The most recent Eighty20/XDS Credit Stress Report for the fourth quarter of 2022 shows an increasing appetite for credit among South Africans, with more than 800,000 new entrants to the credit market over the period.
However, this has been accompanied by a rapidly growing number of loans, especially credit card, VAF and home loans, which have again defaulted.
“This compares to 600,000 last year, indicating a deepening spiral of debt among more than 18 million consumers – more than a third of the population,” the group said.
More worryingly, these new entrants have taken on R9.3 billion in new loans, the highest in over 2 years, and an increase of almost 10% on last year.
In addition, there has also been a significant increase in credit card balances, with total loan balances rising by R25 billion (12%) year-on-year.
This brings the total active lending population to 18.7 million with total loans of a staggering R2.3 trillion.
According to Debt Rescue CEO Neil Roets, these figures show that South Africans are increasingly seeking credit to survive the relentless onslaught of cost-of-living rises “that seemingly have no end in sight”.
South African households have experienced rising consumer price inflation – which reached 7.0% in February 2023; higher interest rates – with another 25 basis point hike next week; and a wave of price hikes on the way, especially electricity.
“With inflation rates falling outside the South African Reserve Bank’s inflation target range of between 3 and 6% since May 2022, although we have seen a gradual decline since November 2022, the recent surge has caught everyone off guard, dashing hopes for economic stability in the near future,” says Roets.
“During National Credit Education Month in March, it is pertinent to highlight the most important rights that consumers should demand: a stable economy in which all South Africans can thrive and an end to the relentless rises in the cost of living that affect life. decimate people. The sad fact is that no one seems to be listening anymore,” he said.
Roets said South Africans are fighting a daily struggle to simply survive, with the cost-of-living crisis leaving many households no other way than “the bottomless pit of debt”.
“The elephant in the room, of course, is the many millions of others who are not creditworthy and just hang on to their fingernails,” he said.
The latest statistics shared by the Pietermaritzburg Economic Justice and Dignity group’s (PMEJD) show an alarming percentage – more than half (55.5%) of South Africa’s total population, representing 30.4 million people – who live below the country’s poverty line. from R1,417 per month.
Added to this is the figure of more than a quarter (25.2% – or 13.8 million) living below the food poverty line of R663.
“In light of this scenario, it stands to reason that consumers simply cannot afford more price shocks, and given the looming 18.65% increase in electricity rates in April, the expected increase in the repo rate at the end of March and the expected rise in gas price next month, it is clear that the country is at a tipping point and heading for catastrophe,” he said.
Read: Warning about solar energy on roofs for complexes and estates in South Africa
Global Courant 