If the un­em­ploy­ment

Finweek English Edition - - INSIGHT: LOCAL -

is­sue is not ad­dressed it is un­clear how the grow­ing debt bur­den among house­holds can be ad­dressed.

Govern­ment has been pay­ing large amounts of wel­fare to ad­dress the deepseated poverty in SA – nearly four in 10 South Africans rely on wel­fare – but Govern­ment’s abil­ity to in­crease this as­sis­tance is limited.

Mak­ing mat­ters even more com­pli­cated for poor South Africans is SA’s cur­rent macro-eco­nomic cli­mate.

Ac­cord­ing to the Mo­men­tum/ Unisa Fi­nan­cial Well­ness In­dex, “Eco­nomic growth has slowed from 3.5% in 2011, to 2.5% in 2012; aver­age con­sumer price in­fla­tion has in­creased from 5% to 5.7%.

“Th­ese fac­tors com­bine to neg­a­tively af­fect many house­holds’ in­come earn­ing ca­pa­bil­ity, their in­come’s abil­ity to fi­nance ex­penses, their ca­pac­ity to ac­cu­mu­late wealth and im­prove their dwellings, as well as their prospects to bet­ter ed­u­ca­tion/ skills,” the re­port states.

Maloka says the high level of un­se­cured house­hold debt is a con­cern to the Govern­ment. “The gap be­tween mean per capita i ncome and mean per capita ex­pen­di­ture how­ever does not nec­es­sar­ily ref lect ab­so­lute fig­ures. Gen­er­ally, in­come f ig­ures are not al­ways re­li­able due to un­der re­port­ing by house­holds on ac­tual in­come. House­holds tend not to in­clude all forms of eco­nomic ac­tivit y where in­come is de­rived.”

Maloka says that this does not de­flect from the chal­lenge of high level of in­debt­ed­ness of many SA house­holds.

“Govern­ment has recog­nised this as a ma­jor con­cern. Un­sus­tain­able house­hold debt can cre­ate sig­nif­i­cant in­sta­bil­ity.” What to do about it? Well, that re­mains to be seen.

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