“With approximately 50% of South Africa’s credit active consumers in arrears on one or more of their credit agreements, consumers with debt or those on the verge of over-indebtedness received no relief with the repo rate staying still,” says DebtBusters marketing manager Kelli Knutsen
17 February 2015
The South African President, Jacob Zuma, announced whilst delivering the SONA in Parliament last Thursday evening, the nine-point plan to ignite growth and create jobs in South Africa. The extensive plan touches on prominent issues from energy problems right through to private sector investment initiatives. For DebtBusters however, the plan for ‘Moderating Workplace Conflict’ is one which stands out most.
Why ‘moderating workplace conflict’ in particular?
Over-indebtedness in South Africa is a pressing issue and is one which has a great impact on work place conflict levels. Worrying statistics released by the National Credit Regulator (NCR) state that almost one in every two credit active consumers have impaired credit records (10.05 million consumers with impaired credit records out of 22.5 million credit active consumers). A number which is ever increasing as millions of consumers who bear the brunt of rising living costs are on the verge of being pushed over the ‘edge’ financially.
Furthermore, South African consumers have a habit of turning to micro-lenders when financial times get tough, as opposed to finding a financially viable solution for getting out of debt. Wendy Monkley, Head of Marketing at DebtBusters, states, “Before debt counselling, DebtBusters clients spend more than 105% of their net income servicing their debt.” However, consumers who finance their day to day living by taking loans and purchasing on account are facing extremely frightening times as credit providers tighten the reigns.
The impact of money matters on workplace conflict
Over-indebted employees, desperate for a way to make ends meet are often subject to reckless agreements by unscrupulous lenders, or tempted by theft or bribery. Furthermore when things become really tight and wage increase demands become viral, labour unrest results, affecting productivity and the bottom line of the company – workplace conflict at its peak.
The situation is currently exacerbated by the current prescribed debt collections frenzy, as it will soon be illegal for prescribed debts to be collected or sold according to the National Credit Amendments Act. A massive collections industry which has grown out of loan books comprising prescribed debts will target employees with prescribed debt and place pressure on those unaware of prescription.
How DebtBusters is contributing to the overall goal of igniting growth and prosperity in South Africa by resolving work place conflict
DebtBusters has seen an increase in the number of employers seeking help for their over-indebted employees. “DebtBusters has experienced over 50% year-on-year growth in new debt counselling applications and has more than 20,000 clients under debt counselling,” says Monkley. Once employees have entered into the debt counselling process, a structured debt rehabilitation process, they will immediately begin to make progress on paying off their debts.
DebtBusters is one of the few players in the industry using The Debt Counsellors Rule Set (DCRS), which is recognised by Credit Providers and responsible for improving operational processes and obtaining the best results for clients.
DCRS makes debt more affordable for clients to pay back as it allows DebtBusters to reduce the client’s debt repayments by up to a 3rd of what they were required to pay before under debt counselling, through the process of reducing interest rates and extending repayment terms.
“Over 80% of DebtBusters clients solve through the DCRS process compared to the industry average of 30%. After DebtBusters has renegotiated their debt with credit providers, consumers generally spend only 30-40% of their net income on debt repayments,” says Monkley.
Debt Counselling rehabilitates employees by teaching them how to work with their money and giving them the confidence they need to handle their own personal financial affairs – DebtBusters is the ONLY Debt Counsellor in South Africa which not only teaches clients how to work with their money but also helps them track their debt counselling process, through their online customer portal Smartcents (www.smartcents.co.za). Smartcents has revolutionised the way DebtBusters does debt counselling and has shifted their focus to financial rehabilitation. Consumer education and rehabilitation is a vital key to assuring cash strapped employees take the right steps to improve their financial situation and consequently moderate workplace conflict.
Author: Kelli Knutsen