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Ian Wason: SONA must address debt addiction

Feb 11 2016 14:52
Carin Smith

Cape Town - In his State of the Nation Address (SONA) President Jacob Zuma needs to make it clear that 2016 has to be the year that focuses on unemployment, education and over-indebtedness as the foundation to increasing South Africa's economic prospects, Ian Wason, CEO of debt managing company DebtBusters, said on Thursday.

SONA needs to address the crux of poor education levels and more specifically poor financial literacy levels and its direct impact on unemployment and economic growth, in his view.

"With 25.5% of South Africans unemployed as of July 2015, unemployment will be a key focus point for President Zuma and his cabinet to address and will need to be duly improved," said Wason.

“South Africans without work put government under more pressure every year for service delivery, as they are unable to afford day to day living costs. More so, they put pressure on their families and often their children to work and support them instead of pursuing their own education and career goals.”

READ: SONA more important than Budget 2016 - economist

He said there is always an air of expectation and hope that what the President will say will lead to opportunity and change.

"But more than expectation is scepticism, as corrective measures to improve on existing policies and their failures will most definitely be scrutinised," said Wason.

"More so now, with the theme of the SONA 2016 being 'following up on our commitments to the people', many South Africans are beginning to lose faith."

He pointed out that 2015 saw a drop in the matric pass rate, from 70.7% compared to 75.8% in 2014.

“South African school leavers lack both the means and the foundations for basic financial management. This paves the way to poor money management early on in their adult lives and develops bad financial habits later on, such as accruing debt and missing account payments," he said.

This inevitably leads to a "debt-end" where these youth in their early 20s are subjected to more borrowing to repay existing debt and to meet day-to-day obligations. Wason even goes as far as saying that South African consumers are addicted to debt.

"Not good debt, like a mortgage or a loan for the expansion of their business, or even an educational loan, but to shorter term expensive debt. This addiction - driven by desperation for cash - has led to the increase in pay day loans, with over two million South Africans likely to be over-indebted and relying on ‘pay day’ loans every month,” he said.
 
"Over-indebtedness has a knock-on effect and contributes to stagnating economic growth. Consumers who are over-indebted will halt any future plans to further educate themselves. In so doing they lack the basic requirements of many employers and limit their chances of finding employment."

ALSO READ: Markets have all eyes on Zuma's critical SONA

 

sona 2016  |  jacob zuma  |  sa economy
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