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Wednesday, February 25, 2009

Banks are repossessing fewer houses & cars but shippers are worried

The world has been reeling under economic bad news, but slowly positive change is starting to happen in South Africa.

“Banks, which at one stage where repossessing 10 to 20 houses are now rethinking that strategy because they have realised that unoccupied houses don’t sell quickly because of the property slump and thieves soon strip them bare,” Andre Snyman, CEO of South Africa’s biggest umbrella debt counselling organisation Consumer Assist said.

“And so because of necessity, they are now letting home-owners remain in their dwellings and are renegotiating payment terms – which is what they should have done in the first instance,” he said. There has also been a reported slowing in vehicle repossessions because banks were unable to sell the cars they were repossessing.

A drop of 1,5% in interest rates since December 2008 is also relieving pressure on bond and vehicle repayments.

And in further good news, the total number of civil summonses issued for debt in 2008 decreased by 4,4% compared with 2007 according to StatsSA’s most recent report issued last week (19 February). However, there was an increase of 2,6% in the fourth quarter of 2008 compared with the fourth quarter of 2007.

StatsSA said the major contributors to the decrease in civil summonses issued for debt in 2008 compared with 2007 were civil summonses issued in respect of money lent (-5,5 percentage points), other services (-0,8 of a percentage point) and promissory notes and other acknowledgements of debt (-0,5 of a percentage point).

Snyman said this did not mean there was less debt – “what it means is that more people are going to debt counsellors to help them out of bad debt, while others are becoming far more careful of how they spend and are trying to pay off outstanding debt.”

In the release of it’s half- year results to end-December 2009, Woolworths CEO Simon Susman last week painted a picture of what was happening:"Our customers are thinking: 'I've got a big fat bond, two cars to pay off and kids at school or varsity. I have to trade down'."

In his recent budget speech Finance Minister Trevor Manuel gave some positives: “civil construction has performed well, supported by ongoing infrastructure investment. Our agricultural sector has grown strongly in response to higher prices and better rains. Sharply lower oil prices – a barrel of crude oil has fallen by 69 per cent from a peak of US$145 a barrel in July 2008 to about US$45 per barrel at present – will help to cut our import bill, but we are also experiencing a fall in export earnings.”

Nowadays, Snyman said, “every positive holds a negative. Shippers are expressing concerns that shipping to and from South Africa looks good until mid-year and then there is a steep fall off in forward bookings, it looks like companies are holding back and waiting to see what happens with the economy.

“Their fears are understandable but in the same way that governments in the USA and Britain have told bankers to stop holding so tight onto money and to allow new loans – because without them the economy constricts and nose-dives, business needs to adopt a more positive, growth oriented approach.”

Snyman said this included running skills training programmes to improve the performance capacity of staff “and with that we recommend they introduce financial wellness programmes to ensure that those who are over-indebted get the necessary help to change negative spending patterns.

Staff who are worried about debt are more likely to be absent due to stress-related illnesses and when they are at work they underperform because they are so worried about their financial situation.” After BMW introduced such a programme absenteeism dropped 34% in a one year period from 2007 to 2008 and the size of employee debt dropped 53%.

Consumer Assist has seen dramatic turnarounds in the performance of staff after or during financial wellness programmes. “We have these programmes on an ongoing basis in some of the top banks and manufacturing concerns in South Africa and find that once staff know they will be supported and helped with their debt problems they show a dramatic turn-around in how well they manage their debt and in improved workplace performance,” Snyman said.

Contributor: Andre Snyman CEO Consumer Assist andre@debtcontrol.co.za www.consumerassist.co.za 0861 21 22 23 debt counseling call centre

Monday, February 16, 2009

Would you like to contribute ?

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Friday, February 6, 2009

deSign of the times

We wish to welcome to the team Mark Rosenberg.

Mark is a design guru and is going to be handling our design and layout this year.
Mark is the editor and publisher of the ever popular Designtimes newspaper.
www.designtimes.co.za

With Mark at the design "Helm" we can look forward to some innovative developements with the magazine over the next few months.