If the unemployment
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.