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Does the recent interest rate pose any risks for your business?

Posted By IRMSAInsight, 27 July 2015
IRMSA Breakfast
27 July 2015 


Does the recent interest rate pose any risks for your business?


Recently, the South African Reserve Bank (SARB) announced that the repo rate would increase by 25 basis points. This was as a result of the inflation pressures that are expected to last into 2016.


With a variety of issues such as the performance of the Rand and challenges around power supply, coupled with petrol price increases, food inflation and electricity tariff hikes, experts generally agree that the average consumer will continue to be under pressure for the foreseeable future.



Questions to Ponder:

  • How will this affect your company’s customers or even your employees?

  • Will an employee under financial pressure now be tempted to negotiate harder for salary increases?

  • Will this interest rate increase influence your ability to sell products and services to a customer who is already under pressure?

Give us your view Click here 


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Thabita Kokong says...
Posted 04 August 2015
The increase in repo rate thus increase in interest rate will mean paying more for their debt, especially short term debt, for a large number of South Africans .
This results in restriction of their spending/buying power.
Customers may not be so keen to pay their accounts. Some customers may find a way to evade their responsibilities thus increasing bad debt.

The public sector wage increases seemed reasonable when it was agreed on. With the interest rate increases the employees may find themselves not so happy with their increases as less money is available in their purses. The time to negotiate salaries for public servants has passed - the repo rate increase can be said to be well timed.
However, next year salary negotiations may be more demanding on the employer.
Unrelated to the question is that some employees can be temped to join in criminal activities against their public sector employer, just to make an extra "buck".

For basic public services, customers cannot do without them & find themselves without a choice but to purchase from public service. As mentioned before, there may be an increase in bad debts.
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