South African consumers borrowing for basic needs

"It is no longer that consumers are borrowing to buy a new car, but to get food on the table. That is why there is an increase in unsecured lending, because it is used for consumption to survive," said University of South Africa (Unisa) personal finance research unit head, Bernadene de Clercq.

"We've got increases in the petrol price, electricity prices. Now that their expenditure commitments are too high, they don't have the income to support that growth," she said.

De Clercq told the summit in Midrand that most South African consumers borrowed from credit providers just for consumption purposes and "to keep up with the Joneses".

She said that when consumers acquired debt in the past two years, they had not thought that electricity prices and fuel prices would increase, hence they were now unable to pay their debt.

A FinScope Consumer Survey conducted by FinMark Trust last year showed that 26% of consumers borrowed from credit providers to buy food.

Sixteen percent borrowed to pay for transport, 7% acquired credit to pay school fees, and 5% to pay electricity bills.

Only 4% of consumers borrowed to renovate their houses.

Consumers were also struggling to pay school fees, medical expenses and municipal services, De Clercq said.

She said over-indebtedness did not apply to the entire population, but mostly low and middle-income groups who had too many accounts with a variety of credit providers.

Recent figures released by the National Credit Regulator showed that there were 60-million accounts belonging to only 19-million consumers in the country.

She said consumers put saving at the bottom of their priorities when they received their incomes. This led to over-indebtedness and consumers could not enjoy the current low interest rates environment.

"We need to teach people to manage their finances," De Clercq said. – Sapa

Advertisting

Golding opportunity for kleptocrats

Government must take steps to clean up the country’s dirty real estate market, which has long offered a safe haven for criminals

SAA’s rescue men fly in defiance

The airline’s business rescue practitioners ignored a warning not to announce route closures and possible job cuts ahead of a restructuring plan
Advertising

Press Releases

Response to the report of the independent assessors

VUT welcomes the publishing of the report of the independent assessors to investigate concerns of poor governance, leadership, management, corruption and fraud at the university.

NWU student receives international award

Carol-Mari Schulz received the Bachelor of Health Sciences in Occupational Hygiene Top Achiever Award.

Academic programme resumes at all campuses

Lectures, practicals, seminars and tutorials will all resume today as per specific academic timetables.

Strategic social investments are a catalyst for social progress

Barloworld Mbewu enables beneficiaries to move away from dependence on grant funding

We all have a part to play to make South Africa work

Powering societal progress demands partnerships between all stakeholders

So you want to be a social entrepreneur?

Do the research first; it will save money and time later

Social entrepreneurship means business

Enterprises with a cause at their core might be exactly what our economy desperately needs

Looking inwards

Businesses are finding tangible ways to give back – but only because consumers demand it