Johannesburg – The decision by Eskom to increase the electricity tariff from 8% to 13% is going to have devastating consequences for the country’s deeply indebted consumers, said Neil Roets, CEO of debt management firm Debt Rescue.
He said the decision by National Energy Regulator of SA (Nersa) to grant Eskom an additional 5% increase to recover R7.8bn in unbudgeted costs early next year would have "dire consequences" on consumers.
"Total consumer debt is now topping R1.44trn (according to Statistics SA) and the debt to income ratio is hovering around the 75% mark, which means that three quarters of a family’s income is already pledged to a variety of creditors," said Roets.
"With the exchange rate now dropping on an almost daily basis, inflation on the increase and now a double digit increase in the electricity tariff, consumers are in for a very bumpy ride."
Middle class South Africans, who have only recently escaped the debt trap are going to be forced back into poverty and for many, their only option would be to apply for debt counselling, according to Roets.
Quoting the National Credit Regulator, Roets said the number of impaired accounts increased from 19.27 million to 21.28 million in the second quarter – that is, accounts not paid for three months or more.
Roets said rising food and fuel costs and slow economic growth were making it difficult for many South Africans to pay back their loans on time. One in every four South Africans is unemployed and the number of borrowers with impaired credit records – three or more payments in arrears – have risen to nearly 50%.