South Africans are drowning in debt but still clamouring for credit

The growth is not in secured credit… Only R40 billion was mortgages… We are now in a debt spiral… If 55% of credit applications are turned down, where do they go? They go to loan sharks…

Maya Fischer-French, personal finance journalist - Maya on Money

Unsecured credit is growing at around 11% or 12%...

Siphamandla Mkhwanazi, economist - FNB

South African consumers are drowning in debt worth R1.9 trillion.

Of that about R200 billion is unsecured, short-term debt (e.g. credit card debt, store accounts, personal loans, etc.)

Credit providers turned down six million credit applications (55% of total applications) in the second quarter of 2019.

South African consumers are drowning in debt (the bad kind). Pixabay.com, 2019

The Money Show’s Bruce Whitfield interviewed Maya Fischer-French (Personal Finance Journalist at Maya on Money) and Siphamandla Mkhwanazi (Economist at FNB).

Listen to the interview in the audio below (and scroll down for more quotes from it).

We’ve seen aggressive lending, especially around furniture and household stuff. Those are not needs, those are wants…

Maya Fischer-French, personal finance journalist - Maya on Money

Salaries are not keeping up with real inflation, let’s be honest. Our inflation rate is not 5%... combined with massive retrenchment – we’re in a spiral!

Maya Fischer-French, personal finance journalist - Maya on Money

Often the police are involved [in loan sharking] ... [people tell her] ‘I can’t go to the police station, they are involved’… There’s definitely an organised crime element to it…

Maya Fischer-French, personal finance journalist - Maya on Money

… most of that [credit growth] is unsecured, which we understand to be consumption-driven credit. However, we aren’t seeing much of that translated into actual consumption. What are consumers doing with the credit if it’s not coming through in sales?

Siphamandla Mkhwanazi, economist - FNB

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