South Africans' Rising Debt - Covid Was the Straw That Broke the Camel's Back

First Johnson & Johnson vaccines arrive in South Africa (file photo).
analysis

Government infighting and policy paralysis are having a direct impact on South Africa's economic prospects, which is hitting ordinary people where it hurts - their pockets.

First published in the Daily Maverick 168 weekly newspaper.

While the South African economy may be creaking up a gear or two as it recovers from the economic trough induced by Covid-19 and subsequent lockdowns, the fallout continues.

The number of South Africans looking for help in managing their debt has soared, with enquiries at South Africa's largest debt counsellor up 31% compared with the first quarter of last year. Aside from the obvious problem of joblessness, real incomes have fallen markedly over the past five years, pushing consumers into distress.

"Nominal income is 7% higher compared with 2016 levels, but when cumulative inflation of 24% is factored in, real incomes have shrunk by 17% in five years," says Benay Sager, head of DebtBusters, the debt support company. "Many consumers are compelled to borrow to make up the shortfall."

The DebtBusters' 2021 Q1 Debt Index, which tracks client trends quarter on quarter and over the past five years, found that people with take-home pay of more than R20,000 a month who are applying for...

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