Consumers urged to borrow responsibly amid ‘Januworry’ blues

As the New Year dawns upon us, many South African households are grappling with financial challenges brought on by fluctuating food prices and the expenses of the festive season.

The latest data from December 2023’s Household Affordability Index reveals a complex picture of affordability issues affecting families across the nation.

According to the report, the average cost of a household food basket in South Africa stood at R5 238.20 in December.

“The average cost of the Household Food Basket increased by R385.3 (7.9%), from R4 853.18 in December 2022 to R5 238.20 in December 2023,” reads the report.

In the report, the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) noted that food prices experienced fluctuations with some items such as soup, carrots, bananas, apples, and oranges witnessing price increases.

On the other hand, certain vegetables became more affordable, alongside commodities such as rice and cooking oil.

Despite the apparent drop in prices, many South Africans continue to feel the burden of high costs of living, especially during the festive season.

Consumers pay high festive price

December comes with an array of holidays including Christmas Day and New Year’s Day, often characterised by a relatively costly spirit of togetherness.

Families unite over heartwarming feasts, and with schools closed, children’s cravings for snacks and treats put added pressure on parents.

However, as the calendar flips to January, a challenging month lies ahead, particularly for those who did not budget wisely during the holiday season.

Many people receive their salaries earlier in December, leaving a significant gap until the next payday in January.

This extended waiting period can lead to empty pockets, unpaid bills, and financial stress, prompting some individuals to turn to excessive credit as their only option to cover necessities including rent, mortgage, food, school fees, and stationery.

Minimum wage beneath poverty line

According to the PMBEJD, the record national minimum wage, at R25.42 per hour, may seem reasonable at first glance, but when considering that it must support an average of 3.9 people in a worker’s family, it falls below the poverty line, making it challenging for families to make ends meet.

“The national minimum wage is R25.42 an hour and R203.36 for an 8-hour day. In December 2023, with a short 18- working days, the maximum national minimum wage for a general worker is R3 660.48.

“Workers work to support their families. The wage workers earn is not just to sustain themselves alone, it is used to support the entire family.

“For black South African workers, one wage typically must support 3.9 people. Dispersed in a worker’s family of four persons, the national minimum wage is reduced to R915.12 per person. This is below the upper-bound poverty line of R1 558 per person per month,” reads the report.

Reckless spending drives credit demand

Meanwhile Poppy Kweyama, education and communications manager at the National Credit Regulator (NCR), has warned that poor budgeting and reckless spending from the previous year have played a significant role in driving workers to rely on credit as a means of supporting themselves and their families.

Kweyama cited NCR statistics for the quarter ending September 2023, showing a quarter-on-quarter increase in impaired accounts.

To maintain a good credit record, consumers are advised to borrow responsibly and only take out loans when necessary.

Kweyama emphasises the importance of planning for loan repayments and making sure they are affordable.

She also encouraged consumers to fully understand the terms and conditions of credit agreements before signing them, further warning against obtaining loans from unregistered credit providers.

Highlighting the costliness of credit, the NCR has encouraged people to familiarise themselves with credit-associated fees that are regulated by the National Credit Act.

These fees include initiation fees, which are capped at a maximum charge of R165 per credit agreement plus 10% of the amount exceeding R1 000 with a maximum limit of R1 050.

Interest rates on outstanding balances are also regulated, and credit providers can charge monthly service fees capped at R60 per month.

Credit life insurance may be required by credit providers to cover debt in cases of retrenchment, disability, or death, but it cannot exceed the outstanding obligation.

Additional costs, such as delivery fees, may apply depending on specific consumer purchases.

“Don’t sign if you don’t understand the Ts and Cs. Always ask for clarity and never pay an upfront fee,” said Kweyama.

“Never leave your ID or bank card with a credit provider in exchange for a loan. Not only is this practice illegal, but remember, to register and exercise your vote in the 2024 elections, you need to have your ID.”

Additional information sourced from

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