Zuma ignores ratings agencies wake-up calls

Debt managers say there was nothing in President Jacob Zuma’s State of the Nation Address (Sona) that offered any hope the government understood how dire the financial situation is for South Africans.

CEO of Debt Rescue, one of the largest debt management companies in South Africa, Neil Roets, said: “A clear indication of just how financially distressed South Africans really are is the dramatic increase in the number of people seeking protection from creditors by going under debt review.

“So far this year, we have had almost 120% more applicants who sought debt relief through the debt counselling process – one of the really good things that this government did for consumers, many of whom would never have managed to get out from under their mountain of debt were it not for the debt counselling process.”

Roets said the fact that ratings agencies, including Fitch and Standard and Poor’s, have all warned that South Africa’s bonds could be reduced to junk status if the economy was not better managed, should serve as a wake-up call for the president and his Cabinet.

“It seems that newly appointed Finance Minister, Pravin Gordhan is doing a passable job, but it remains to be seen whether his policies will be able to ward off recession and the downgrading of the country’s credit status.”

South Africans are among the biggest borrowers in the world, according to a recent World Bank survey, and 10.26 million people have accounts three months or more in arrears, according to the National Credit Regulator (NCR).

According the latest statistics released by the NCR, about 50% of all credit-active consumers are over-indebted.

A clear indication of just how financially distressed South Africans really are is the dramatic increase in the number of people seeking protection from creditors by going under debt review Neil Roets CEO of Debt Rescue