Fraud, dishonesty on the up as economy faulters

First Standard & Poor, now Fitch have rated the South African economy “junk” with huge ramifications for South African citizens, with the poorest of the poor being the worst affected, economists agree.
Manie van Schalkwyk, executive director, of the South African Fraud Prevention unit said there would be much less money going around, a severe lack of international investment and potential job losses.

“This is significant for each and every citizen,” he says.

Chris Gilmour, an investment analyst at Absa Wealth & Investment Management, said a possible impact of the downgrade was that interest rates could increase adding to monthly expenses such as home loan and vehicle finance repayments.

“We may also find that the rand loses further ground against international currencies, which would increase the price we pay to import foreign goods into South Africa.”

Christie Viljoen‚ senior economist at KPMG South Africa‚ said a weaker rand meant a petrol price increase. “Food prices will follow. The raw ingredient of petrol is oil‚ which is bought in dollars‚ so when the rand weakens‚ oil prices rise and so does the petrol price.”

Weighing in political analyst JP Landman said, “Even though local currency is not yet junk, the interest payable on it has increased from less than 8.5% before Pravin Gordhan was recalled from London to 9% on Friday 7th April.
“Small change it is not,” said Landman. “On a full year’s borrowings by government it amounts to about R2.6 million per day … for 365 days. That is about 8 000 RDP houses (21 houses per day) or support for about 24 000 students from the ‘missing middle’ to go to university.”

Viljoen said, a weaker rand also meant higher transport costs. “Higher transport costs affect the price of everything moved by trucks – from food to imported goods and anything you buy at a shop,” Viljoen said.
Gilmore indicated the cost of credit would increase “Being downgraded to junk status means we could conceivably – over time – be paying two to three percent more to service debt,” Gilmour said.

The Consumer Goods Council of South Africa said the downgrades could also result in the distinct prospect of rising inflation and prices, which will affect consumers who are already struggling to balance household budgets.
“My concern is the level of desperation that may result,” Van Schalkwyk said. “People who become even more desperate for a job may lie on their applications. Others may see credit as a quick solution to purchasing power in a buy-now-pay later facility, and misrepresent themselves on the application.”

They could either lie about their income, inflating the truth to stretch an already-pressured budget, he said, or be dishonest about their employment status, claiming to a have job where none exists.
For those with existing credit, interest rates will increase while salaries will not increase at the same rate, Gilmour said. This will severely compromise the average consumer’s ability to repay debt. “It’s going to mean the consumer will be under relentless pressure, particularly those who are already over-indebted.”

If you’re heavily in debt, speak to your creditors sooner rather than later to see what plans can be put in place to assist you, he said.

Research manager at Euromonitor, Thomas Verryn said consumers in the lower and middle income strata, would feel the impact, with a “decrease in disposable income as inflation and interest rates are likely to increase. Possible job losses are also on the cards as the cost of doing business increases and companies shed jobs to cut costs.”
Van Schalkwyk said: “Even at the most desperate level, I urge consumers not to misrepresent themselves. This is criminal and you will be listed on the fraud register with a record that is going to be extremely difficult to erase. It will also compromise your access to credit in the future. Stick to the truth. Failing to do so can have significant consequences.”

Tags: , , ,

Follow us on social media: 


View our magazine archives: 


My Office News Ⓒ 2017 - Designed by A Collective