December 20, 2023

South Africans are Taking Control of Household Debt

South Africans are Taking Control of Household Debt

As another hard year comes to an end, South Africans are focusing on many things including their own debt. Aside from the festive season, SA consumers have a lot to consider.

One of the biggest changes seen is that many South African households are taking control. This includes control of their financial futures, tackling debt, and saving where possible. However, the country’s economic projection doesn’t give the same confidence to consumers.

One Step Forward, Two Steps Backwards

South Africans are growing more confident in tackling their own household finances and managing debt. This is despite the snowball of increases we’ve seen over the past few months.

The latest consumer signals report by Deloitte indicates that South Africa’s Financial Wellbeing Index has improved. This in itself shows that consumers are slowly returning to positive expressions regarding their financial future. This is a big change in comparison to last year.

Debt: Challenges and Changes

One of the biggest changes in consumer attitudes could be the ease of inflation and a hold on interest rates. The report states that should inflation continue to rise; we will likely see more of a downward trajectory similar to what has been happening in the past year.

While anxiety levels have lessened over the last year, net anxiety has increased by 6% between September and October 2023. One of the biggest drivers of anxiety is the direction of the economy at the current time.

Read: What Is The Debt Trap & How Do I Avoid It?

Economic Growth and Loadshedding Woes

There are big concerns regarding the country’s economy. The economic outlook sub-index of the CCI is 11 points lower than the average reading for the household financial prospect index.

FNB Chief Economist, Mamello Matikinca-Ngwenya says that this suggests, to an extent, that consumers should remain aware of the adverse implications of factors such as high levels of loadshedding, the logistical constraints of Transnet and the tightening in fiscal policy and how they impact economic growth. That being said, these should not lead to an equal deterioration of one’s own finances.

Read: Does Your Salary Make it Through the Month?

The economy remains constrained, but there is an expectation of economic growth. This will accelerate from next year if more control can be exercised over loadshedding.

With monetary policies tightening globally, we see demand slowing and international commodity prices being subdued, which in turn is hurting domestic exports. With this in mind, there is slow and steady GDP growth in the forecast for the rest of 2023 and 2024.

Debt and Budgeting

Most consumers are still expected to drop their spending during the holiday season due to concerns which will be a massive blow to retailers, especially those selling luxury items. Even with household finances seemingly more stable, consumers seem to have come to the conclusion that now might not be the ideal time to buy high-cost items.

Read: 5 Ways to Treat Yourself on a Budget

High- and middle-income consumers are showing increased concern regarding high interest rates and the marked degeneration of South Africa’s fiscal position. Meanwhile, smaller-income households expect their finances to see great improvement over the course of the next year.

How Can Debtline Assist?

With the festive season upon us and 2024 hot on its heels, you might find yourself looking to sort your finances and kill off pesky debt once and for all. If you find yourself in need of assistance with debt issues, the Debtline team is ready to help!

Debtline is a professional debt management company in South Africa that provides expert advice, helps with debt payment negotiations, and provides protection for those undergoing Debt Review.

We offer professional assistance for all. Get in touch by contacting the Debtline team via the website and filling in the contact form for a free callback.