New data from DebtBusters shows that an increasing number of South Africans are finding it hard to make ends meet and are using larger portions of their salaries to service debt.
DebtBusters is the country’s largest debt counsellor and its quarterly analysis tracks client trends quarter-on-quarter and over the past four years.
According to Benay Sager, DebtBusters’ chief operating officer, the average debt repayment to net income figure is 61% – well above sustainable levels.
By comparison, the overall debt levels – the total debt exposure to annual net income – has increased to 107%, he said.
“When we look at the lowest and highest income earners, the situation is even starker. People who earn less than R5,000 a month need 63% of their income to repay their creditors. They are also charged the most interest.
“Those who earn over R20,000 a month have debt levels of on average 133% of their net annual income.”
Another warning sign that people are becoming over-indebted sooner is the number of credit agreements they have, said Sager.
This number has declined from an average 8.6 in Q2 2015 to 6.6 in 2019, meaning consumers are getting into debt trouble with far fewer agreements than they did before, he said.
“What the numbers show is that while appetite for credit hasn’t diminished, consumers become overindebted sooner and consequently are not able to take out more credit.”
Sager said that a four-year quarter-on-quarter comparison also challenges assumptions that is it primarily people with unsecured debt who seek counselling.
Since Q2 2015, more consumers with assets are becoming over-indebted, he said.