Economic Stagnation: Trouble for South Africans earning under R25,000 a month
S.Africa: Black man tries to have sex with dead cat
Sterkfontein is a mental hospital. But it is full. They wanted to put this 18 Year old Black in there ...
[Common Whites will just have it harder. Jan]
Recent credit and financial health reports show that South Africans are struggling to maintain their standard of living, especially the middle-class workers.
2023 has been an immensely challenging year for the South African economy, with a GDP growth rate of less than 1%.
The stagnant economy results from lurking global tensions, stubborn issues with supply chains, intensified load-shedding, rising interest rates, and an increased cost of basics like food and fuel.
These issues have put unreasonable pressure on the average South African consumer, who is facing the brunt of increased interest rates and fuel prices and is expected to pay more for their food because of inflation.
Many households with limited disposable income struggle to stay afloat in this tumultuous period.
Research and analytics firm Eighty20, in its latest Credit Stress Report, defined middle-class workers as those households with an income of nearly R25,000 a month and a personal income of R15,000.
This is generally in line with BankservAfrica’s latest Take-Home Pay Index (BTPI), which shows the average take-home pay is around R15,578 per month as of September 2023, and this segment is getting hammered in South Africa.
Nedbank’s latest NedFinHealth Monitor shows that 76% of South Africans say their expenses increased in the past 12 months, while 62% say their spending equals or exceeds their income.
Additionally, 69% of South Africans cannot pay all their bills on time, with 33% who said they were homeowners having been late with their home loan repayment in the past 12 months.
Eighty20’s credit stress report highlighted similar concerns. According to the report, while total loan balances remained stable, the total and average instalments were up by 12% YoY.
The estimated instalment-to-income ratio for middle-class South Africans is now 73% – up 10% YoY and by far the highest of all segments. The number of secured credit has dropped to 700,000 with home loans (down 4% YoY) and 604,000 with Vehicle Asset Finance (down 9% YoY).
Those with loans struggle to pay them off – with 51% and 30% increases in the rate of new defaults for home loans and VAF, respectively.
South African Reward Association member Kirk Kruger added that South Africans are among the most indebted people in the world in 2023, with as much as 73% of disposable household income servicing debt repayments.
“Many people are facing extraordinary financial headwinds and struggling to service their debt on home loans, vehicle loans, credit cards and overdrafts,” he said.
He noted that the interest rate has increased by nearly 5% in the last two years and used the example of a South African salary earner – reflective of the country’s middle class – to illustrate this impact.
He said that a middle-class South African with a bond of R1.5 million, a car loan of R300,000, and a personal loan of R50,000 is now paying approximately R5,438 more per month on loan repayments compared to November 2021.
This means this person will need to earn an additional R8,915 per month at a gross level to have the extra R5,438 after tax to sustain their standard of living. That is more than a R106,000 per year.
The FNB/BER Consumer Confidence Index (CCI) showed that middle-income households saw their confidence levels improve from -22 in Q2 to -15 in Q3, whilst confidence levels for low-income households remained unchanged at -16.
FNB Chief Economist Mamello Matikinca-Ngwenya noted that while the financial pulse of the nation remains weak, there appears to be some light at the end of the tunnel for consumers. “The CPI inflation rate cooled from 7.1% in March 2023 to 4.7% in July, fuelling hopes that the South African Reserve Bank has reached the end of its interest rate hiking cycle,” he said.
Concerningly, however, this may not be the case. Stats SA published the latest CPI data on Wednesday (18 October), showing a significant jump in headline inflation to 5.4% in September from 4.6% in August.
While CPI remains within the SARB’s target bank of 3% to 6%, the higher inflation print is likely to push the average for the year to 6%, economists say, which may be too close for comfort for the MPC.
According to Koketso Mano, FNB Senior Economist, the rise in inflation was mainly driven by higher fuel prices and transport costs – thanks to a significant hike in local prices in September. Given another big hike in fuel prices in October, inflation will likely continue to rise.
USA: Black man stabs White woman and has sex with her as she dies...
I was a big fan of the show Medical Detectives. This story really got to me. And this Black man was not even executed.
