The SARB announced its decision to keep the repo rate steady at 8.25%, Rynhardt de Lange of Mi Law Legal unpacks the implications for debt-strained South Africans, noting the dual impact of stable borrowing costs and ongoing economic pressures.

19 July 2024 - The South African Reserve Bank's (SARB) Monetary Policy Committee (MPC) has announced its decision to keep the repo rate unchanged at 8.25%. This decision comes amidst growing concerns over the state of the South African economy, with inflation, macroeconomic volatility, and social inequality ranking as the top risks affecting the country, according to PwC South Africa's Voice of the Consumer Survey 2024.

Rynhardt de Lange, Director and Head of Legal at Milaw Legal, shared insights on the current economic climate and its implications for debt-strained South Africans.

"The decision by the SARB to maintain the repo rate at 8.25% reflects the ongoing challenges within the South African economy. Inflation remains the top concern for 75% of consumers, followed by macroeconomic volatility at 55% and social inequality at 40%. These issues are deeply interconnected and have a significant impact on the financial stability of many households," said de Lange.

For many South Africans, the unchanged repo rate is a double-edged sword. On one hand, it provides some stability in borrowing costs, which can be crucial for those with existing debt. On the other hand, it underscores the persistent economic pressures that continue to affect everyday lives.

"Debt-strained South Africans are particularly vulnerable in this economic environment," de Lange continued. "With inflation driving up the cost of living and economic volatility making income less predictable, managing debt becomes increasingly challenging."

De Lange offers several strategies for dealing with debt during these uncertain times:

1. Review and Prioritise: "Start by reviewing all your debts and prioritise them based on interest rates and urgency. Focus on paying off high-interest debts first to reduce the overall financial burden."
   
   
2. Budgeting: "Create a realistic budget that accounts for all your expenses and stick to it. This can help you avoid unnecessary spending and ensure you have enough to meet your debt obligations."
   
   
3. Seek Professional Help: "Consider consulting with a financial advisor or a debt management service. These professionals can provide personalised advice and help you develop a feasible debt repayment plan."
   
   
4. Explore Debt Mediation: "For those who are significantly over-indebted, entering into a debt mediation process can help restructure debts into more manageable payments."
   
   
5. Stay Informed: "Keep abreast of economic trends and updates from the SARB and other financial institutions. Understanding the broader economic context can help you make informed decisions about your finances."

Despite the challenges, de Lange remains cautiously optimistic about the future. "While the current economic conditions are tough, there are steps individuals can take to mitigate the impact on their personal finances. By being proactive and seeking the right support, South Africans can navigate these difficulties.

“As South Africa continues to grapple with economic uncertainty, the SARB's decision to maintain the repo rate highlights the delicate balance between providing immediate relief and addressing long-term economic challenges. For consumers, particularly those dealing with debt, staying proactive is key to managing their financial health during these times,” said de Lange.

About Milaw Legal

Milaw Legal is a debt management company committed to empowering South Africans in their battle against debt. With over a decade of expertise in financial services, the organisation offers a range of high-calibre debt relief services tailored to meet each individual's unique needs, including debt review removal, judgment removal, and affordable distribution. Guided by values of integrity, empathy, and innovation, Milaw Legal provides personalized and comprehensive legal services, ensuring clients achieve financial stability and long-term success.