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Most South Africans use debt to survive till payday: survey

Many people are forced to work two jobs, if they are able to find any.
Image: Waldo Swiegers/Bloomberg

Almost 80% of South Africans seek expensive unsecured loans to help them meet their monthly financial obligations, according to a survey by fintech platform PayCurve.

Many people are forced to work two jobs, if they are able to find any, and they take loans to buy food, cover emergency expenses, such as vehicle repairs, and pay for school-related fees, according to the survey that was completed by 509 South Africans aged 16 to 66.

The findings highlight South Africans’ deteriorating finances in an economy that was already in a recession, with a third of the labour force unemployed, before the first Covid-19 case was confirmed. Central bank data shows household debt stood at 73.7% of disposable income in the first quarter and the cost of servicing these obligations consumed 9.3% of households’ income.

These are some of the other findings by PayCurve, which helps companies provide staff with early access to a portion of their salaries:

  • 11% of respondents spent more than half their monthly income paying off short-term debt and 43% pay more than a fifth of their salaries toward such loans.
  • 84% of respondents who rely on short-term debt wanted the opportunity to access a portion of their income ahead of pay day.

DebtBusters, a company that helps consumers restructure their loans, paints an even bleaker picture.

It found that the 1.6 million South Africans who took advantage of payment holidays offered by financial institutions during the country’s coronavirus lockdown from April to June will pay an additional R20.7 billion ($1.18 billion) in debt.

“In a country as over-indebted as South Africa, especially at a time when the economy is contracting, this is enough to push people who were just about making ends meet into a situation where their debt-to-income ratio is unsustainable,” Benay Sager, DebtBusters’ chief operating officer, said.

© 2020 Bloomberg

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That is exactly what the government does. They use debt to survive until payday comes. This is how you steal from yourself. If you cannot survive on the salary, how can you survive when you give yourself a 30% pay cut by paying interest to a loan shark?

The financial situation of the government cannot be better than the financial situation of the average voter because a democracy empowers the voter to turn his environment into a manifestation of his mindset.

This implies that the IMF can never have enough funds to finance the ANC. Under pressure from bankrupt union members, the ANC will eventually pay government employees with fake currency or bounced cheques. This is our destiny under an ANC government.

Agree with the above response. In my opinion, for the banks to assist in the survival of our economy, they need to limit their potential losses by reducing their own interest rates on current and new loans ( new loans aren’t happening anyway). Rather look like you are part of the solution than collapse under the reality.
And under NO circumstances must the SARB be nationalized…..that will definitely be the beginning of the end.

Not sure if click bait … ” Many people are forced to work two jobs, if they are able to find any, and they take loans to buy food, cover emergency expenses, such as vehicle repairs, and pay for school-related fees, according to the survey that was completed by **509** South Africans aged 16 to 66. ” 509 in certain suburbs types, will yield terrible figures.
We need wider and more comprehensive surveys in investigative journalism to how dire the debt issue is in South Africa. We know it is bad, yet how bad. How long can we continue in the debt spiral, even the JSE listed companies have taken on to much debt and what is scary is that people and corporate’s are struggling to repay loans in a low interest rate environment.
It’s almost as if SA has done things in the wrong order.

End of comments.

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