On Monday 23 March 2020, President Cyril Ramaphosa announced a set of measures that the government and private sector are undertaking to cushion the blow for businesses and consumers during the economic crisis caused by the Covid-19 outbreak. This set of interventions is only the first phase of South Africa’s economic response, with the government warning that further measures are under consideration and will be deployed as needed.
Stay up-to-date with the latest announcements below, and please don’t hesitate to contact us for more information about how these interventions will affect your debt journey.
Update, 21 April 2020
As we head into the final stretch of the extended lockdown, South Africans wait on tenterhooks to hear from the Presidency about what steps the Government will be taking to kickstart our flailing economy – and what these measures will mean for consumers facing salary cuts, job losses and financial uncertainty.
Update, 14 April 2020
The Reserve Bank cut the Repo rate to 4.5%, the second cut since March 19. While those with a home loan, credit card, overdraft or vehicle loan will benefit from the reduction in interest, the move will not provide relief to the 73% of consumers with fixed rate loans – despite the fact that these consumers already pay 37% of their after-tax income on monthly fixed rate debt repayments.
Update, 1 April
Choose Credit Life Insurance over a Payment Holiday. Many banks and lenders announced temporary “payment holidays” that essentially pause expected debt repayments for a number of months. Each bank or lender has their own set of qualifying criteria in terms of who can take advantage of these payment holidays. However, if you have a Micro Loan or Personal Loan from a Bank, you will be covered against loss of income by a Credit Life Insurance (automatically added). If you are worried that you may experience payment problems as a result of Covid-19, and you are up to date with your loan payments, it is better to claim against your Credit Life Insurance policy for loss of income rather than apply for a payment holiday.
Update, 30 March
The National Credit Regulator has issued regulations to assist and protect consumers during the Covid-19 period. If you apply for Debt Review, the protection period has been extended. This is critical to shield you from nasty letters and collection phone calls from Credit Providers, and allows more time for your Debt Counsellor to obtain a Magistrate’s approval for the repayment plan.
Update, 25 March
Funds are being set up to help affected workers
Many companies can’t afford to continue paying their employees during this time and are considering other options. To avoid retrenchments, several funds have been set up to benefit more than 75,000 small and medium-sized businesses.
Through the Temporary Employee Relief Scheme, the government is hoping to pay wages of employees in struggling companies. In addition, a total of R30 billion has been allocated to a special National Disaster Benefit Fund, which will pay Unemployment Insurance Fund benefits to qualifying workers for up to three months.
Banks are working together to offer debt relief
New rules have been gazetted which allow banks to work together to support clients who face losses during the crisis, including debt repayment holidays and debt relief, restrictions on asset repossessions, and extend more credit to individuals and businesses.
A private solidarity fund is in place to assist businesses
With a R2 billion kickstart from the Oppenheimer and Rupert families, the government has established a fund to assist small businesses that are threatened by the coronavirus crisis. Companies will get financing at an interest rate at prime minus five percentage points.
People who earn less than R6,500 per month will get a wage subsidy of R500
Details are yet to be confirmed, but South African workers who earn less than R6,500 per month will get a R500 wage subsidy over the next four months (from April to July).
SARS is providing tax relief for businesses with a turnover of less than R50 million.
Eligible tax-compliant businesses will be allowed to delay 20% of their pay-as-you-earn liabilities over the next four months, and a portion of their provisional corporate income tax payments over the next six months.
Covid-19 is a reality, and we understand your uncertainty and worry. By being prepared for the challenges ahead, you can sometimes lessen the impact they may have on your day-to-day life. If you have any concerns about your debt, please don’t hesitate to get in touch and we’ll do what we can to help.