The Impact of Debt on Employers and Employees MANAGING RISK

NCA - Introduced in 2007 Purpose – to protect the man in the street from reckless lending Boer maak n plan Lenders - developed more efficient tools to speed up the administration of the loan process Result - increase of unsecured loans over past 2 years = 53 % 1994 – Household debt up from 56% – 75 % = 34 % National Credit Act 53 %

Credit active consumers: 20,21 million Almost 49 % with Debt problems

4 Unlocking Property Ownership Status Quo Debt Crisis in South Africa 20,21 million credit active consumers: 62% Arrears & debt impairments 38% No arrears 14 % 1 – 2 months in arrears 21% 3 – 4 months in arrears 26 % adverse or judgments

Case Study No 1 Mine XXX Mine – Income R per month – PAYE etc – Ex wife – maintenance – Debt deductions Balance left R Result - …………………….

Case Study No 2 Police Sergeant - George – Income + R ….….. – PAYE etc- R……….. – Uniform- R ………. – Debt deductions- R ………. Balance left R per month Result - …………………….

May your EXPENSES never catch up with you before you reach the PAYDAY. EXPENSES PAYDAY WORD WAKKER !!!!!!!!!! 7

8 Unlocking Property Ownership Debt Secured -Home loans *Security – Mortgage bond *Interest – prime + 1 – 3 % Unsecured & Short Term * Security or no security ? *Prime + up to 60 % per annum *Is it really UNSECURED? * Fraud & Abuse of Garnishee Orders & Emoluments

9 Unlocking Property Ownership L S M Unsecured & Short-Term Debt Home Loans Under R per month R13 billionR1,3 billion NCR Stats 2 nd Quarter 2013 LOAN LOANS GRANTED

10 Unlocking Property Ownership The Problem – Buying a House First time buyers in the affordable market Little knowledge or background * 80 % Biggest Problems: Over-indebtedness Account Conduct Affordability

11 Unlocking Property Ownership The Problem – Buying a House First time buyers in the affordable market Little knowledge or background * 80 % Biggest Problems: Over-indebtedness Account Conduct Affordability Affordable Market: Approved vs Declined 15% Approved 85% Declined

Of the five major sources of stress, the issue of personal financial stress was rated as #1 Rated 5 times higher than health concerns Financial Stress – Relevance to Employees?

Impact on the property market

14 Unlocking Property Ownership Access to property finance Major Fund *Provides funds for home loans *Outsource to lender Lender *Obstacle – bad quality of clients *2 700 applications approved *600 applications – 100 approved *Relax approval criteria *Increase interest rate to price for risk

15 Unlocking Property Ownership Back to the our Own Office LOAN What is the impact ?

Disruption of administration, emolument & garnishee orders Frequent staff financial counselling Absenteeism from work Ongoing demands for access to payroll Impact on HR & Payroll Office

17 Unlocking Property Ownership Solutions: Government Contribution FLISP CREDIT AMNESTY

18 Unlocking Property Ownership Solutions: I want to save the world

19 Unlocking Property Ownership Solutions: Housing Education and Empowerment Promote as part of a holistic campaign Engage early Continue with education This will lead to: Empowerment Improved : behaviour, dignity and integrity Reduction of risk Commence with awareness and education

20 Unlocking Property Ownership Early consumer engagement Empowering consumer Education to affect change Continual engagement Solution - Housing

21 Unlocking Property Ownership Start with the basics

Do you have a mobile phone? How do I manage my budget?

Captures Daily, Weekly Expenditure for: – Food R120; – Travel R30; – Rent R500; – Other expenses In budget Alert !!! Capture each rand you spend

How much can you save if you replace your most expensive debt & pay off your other debt faster? Investigate your most expensive debt

Investigate - 25 IDENTIFY THE MOST EXPENSIVE DEBT FIRST Savings R per year

26 Unlocking Property Ownership How to buy your own home

27 Unlocking Property Ownership Pre and Post Purchase Education Two programmes: Pre-purchasePost purchase and after transfer of ownership

28 Unlocking Property Ownership Alternative Ownership structures

29 Unlocking Property Ownership For 6 – 18 months (negotiated) Rent Towards a deposit Save Training & Mentorship Home Ownership Education Bond approval Reward Rent2buy

30 Unlocking Property Ownership Fly Solo / Partnerships? Cannot achieve this on our own Cannot achieve this on our own

31 Unlocking Property Ownership Strategic Role Players National Government Local Government Local Authorities City of Cape Town Financial Institutions Property Developers Land Owners Estate Agency Affairs Board Law Society Attorneys Fidelity Fund Corporate Entities Private Entities Community Leaders & Forums But The Most Important Stakeholder Is: The Buyer! Our Partners and Content Contributors: Blue Oak Credit Health Inspect-a-home 1 Call ASAPBlue OakCredit HealthInspect-a-home1 Call ASAP Law Property Lightstone moneysmartLaw PropertyLightstonemoneysmart My Budget Fitness Real Estate Investor Magazine Setsmol My Budget FitnessReal Estate Investor MagazineSetsmol Education : Partners and Role Players

32 Unlocking Property Ownership ENERGYWORKS Unleashing the Personal Power of Production 32 © Energyworks / EBH / 09/13

STAKEHOLDER ENERGY PERSONAL ENERGY LEADERSHIP ENERGY ORGANISATIONAL ENERGY THE BOTTOM LINE STAKEHOLDER ENERGY Employees ORGANISATIONAL ENERGY LEADERSHIP ENERGY PERSONAL ENERGY Energyworks :Personal energy works right through the organisation… ©

34 Unlocking Property Ownership Conclusion – Sustainable Homeownership Customer Responsible, learns to manage own finances and makes informed decisions. Reduces the burden of debt Lender Promotes responsible lending &

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