Strains in SA Economy far from over
“R603 million is the value of claims that we have paid out to clients in the first 11 months of the year, in respect of payment defaults on the domestic market,” says Luke Doig, Senior Manager, Economics, at Credit Guarantee Insurance Corporation.
"That is more than the claims paid during the 2011 and 2012 years combined,” continues Doig. "If one considers that in the aftermath of the global financial crisis, the company paid claims of R410 million and R355 million in 2009 and 2010 respectively, it is fairly evident that the strains being felt in the South African economy are far from over.” 2013 has been typified by some notable company failures like Cosira and First Tech, which gave rise to a few very large claims with average values per claim rising some 130% so far this year.
This experience is corroborated to an extent by the average value of default judgments against businesses having risen some 41.4% in the first nine months of the year. The company’s overdue payment indicator (potential future claims) is 28.2% higher in the first 11 months of this year but there is evidence that the deterioration in the trend is moderating. The company is hopeful that the economic momentum will gather pace somewhat, both at home and abroad, perpetuating a further improvement. "But we are always mindful of the risks that still cloud the outlook for many businesses still trying to recover from the recent strikes and intensified squeeze on margins,” concludes Doig.
