Credit in SA is used more as a lifeboat

Although it wasn’t much of a silver lining to the awful cloud of Covid and the associated restrictions in South Africa, the pandemic did lead to a small decline in the overall debt burden of South African consumers.

That was because many shops were closed for a time, or because consumers either couldn’t travel to shop or were too scared to go out.

Now, however, we are back to our ways of getting in over our heads when it comes to credit, according to
a study by Genesis Analytics, in partnership with the Financial Sector Conduct Authority.

The study found that more than 50% of South Africa’s credit-active consumers can be considered to have
too much debt, which resulted in bad credit records for 48% of all borrowers.

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It would be easy to accuse those who have become burdened by excessive borrowing of being undisciplined and unable to manage their money.

However, that would be simplistic because it ignores the reality that, for many South Africans, the ability to survive to month-end depends on being able to access credit as a sort of “bridging” finance.

For many, credit is not about luxuries but merely about being able to acquire the necessities of life.