In the midst of a volatile global economy, South Africans are battling a relentless cost of living crisis, marked by a weak rand, soaring interest rates at a 14-year high, escalating debt, and rising costs in electricity and food.
Like people across the country, Durban ratepayers are at the epicentre of this crisis, owing a staggering R19 billion to the City.
The financial hardships are exacerbated by diminishing household incomes and increasing reliance on various credit facilities, with several South African banks witnessing a surge in credit impairments due to high interest rates and consumer inflation.
The middle and working class, in particular, are submerged in debt, resorting to borrowing from banks, using credit cards, or obtaining personal loans from family, friends, or their stokvel to stay afloat.
According to the Direct Selling Association of South Africa, to combat the escalating cost of living, 29% of consumers have taken on additional employment in the past six months.
A further 19% have sold valuable items, including jewellery and art, to raise additional funds, while 20% have sold other household items.
Rajesh Parshotam, chairperson of the Direct Selling Association of South Africa (DSASA), warns, “In desperation to survive financially, many South Africans may become vulnerable to Ponzi, pyramid, or get-rich-quick schemes.”
TrendER/infoQuest report reveals that consumers, especially those in the 35-49 year age category, are increasingly accessing credit facilities, including personal loans, credit cards, and home loan excess funds, indicating severe financial constraints.
The recent interest rate hikes have left nearly three out of five homeowners struggling to pay off their monthly instalments, with 58% struggling with home loan instalments and 46% struggling to pay for groceries.
In response to the escalating crisis, the eThekwini Municipality recently reinstated its Debt Relief Programme from October 1, aimed at assisting cash-strapped customers and non-profit organisations.
The programme, which was previously implemented from December 2022 to February 2023, offers conditions to alleviate the financial burden on the municipality's residents.
Under this new programme, eligible residents can enrol in a payment arrangement with a down payment requirement of 5% for residential customers and 10% for non-residential customers, excluding government departments and institutions.
“A notable feature of this programme is the forgiveness of accumulated interest once a payment arrangement has been established,” the eThekwini Municipality said.
“However, it is important to note that all written-off interest will be reinstated in the event of a customer defaulting on the payment plan. Recognising that financial recovery may take time, the programme allows for the settlement of the outstanding debt over a maximum period of 36 months,” it said.
However, the Democratic Alliance (DA) slammed ANC-led eThekwini Municipality for not extending the scope of the Debt Relief Programme.
They say this will leave thousands of residents struggling with exorbitant electricity and water bills generated by the municipality.
The cost of living crisis is beginning to bite the eThekwini Municipality, with its spiralling debt being one of the major concerns. As of August 31, 2023, the amount owed to the Municipality was R26.97 billion, with R19.04 billion owed by households, i.e. ordinary residents.
This household debt, constituting 74.89% of the total debt, is a clear indication of the dire straits people are in, and the weight of the tariff increases over the years.
According to the DA, its proposal for an amnesty of a zero deposit payment plan for people in arrears was narrowly defeated by the ANC.
“The ramifications of this is that consumers who are in arrears, still have to fork out substantial deposits before a credit instalment arrangement can be concluded.
Large deposits means less money for food, household necessities and in many instances protracted disconnections,” the DA said in a statement.
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