The Debt Capital of South Africa

The Debt Capital of South Africa

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Employees with high levels of personal debt can impact on your company’s bottom line as they can spend company time and resources trying to resolve their problems.

Gauteng has the highest consumer debt per capita of all nine provinces and accounts for almost half of total consumer debt held in South Africa. The average individual in Gauteng owes R4 260.

This is according to the South Africa Survey, published by the South African Institute of Race Relations.

Forms of debt include:

  • Mortgage agreements
  • Secured credit
  • Unsecured credit
  • Credit facilities
  • Short-term credit transactions.

The Western Cape accounts for 14% of the total debt owed in South Africa and has the second highest debt per capita at R2 700 per person.

The province with the lowest per capita debt is Limpopo, which accounts for 4% of the total debt owed in South Africa, with R750 per capita.

 

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The data, obtained from the National Credit Regulator, revealed that total consumer debt in South Africa increased from R85bn in 2011 to R104bn in 2012, or by R19bn. Average per capita debt in South Africa is R2 050, representing the average amount each person owes.

Earn more, borrow more

Georgina Alexander, a researcher at the Institute, said, “Higher income earners are able to borrow money more easily as they have assets or income against which they can borrow. On the other hand, low income earners are less likely to have assets or a large enough income against which they can borrow money.

“Gauteng has the highest annual average household income in the country of all provinces, so part of the reason for the high per capita debt in Gauteng may be the higher incomes in the province.”

Unsecured lending to blame

More than 9 million South Africans have blemished credit records, largely attributed to an unsecured-loan boom. The plight of the country’s miners came under the spotlight last year when it emerged that the majority of them were in debt to money-lenders, who were charging them huge amounts of interest on their loans.

Coping with debt

Legal & Tax has introduced an employee benefits product offering for SMEs called Solace that includes advice and assistance with dealing with debt.

Solace will enable SMEs to extend high-quality tax and legal advice and cover to their employees at an affordable cost, no matter what they earn.

This offering protects SMEs and their employees from a range of risks and hassles, ensuring that companies enjoy the benefit of a productive and motivated workforce. The product offers a range of services, from legal cover and advice and tax consulting through to trauma assistance and debt counselling.

Deal with debt stress

Says Benjy Porter, CEO of Legal & Tax: “Happy employees are productive, effective and motivated. With this new product, our goal is to help businesses manage threats to the productivity of their employees.

“Debt, legal and tax issues keep many people awake at night, especially low and medium earners who can’t afford legal and financial services.

“These are all problems that compromise workplace performance, cause unproductive hours in the office and increased absenteeism. We take care of these issues for your employees,” concludes Porter.

Alison Job
Alison Job holds a BA English, Communications and has extensive experience in writing that spans news broadcasting, public relations and corporate and consumer publishing. Find her at Google+.