What do the current economic changes mean for South Africans?

Iemas Financial Services reflects on some of the main economic changes in the South African economy and what this will mean for the future.

During 2017, two of the three major rating agencies downgraded South Africa’s foreign and local currency government debt to junk status, with the third keeping the country’s local currency rating at the lowest level of investment grade pending a review after the 2018 budget is finalised. The downgrade followed further deterioration of the country’s economic outlook and public finances.

Since his appointment president and with all the changes within government, Cyril Ramaphosa has reacted to the downgrade by pledging to reignite growth in the country. Some of his plans include creating more jobs, prioritising growth and investment, to contain debt and spending and the improvement of managing state-owned institutions.

Although this might seem easier said than done, the wind of change has already begun. In addition to the strong performance of the rand, investor confidence is improving and the government has finally acknowledged the seriousness of the Eskom crisis. An enquiry was also launched into the Sassa saga.

What does this all mean for the average South African? Although the positive effects may only realise over a period of time, a number of changes can be expected to have a positive impact on the pocket of the man on the street.

These may include:
• A 5.2% electricity tariff increase from 1 April 2018, instead of Eskom’s initial application for 20%
• Expected improved economic growth rate of 1.1% in 2018 versus 0.8% in 2017
• Lower unemployment rates due to job creation

“Even though the future is looking brighter, it does not mean that things will change overnight” cautions Johan Nel, CEO of Iemas Financial Services. “The economy is predicted to grow at a slow pace and it will take a time for the economy to reach a point where consumers can expect significant benefits from a higher growth rate,” says Nel.

“South Africans need to remain focussed on achieving a healthy level of financial wellness. This includes managing debt responsibly, getting into the habit of budgeting so that they can manage their expenses and put some savings away for a rainy day” advises Nel.

“At Iemas, “your caring partner in financial services”, we believe that it is our responsibility to ensure that our members are financially educated and have the right tools and expertise on hand to assist them on their journey towards financial wellness. Therefore, Iemas offers free financial wellness training to all the employees employed at its portfolio of participating employer groups” concludes Nel.

About Iemas Financial Services (Co-operative) Limited

 Iemas Financial Services is a co-operative that offers a wide range of affordable and competitive financial products and services to over 160,000 members across South Africa.
At the heart of Iemas’ co-operative business model is the principle that the organisation is owned by, and operated for the benefit of those using its services (referred to as its members), and Iemas members annually share in the profits of the organisation based on the products/services they use during the year.

Iemas has business agreements with over 600 employers authorising the co-operative to offer its financial products and services to their employees.
With a history spanning over 80 years, Iemas has extensive experience in providing financial services and its product portfolio includes Vehicle financing | comprehensive insurance solutions | educational loans | secured and unsecured personal loans | a purchase card | housing solutions.

Insurance products are offered through Iemas’ subsidiary Iemas Insurance Brokers (Pty) Ltd. Iemas Financial Services (Co-operative) Limited is a registered credit provider (NCRCP 1332) and Iemas Insurance Brokers (Pty) Ltd is an authorised financial services provider (FSP 47563).

Read other related blog article here: Iemas Financial Services looks at the impact of low or negative economic growth and how to cope financially during these trying economic times

Share this: