South Africans are getting buried – and many are digging even deeper

South Africans are struggling to cope as financial pressures increase, with many turning to debt facilities.

According to clearing house BankservAfrica, salaries over the past five years have grown by 22.8%, with the average nominal pay increasing from R12,573 per month in February 2018 to R15,438 in February 2023.

However, the Consumer Price Index (CPI) rose by 26.6% over the same period, showing that nominal take-home pay lagged behind inflation.

This, essentially, means that South Africans have gotten poorer over the last five years.

Moreover, debt levels are increasing as South African consumers tackle challenging financial times, TrendER/infoQuest, an online research company, said.

TrendER/infoQuest interviewed 300 South Africans in June 2023, with the results compared to a year prior.

Overall, there have not been any major changes in satisfaction levels in terms of financial situation, with roughly one in two consumers giving a rating of 5 or less – indicating dissatisfaction.

Only 13% of respondents in 2023 said that their financial situation was very good/excellent.

Those over 50 years old were also less satisfied with their financial situation compared to a year ago, as this age category includes retired people on a pension or are feeling the effects of the increase in the cost of living in general.

Rather unsurprisingly, as income increases, the proportion of those dissatisfied with their financial satisfaction declines.

Rising debt

TrendER/infoQuest said that various forms of credit facilities were accessed by consumers over the last six months, with personal loans, credit cards and home loan excess funds all being used.

This indicates that consumers are facing financial constraints as consumers need to access funds.

Those in the 35-49 year age category accessed more credit in the last six months than those in other age categories

In addition, these financial constraints are further evident in consumers struggling to pay off their debt.

With the recent interest rate hikes, nearly 3 out of 5 homeowners said that they were struggling to pay off their monthly instalments. Consumers are also struggling to pay for petrol and groceries:

• 58% of homeowners are struggling to pay their home loan instalments
• 36% are struggling to pay their vehicle instalments
• 40% are struggling to pay their credit card instalments
• 35% are struggling to pay for petrol to get to work
• 46% are struggling to pay for groceries

To assist with costs, 29% of consumers have taken out an additional job in the past six months. Taking on another job is higher in the 18-25 age category.

In addition, 19% of consumers have valuable items, including jewellery and art, to raise additional funds, while 20% have sold other household items.

“South Africans are under a great deal of financial pressure and are taking out more debt to cope with the ever-increasing financial strains. In addition, they are struggling to pay not only the debt that they have, but also to cover everyday costs such as groceries and petrol,” said Mogorosi Mashilo, Managing Director of TrendER/infoQuest.

“While consumers are trying to cope with the current situation, debt has longer-term consequences and consumers need to caution against getting into a debt spiral which is very difficult to get out of.”

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