I picked up the South African Times in the airport on Friday, the cover read:
"Six million can't pay their debt":
Experts told The Times that the economic “perfect storm” — high inflation, including food and fuel, and the resultant interest rate hikes — have driven six million South Africans to the brink.
Rajeen Devpruth, manager of statistics and research at the National Credit Regulator, said that by the end of last year, 6.3 million South Africans had “impaired credit records”, which means their payments were more than three months in arrears or judgment had been obtained against them for outstanding payments.
That’s half of the 13 306 000 South Africans currently employed, according to the latest Labour Force Survey in September 2007.
I've been predicting this situation for over 18 months now. And still today, while the South African government is looking for thousands extra debt counselors, some peopleare still no realising the extent of the crisis and pretending the dip will be over in a few months from here. Think again !
Last week, Johann Rupert, chairperson of SA Remgro told to his shareholders that the South African recession could last another 5 to 10 years. Even Mbeki is extremely sceptical about South African Trade.
The signals are clear: South African retailers Woolworths and Truworths forecast a tough year ahead, only Massmart can keep its nose above the water with its low-cost stores.
Some people will state that the June-July 2010 Fifa World Cup will save the day. I have a different view: the Fifa World Cup is a huge risk for South Africa. When you visit Johannesburg, Port Elizabeth and Cape Town, you will understand that FIFA executives have expressed concern over the planning, organisation and pace of South African's preparations. And even if the World Cup will take place in South Africa, it will be a very disappointing event with the Chinese Olympics in the back of our heads. Also, June-July is winter in South Africa, not an ideal period to receive tourists. And on top of that, June 2010 willbe exactly one year after the elections.
To sum it up, next to the economical crisis, the country is also facing the following challenges:
(1) Jacob Zuma's corruption case involving French arms manufacturer, Thint.
(2) ANC's attempted removal of the Scorpions (South Africa's organised crime prevention unit) for investigations into corruption within the presidency.
(3) Steadily increasing devide between the very rich and the very poor.
(4) Crime in South Africa and the decay of the criminal justice system.
(5) Current power crisis, as an indication of the breakdown of national utilities.
(6) BEE, affermative action policies, "reverse racism" and ethnic equality creating push emigration on the country's white and indian minorities. Ensuring that more and more black citizens get previously white owned jobs and enter a "white" salary scale, enabling them to afford up market properties and expensive vehicles while requiring less skills and education. A direct result of the "brain drain" currently experienced in South Africa.
(7) Zimbabwe crisis
(8) Land reform (my personal biggest worry !)
