Determinants of household over-indebtedness in South Africa

The proportion of household debt to disposable income is high in South Africa, signifying over-indebtedness which reduces the welfare of households. High debt leads to low savings, negatively impacting economic growth. This paper presents the determinants of household debt distress in South Africa and comes up with recommendations on how to manage household debt. The objectives are achieved through systematic literature review. Findings suggest that households are over-indebted because of several reasons. They lack necessary finance management skills and proper protection from predatory practices by lenders. Household indebtedness is also caused by the rising cost of living which leads to low household disposable income and savings, high interest rates, misfortunes and adverse trigger events and income inequalities. Education, age and being a recipient of a social grant all have positive and negative impacts on household indebtedness. Findings also suggest that female-headed households, renting households, large households, urban based households, households with a mortgage and households where the head is not working, is sick or disabled are more likely to be over-indebted. A framework is presented with recommendations on how household debt can be effectively managed in South Africa. Upskilling in finance management can help improve the way households manage their finances. Moneylending institutions should avoid predatory lending and disclose vital information affecting household borrowing decisions. A downward review of interest rates on debt is necessary with a balance between profitability and sustainability of loan repayments. Consumption insurance on loans is recommended to cushion debt distressed households.

Developing a framework for managing household debt The case of South Africa

The proportion of household debt to disposable income is very high in South Africa, signifying over-indebtedness which reduces the welfare of households and ultimately reduces economic growth. This paper presents the determinants of the household debt in South Africa and comes up with a framework of recommendations on how to manage household debt. The objectives are achieved through systematic literature review, document analysis and secondary data analysis. Our findings suggest that households are over-indebted because they lack the necessary finance management skills, lack proper protection from the predatory practices by lenders and fail to obtain disclosure of vital information pertaining credit which affects their decision to borrow. Household indebtedness is also caused by the rising cost of living and low household disposable income, low household savings, high interest rates, misfortunes or adverse trigger events and living in urban areas. Education, age and being a recipient of a social grant all have positive and negative impacts on household indebtedness. Findings also suggest that female-headed households, renting households, large households, households with a mortgage and households where head is not working, is sick or disabled are more likely to be over-indebted. We develop a framework with recommendations for managing household debt in South Africa. We recommend upskilling to help households to effectively manage their finances and take responsibility. Moneylending institutions are encouraged to disclose vital information pertaining credit which affects decision to borrow by households and to avoid predatory lending. We also recommend a review of interest rates on debt and availability of consumption insurance on all loans to cover for cases when the household faces unforeseen circumstances affecting repayment.

Pandemic, lockdown and the stalled urbanization of welfare regimes in Southern Africa

While Covid-19 caused few fatalities across most of Africa – with the notable exception of South Africa – the indirect economic effects were substantial, especially in urban areas. International organizations encouraged governments to expand their provision, especially for the urban poor. South Africa extended temporarily its already considerable system of social protection and introduced new implementation systems. Elsewhere, governments that had hitherto appeared ambivalent about social protection resisted major reforms, even on a temporary basis. In Zambia, the government committed considerable resources to small farmers but ignored almost entirely cash transfers to the poor. Botswana provided food parcels but did not expand its social grant programmes. The shock of Covid-19 in Southern Africa did not prove to be a ‘critical juncture’: Powerful pro-reform coalitions did not form to shift governments onto new policy paths. National governments were generally reluctant either to introduce programmes that were targeted on the urban poor specifically or to allow countrywide emergency programmes to become permanent. The crisis thus did not lead to any clear ‘urbanisation’ of welfare regimes in the region, despite the disproportionate effect of the crisis on the urban poor.

THE IMPLEMENTATION OF COMPANY’S CSR PROGRAM IN EMPOWERING THE ECONOMY OF RURAL COMMUNITIES DURING THE COVID-19 PANDEMIC

This research aims to explain the implementation of the company's CSR program in empowering the economy of rural communities during the Covid-19 pandemic based on Riau Provincial Regulation Number 6 of 2012. The method of the research is socio-legal research. The results of the research explain that the Covid-19 Pandemic has the impact toward the sustainibility local economy of Riau Province, including the people of Palas Village. In addition for expecting social grant from the government, one great opportunity for inhabitants of Palas Village for the enhancement of local economy condition must based on the application on the CSR programs of companies operating system in Pelalawan Regency. Companies that carry out their business activities in the field of natural resources and / or fields related to natural resources must require to carry out CSR. Based on Article 32 of Riau Provincial Regulation Number 6 of 2012, it is stated that companies that do not implement CSR will be worned of administrative sanctions in the form of written warnings and restrictions on business activities, freezing of business activities, and revocation of business activities.

Factors Correlated with Home Gardening in Gauteng Province, South Africa

Background: In addition to increasing access to fresh and affordable produce, home gardening enhances food security. This notwithstanding, there is no evidence of studies that have investigated factors correlated with home gardening in Gauteng Province (GP), South Africa. The present study investigated home gardening across the GP. Methods: Retrospective data of residents of GP (n = 30002) collected by the Gauteng City Region Observatory were used. A binary logistic regression was employed to determine factors correlated with home gardening. Results: Overall participation in home gardening was low (12.37%). If a respondent was a resident of the poorest areas, resided in a house received under the Rural Development Programme, had a borehole/well as the main source of water, belonged to a social club, received a social grant, was >65 years, and rated his/her health as poor, then they were more likely to participate in home gardening. Factors that were negatively correlated with home gardening included if the respondent rented from private individuals and if the respondent’s health status prevented him/her from doing daily work. Conclusion: The low participation levels in home gardening observed suggest the failure of the current policies geared at fostering home gardening in the province. Policy makers and relevant authorities should target identified groups to improve participation in home gardening.

A Behavioural Explanation of Smallholder Entrepreneurship with Empirical Evidence from KwaZulu-Natal, South Africa

This study aimed to investigate the impact of social grant dependence on on-farm entrepreneurial spirit of smallholders. A sample of 175 farmers was obtained from two communities in KwaZulu-Natal. The study employed Principal Components Analysis and Tobit regression. The entrepreneurial spirit indices were constructed from revealed preference-based questions. The study found a positive relationship between the social grant and on-farm entrepreneurial spirit. The positive impact on rural household farming activities implies that the prevailing low entrepreneurial levels among farmers are not the result of social grant dependence but lack of opportunity and other resource constraints. However, to remain effective, policy should ensure that the grant money benefits (directly/indirectly) the intended beneficiary and their households. The other factors found to be associated with on-farm entrepreneurship include age of the farmer, gender, psychological capital, access to training, access to education, access to land, inadequate farming assets, water insecurity, extension, off-farm income and group membership. The study also recommends the need for strategies that improve psychological capital and thus enhance positive on-farm entrepreneurial behaviour among smallholder farmers. Addressing institutional and farming constraints related to access to resources and services (land, credit, extension, and water) and collective action will positively contribute to on-farm entrepreneurship.

(Re)formulating the Social Question in Post-apartheid South Africa: Zola Skweyiya, Dignity, Development and the Welfare State

Democratisation in 1994 meant that, for the first time, the South African state recognised that all South Africans had claims on and responsibilities to society. To address the racialised legacy of apartheid, the new government sought to expand opportunities for black South Africans—and hence solve the social question—through racially inclusive economic growth and development. The government initially viewed the system of social grants that it inherited as insufficiently developmental and worried about the poor becoming “dependent” on public support. When unemployment and poverty persisted, compounded by HIV/AIDS, reformers—including especially the Minister of Social Development from 1999 to 2009, Zola Skweyiya—reframed the social question in terms of dignity and responsibility and expanded the social grant system.