South Africa’s cost of living crisis goes through the roof

South Africa is fast becoming one of the most expensive countries to live in, partly because of the government’s ineptitude as well as people living beyond their means.

Students of economics in their grounding lessons are taught of concepts such as market failure, which refer to government’s responsibility to protect and to protect communities from the vagaries of the market.

Due to loadshedding, which costs the country roughly R1-billion a day, South Africans have had to endure expensive means of generating electricity that include solar, inverters and such expensive gadgets.

As if that were not enough, many residents have had to get together to fix potholes, cut grass and generally assume responsibilities of municipalities and transport authorities – notwithstanding taxes being levied towards such services through rates and taxes.

Let it not be forgotten that 30 years into democracy, South Africa remains one of the most unequal country in the world followed by Brazil, with the gap between the rich and the poor remaining stubbornly high.

According to Finmark Trust’s annual Finscope Consumer South Africa Report for 2023, “nearly half of South Africans are battling to afford food and electricity”.

The report says 40% of adults are resorting to borrowing money to buy food while at the same time an estimated 20 million adults have gone without electricity for the last 12 months due to unaffordability.

Further scrutiny of the report shows that living expenses, which include items such as groceries, energy, transportation and communication, account for nearly 85% of monthly income.

Of this, groceries make up 30.4% of expenses, energy 11.5%, transportation 9.1%, and communication 8.8% while routine household maintenance, rental and rates gobble up 8.5%.

Paul Roelofse, a certified financial planner, said the offshoot of the survey is that people are not saving for the future. He says this will have a big impact down the road as workers approach retirement age.

‘’For instance, you have about two-thirds of the middle class earning between R9000 and R20000 a month and not having retirement products in their portfolios. They live from dayto-day hoping that nothing happens in their lives. Never underestimate how inflation erodes the power of your money.

As things stand, the basic basket of goods presently stands at R3000 per month.

The state cannot keep on dishing out grants because this, in the long term, will not be sustainable. The answer lies in helping people get jobs – jobs and jobs. The state should embark on mega infrastructure projects such as road construction – dams and schools – thus enabling South Africans to earn salaries and pay taxes.

This is what former US president Barack Obama did in 2008 when he embarked on massive public infrastructural projects to boost the economy. This resulted in thousands of jobs being created and money circulating in the economy.

A study by the National Treasury in 2021 revealed that 51% of South Africans are financially illiterate. Coupled with enabling people to get jobs, the state should use experts to teach them about the financial universe.

The lessons include how to run your money – using money to build a foundation – budgeting and what income and expenses are all about.

Roelofse argued the majority of South Africans learned financial management through trial-and-error methods. He said it was disheartening to see the breadwinner of the household dying, and the survivor not having a bank account.

This is the message emphasised by the late erudite scholar and academic, Es’kia Mphahlele, that among the first disciplines to be included in the country’s school syllabus is a programme on consumerism. According to the late icon, such a discipline would teach students about money – their rights and responsibilities as citizens and the impact of our financial decisions on the economy.

This worsening situation should have long necessitated intervention by the government to prevent this from becoming a curse to current and future generations. The quality of our freedom will also be measured by the improved standard of living. As things stand, the picture points to a country and a populace sinking into economic quicksand.