South African consumers cut off electricity and food to survive cost of living crisis
The latest Debt Rescue survey paints a grim picture of millions of South Africans living hand to mouth.
South African consumers are cutting back on electricity and food to make ends meet, according to the latest Debt Rescue survey.
The survey reveals that a significant number of South Africans simply go without basic necessities each month when money runs out, while the household debt-to-income ratio is expected to hover around an incredible 65%. in 2024 at the current cost of the economy. living crisis.
The latest Debt Rescue survey, conducted to better understand the socio-economic challenges facing consumers, paints a grim picture of millions of citizens living hand to mouth, unable to afford enough food or electricity to support their needs, while struggling to feed and clothe their children in severely constrained conditions. financial conditions.
General living expenses
A worrying 31% of respondents said they had to significantly reduce their general living expenses, particularly in categories such as electricity (23%) and food (23%), while 25% opted to more affordable medical help options and a significant percentage of 56% were not able to afford medical help at all.
Neil Roets, CEO of Debt Rescue, says it is unconscionable that the national energy regulator, Nersa, could decide to make sweeping structural changes to electricity tariff structures that will put this basic utility out of business. reach of millions of people nationwide, especially in the context of rampant threat. poverty and distress.
“As the country pauses to celebrate the arrival of South Africa’s new Government of National Unity (GNU), the lives of millions of South Africans remain a daily struggle to put enough food on the table and keep their families warm while they are in the grip of the crisis. the cold winter months.
ALSO READ: Debt Index Shows Consumers Struggling With Stagnant Debts and Incomes
Switching to gas and solar
A significant number of 34% of respondents opted for gas stoves and 10% installed solar geysers to manage costs. “While the survey results show that people have made significant lifestyle changes to adapt to their sub-economic living conditions, a whopping 46% simply go without each month when the money is running out. This situation is simply not sustainable and should cause deep concern among our leaders,” says Roets.
One of the changes Nersa is making is the implementation of a R230 service and capacity charge that will be levied on “normal” (non-indigent) prepaid electricity users, meaning that prepaid customers, known to be among the poorest users, will pay extra on their bills, regardless of how much electricity they actually consume in a month.
In addition, Nersa is preparing to align prepaid rates with conventional rates and plans to increase them further in the coming years.
Unemployment and related activities
While the Debt Rescue Survey results for those aged 25 to 65 show an unemployment rate of 27%, the latest figures from Statistics SA are far more frightening, with data for the first quarter 2024 showing the number of unemployed South Africans jumped by 330,000 to a record 8.2 million, taking the unemployment rate to 32.9%, the highest in decades.
However, it appears that South African consumers, with their positive attitude, are still trying to make ends meet, as 40% of respondents revealed they have started side hustles to supplement their income, indicating a proactive approach in managing of their financial stress.
ALSO READ: Debt Index Shows Consumers Struggling With Stagnant Debts and Incomes
The household debt ratio now stands at 65% in cost of living crisis
Unfortunately, Roets says, the flip side is that the household debt-to-income ratio is expected to hover around an astounding 65% in 2024. “Mainly due to the rapid and sustained rise in interest rates, the South- Africans are now spending a greater share of their income on debt servicing than at any time in the past five years.
According to the South African Reserve Bank’s (Sarb) quarterly bulletin for the first quarter of 2024, South Africa’s middle class is under severe pressure due to high interest rates, defaults on home loans having increased significantly over the past 18 months.
According to Jaco van Jaarsveldt, head of business strategy at Experian Africa, Experian’s default index has deteriorated significantly over the past 18 months and can be considered an accurate measure of consumer distress.
Roets says this matches what Debt Rescue is seeing regarding the number of people seeking debt advice. “There has been a sharp rise in recent months and with the latest cost of living increases placing an even greater burden on consumers, there is no light at the end of the tunnel.”
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