South African consumers are more financially vulnerable than might be expected, the Consumer Financial Vulnerability Index released on Thursday found.
”While debt is a problem other factors are significant in causing many South Africans to be financially vulnerable,” the creators of the index FinMark Trust and Unisa’s Bureau of Market Research said.
The high level of vulnerability was partly explained by the national poverty rate of 47% of households.
However, income vulnerability was exacerbated by the economic downturn and job losses.
The index also found that there was a very low level of savings in South Africa and relatively high levels of consumer price inflation — especially food price inflation.
According to FinMark Trust and the Bureau of Economic Research at Unisa, more than 400Â 000 South Africans had lost their jobs since the onset of the recession and 42% of them could not keep up with payments on their accounts even though they might have an income.
The index showed that income security, level of savings, cost of debt and living expenses all played a part in the consumer’s financial well-being.
”Someone who has lost his job and who has little or no savings will be financially vulnerable.
”Someone else, also faced with loss of income but who has sufficient savings and social networks will be less vulnerable,” the research found.
Even some high-income earners were financially vulnerable due to high debt service and living expenses, despite having income security.
The Consumer Financial Vulnerability Index revealed that respondents believed they were financially worse off than a year ago, with nearly 35% of respondents indicating that their ability to make ends meet had deteriorated during the past year.
As part of the research, account managers at organisations such as municipalities, communications companies and clothing stores were asked about the payment behaviour of their customers.
They confirmed that over the past 12 months the financial situation of their customers had deteriorated, the research showed. — Sapa