, I can't believe we spend time learning about Trigonometry when no one is taught basic life skills like budgeting? Or just how to take care of yourself out there in the world of Financial sharks.. This seriously needs to be introduced to school syllibi

  • lionel.schultz.1 - 2012-10-24 14:55

    Just imagine, your purchases on credit for food has already been processed by the sewerage works and you still having to pay these off over 6, 12 or 24 months on budget or paying the mininum owing every month on your credit card. It has become the norm for the person at the till at a grocery store to ask whether you want the payment straight or on budget, when paying by credit card. What a sorry state of affairs. This country is going down the tubes at an alarming rate and what a coincidence that this accelaration in the countey's demise has increased since Jacob Zuma became President. Things are only going to get worse if he is elected for another term and it is virtually cast in stone that he will.

  • roche.brandy - 2012-10-24 15:01

    Don't fell in the same trap than the Americans...and be a credit card slave.

  • hjkavdkah - 2012-10-24 15:01

    Responding to mr Sunter's 25% risk table MR Clem Sunter, Great article and absolute truth. I have immigrated to the UK about 9 years ago witch at that point was relatively easy. Looking back from the 9 Years to present, it became a lot more complicated and some times impossible to immigrate so the risk in that sense have definitely gone up. In summery - 1 to 9 years Education Sector your 25% to my 65% Health Sector your 25% to my 70% Security 25% to my 95% The Risk to immigrate has gone from your 25% to my 65& The Risk on Financial/ Economic status your 25% to my 70% Freedom in my country of birth your 25% to my 70% So Mr Clem - Honestly where is this country going to be in the next 9 years I am not running away - I am looking at the risk of me being alive in SA for the next 9 years - 25% -

  • heathway.master - 2012-10-24 15:20

    With Electricity, rates and taxes, water, now doubling and trebling, what disposable income is left in the consumers’ pockets. The value of my house was trebled by the Municipality, even though its resale value has dropped by about 2/3 in these hard recessionary times. Gorham now issue the statement that because the fiscus has lost so much tax because of all the recent strikes which have seriously dented productivity, he is now looking at increasing business and individual tax to make up the shortfall. Yes SA Citizens, the Government intends to viciously punish all the tax payers while they diligently came to work, while tens of thousands of scum, where creating anarchy at the mines, transport industries, car manufacturing plants , retail stores, supermarkets etc etc etc. Eventually the Golden Goose will simply fold up its wings, and fall down dead. Oh yes folks, I almost forgot, SANRAL is to be given the go ahead to secure R 800 – R 1000 from the desperately struggling motorist, to cover the costs of it exceeding its infrastructure development budget by 1500 %.

  • sbarnard2 - 2012-10-24 15:36

    So Mr Journo...teach ppl to use there money properly.. So what comes first?? Food to live? Pay u'r car to get to work? Pay school fees so u'r kids can get an education? Pay u'r rent? Or pay u'r water and lights?.. Must I down grade my car, down grade my house, down grade my accomodation, eat less or send my children to a govt school?? What food type is lower than rice 7 days a week with cheap meat?. What does u'r article ask us to do? Which one must I give up? Must we live like hobo's because our govt can't run a country properly? Because they are greedy and thru this our standards of life must now decrease?.. U tell us what to give up? Must I go live in a squatter camp so as not to make debt to pay school fees! Must my family live on 2 min noodles or must we resort to candles?? Or should our govt walk away and just say they failed the ppl of SA??

      Onke Mdingi - 2012-10-24 17:42

      So well calculated to drive middle income groups out of the cities so as to make wayfor the so called investors especially from Asia to their places.

      jasonpetro.martin - 2012-10-25 02:05

      Bernadene de Clercq-you are very quick to want to preach to the masses about their financial planning-how much do you earn?have you got children?for those of us raising families,and working pretty damned hard for the salaries we earn-it aint easy when salaries don't keep up with inflation,and sooner or later you find yourself in the miss1,pay1 scenario to make ends meet-we didn't expect food prices to double,or petrol to go üp THAT much...but here we are,still trying to make an honest living...but that obviously counts for NOTHING in your books...

  • renard.souza - 2012-10-24 15:47

    Viva ANC viva!!!!

  • renard.souza - 2012-10-24 15:49

    While most politicians wipe their backsides with R200 notes!!

  • johan.wilsnach - 2012-10-24 15:58

    This is a wake up call for all my fellow citizens. Use your vote wisely in the next election it will make a huge difference. We also need the stop the flow of money out of our country to mogabe.

  • elizabeth.bothma.58 - 2012-10-24 15:58

    Shame on these financial institutions, especially banks, giving these un-secured loans. They know that people will probably default and wont be able to afford the repayments. Its a vicious circle! They dont care, as long as they make bucks!!

  • ramaremisa.judia - 2012-10-24 18:22

    This wil eventually lead us to porvety n lots n lots of debts

  • andre.kuhn.583 - 2012-10-24 18:37

    ...but now if you need capital as a self employed to grow your business the banks won't lend because of the high risks involved and the difficulty to access someones repayment capability. This is another self-destructive situation in RSA while the market entry barriers keep on raising. Result: Monster Capitalism

  • kim.mann.127 - 2012-10-24 20:02

    I wonder how big Whitey Basson's bonus is going to be this year - R700 million????? Checkers put up some prices by more than 30% in one week and I don't have a brand new car. My car is 16 years old but I'm so busy saving towards Whitey Basson's next bonus, I can't afford another car!!!!

  • olivia.karnak - 2012-10-25 09:43

    As long as they on the top are enriching themselves, they couldn't give a damn about their country, they will keep running it into the ground, because they just do not learn, they never will

  • smith.celeste - 2012-10-25 10:29

    Preach to government all you want. They are not responsible for your actions. If you see someone bashing their head against the wall it's your choice to do the same or not. I have learned the hard way that some people are just too lazy and spoiled to work harder and spend less. Debt is easy. You sign a form and someone gives you money. Why would you choose bread instead of pizza if money just floats around like that?

  • ryan.stephen.07 - 2012-10-26 01:03

    "We need to teach people how to manage their money".. We first need to teach people how to vote

  • pieter.vanrijn.9 - 2012-11-02 15:38

    It is very sad that no-one stimulates productio or cultivation in SA any more. We sell our souls to the chinese ans that is the worst you can do!! WAKE UP!!!!! Let us start being productive again and refuse to buy chinese junk!!!! Buy South African and be proud to show we are South Africans!!!!!!!!!!!!!!

  • leonard.rom.7 - 2012-11-21 12:58

    thank you Eskom so we will all have borrow money to pay no service delivery

  • ruben.maistry - 2012-11-27 10:35

    The government has all their priorities screwed. They should have an educational programe to teach the masses on basic home economics.

  • enlightened.bowman - 2012-12-23 09:11

    Haaaa haaa haaaa, wait till they implement e tolling,They'll have to WALK. this is turning into a typical African circus. They can not do it, that simple, mud hut, subsistence farming and berry gathering, that's ita nd then torture a bull to death the first week in August every year, that's the african concept of culture. Sorry, if I included anything untruthful, I truly apologise

  • enlightened.bowman - 2012-12-23 09:14

    Well, I don't want to be funny but if there are 60 million accounts belonging to only 19 million people, that averages 3.15 accounts per person. That tells me that the banks are just as dumb as the person that opens three a ccount. Therfore, if the bank doesn't do it's homework, the bank should foot the bill.

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