So Many Questions
The Reserve Bank has hiked interest rates for a second time this year. Chris Barron asked the vice-chairwoman of the SA National Consumer Union, Ina Wilken . . .
Has consumersthe impact been this carefullywill have enoughon considered?I don’t think so. If you think that the majoritythan in the of rest South of Africansthe world earn. . . less
Really?Well . . . the wealthy part of the world. They already are suffering.going to suffer, and they are Isn’t drowning around in 75% debt? of the country If say, you and hear how what many the peopledebt counsellorsare goingcan do to aboutsee them their to debt, see then what they absolutely far-fetched. this doesn’t sound
And now this? Which has got an immediate effect because the interest rate will immediately be hiked. There is an immediate increase of 0.25%. Many people might say that’s nothing, but if you take a 20-year bond, you’ve been paying 9.5%, now you’re going to pay 9.75%. That’s an increase of R81.75 for every R500 000. Isn’t it the reality that even before this increase people have not been keeping up with their house repayments? They can’t. And what also should be considered is that Eskom is screaming and shouting for a 17% increase next year. And all the other tariffs are going to go up. Is there any logic in hiking interest rates to control inflation when the main driver of inflation is the rise in administered prices, like electricity? That is my main problem. People are trapped; they have to pay these increases. When you do your budget these are fixed costs because you can’t do anything about them. Everybody says you must use less electricity, you must use less water. Well, we are there already. We’re doing our utmost best. Your information is saying that many people are already using the bare minimum? Exactly. And with increases of 17%, you must remember that if Eskom asks for 17% and they get it, do you think the municipalities are only going to hike their tariffs by 17%?
No. By 20% or 25%. And that is just one scenario we are looking at. What about water? And, of course, food prices? School fees, transport costs, health costs, security costs — the list is endless, isn’t it? It is absolutely endless. No, this is very, very bad news for consumers. And they’re not exactly luxury items, are they? None of them are. And now we must tell consumers: “Stop spending.” For crying out loud, I’ve been saying this for how many years, and it is just getting worse. What must we stop spending on? We’ve got to eat, we’ve got to live. We’ve got a life to live. Am I right in saying that people are already buying food on credit? Absolutely. And why are they using credit cards? Because they can . . . pay a minimum amount. But what they don’t realise is that they’re paying so much more in the long term because of the interest rates and additional costs. But they don’t have any option. That’s our problem. The exchange rate has been cited as a reason for the hike. Is that convincing, to you, given the impact? Well, we all know what the rand is doing at the moment. But the long and short of it is surely you must first look at your own people? We’re moving into the festive period and the bottom line is that for the majority of South Africans there is no money to spend. What’s your position on debt counsellors? It is very important for people to realise that they should rather draw up their own budget and work out what to pay back, and go and see their creditors. Because the moment they go to a debt counsellor they must remember there is an additional cost to that — R4 500 or R5 000 that they take off. And they can’t afford that. The debt counsellor just becomes another creditor? Exactly. So go straight to the creditor and make arrangements. But don’t just stay away and think he’s going to forget about it, because then there’s trouble. Go and see your creditors and make your own arrangements and stick to those arrangements. Rather suffer for a year or two and get out of this spiral of debt. How do people, the majority of people in this country, get out of a spiral of debt when interest rates are going up and pushing everything else up? That is the problem, but you’ve got to cut everywhere, otherwise it’s going to be to your own detriment.
Cut where? I don’t know any more. You’ve got to stop buying clothes, you’ve got to buy less food. Now we are talking of basics. That’s what we’re talking about. Once you’ve reached a certain level, how can you buy less food? You can’t. And then you’ve got children at school and you’ve got to pay for your child’s upbringing. You’ve got to buy school clothes, you’ve got to buy school books, because the government doesn’t give it any more.