More South Africans turn to personal loans as income is eroded by rising expenses
Image: Karen Sandison
Consumers are increasingly feeling the pinch with a record number of people who are now in debt review having a personal loan.
The latest DebtBusters' Debt Index for the first quarter of the year showed that more South Africans than ever are using personal loans to make up the shortfall between income and the rising cost of living. This, it said, is despite South Africans having access to some of their retirement savings in the form of the 'two-pot' retirement regime.
However, Benay Sager, executive head of DebtBusters said that debt counselling enquiries were 'a bit muted' compared to previous years. He attributed this to uncertainty about the macroeconomic environment as well as access to retirement funds.
The number of consumers who completed debt counselling has increased 11-fold since 2016. Consumers who received their clearance certificates in the first quarter of 2025 paid back over R700 million to their creditors.
This comes as Statistics South Africa released its unemployment figures, also on Tuesday, which showed that the unemployment rate has increased to 32.9% from the last three months of 2024, when it was 31.9%. The overall unemployment rate, which includes discouraged job seekers, went from 41.9% to 43.1%.
DebtBusters' research also found that 37% of people applying for debt review had a one-month loan - also known as a payday loan.
These increases in debt come as consumers are less optimistic about South Africa's economic environment, with the FNB/BER Consumer Confidence Index dropping to its lowest point since the second quarter of 2023 as of the first three months of the year.
Sager pointed out that 'personal loans, especially one-month loans, remain a lifeline for many, because income has not kept pace with rising expenses'.
Over the past nine years, electricity tariffs have increased by 135%, the price of petrol has risen by 88%, and the compound effect of inflation is 52%, DebtBusters pointed out.
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Advertisement
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Next
Stay
Close ✕
As a result, those who applied to the company for debt counselling in the first quarter of this year were using an average of just more than two-thirds of their net salary to pay debt, the debt review company said in a statement. 'This is a significant increase compared to previous quarters and the highest since 2017,' it added.
'The most vulnerable consumers, taking home R5 000 or less per month, use 76% of their income to repay debt. Those earning R35,000 or more spend 77% servicing debt. The ratios for these income groups are the highest since DebtBusters started analysing the data in 2016,' it noted.
DebtBusters added that today's consumers have 53% less purchasing power than in 2016. However, for those taking home R35,000 or more, nominal income has increased by 11% since 2016 – the first significant growth for some time.
Consumers in most income bands spend 25% of their disposable income, after debt repayments, to pay for water, electricity, rates and transport. Food inflation has meant many have had to sacrifice insurance and assurance cover, said DebtBusters.
IOL
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Maverick
an hour ago
- Daily Maverick
How SA can transform promises into tangible improvements for all
South Africans want to see tangible improvements in their daily lives. They want to know whether the government is focusing on the right priorities to move the country forward. Development Indicators (DIs), produced annually by the Department of Planning, Monitoring and Evaluation, provide a strategic evaluation of South Africa's development trajectory and the impact of public policies. Aligned with its vision of being a catalyst for the country's development goals, the department produces the Development Indicators to support informed public discourse and evidence-based policymaking. This not only promotes transparency but also positions monitoring and evaluation as a tool for advancing democracy by creating space for diverse views and public engagement in assessing the country's development and exploring future scenarios. As researchers at the Harvard Centre for International Development observe, 'Policy success for whom?' is a crucial question, as perceptions of progress often vary among stakeholders. The Development Indicators 2024 provide a long-term trend analysis up to 2024 and serve as a baseline for the seventh administration to support the implementation of the Medium-Term Development Plan (MTDP) 2024-2029. The findings reaffirm the strategic focus of the Medium-Term Development Plan, of placing inclusive economic growth at the centre of government efforts. They also recognise that while the National Development Plan remains the country's long-term vision, its foundational assumptions have shifted significantly due to demographic changes including migration, the Covid-19 pandemic and global disruptions. It is therefore clear that processes for planning beyond 2030 need to be initiated. The findings are sobering. None of the high-level National Development Plan targets for reducing unemployment, poverty and inequality are currently on track to be attained by 2030. Of the 85 Development Indicators reviewed, about 13 (15%) are on track, while 31 (36%) show promising progress. Population growth has outpaced economic expansion and the recent global disruptions have necessitated revision of medium-term growth projections. The global context is that only 17% of Sustainable Development Goals targets are on track, with a third either stalled or regressing. Higher, inclusive and sustained economic growth is essential for shifting our development trajectory. We must accelerate economic reforms to surpass the 3% growth threshold if we are to meaningfully change outcomes. Inclusive growth must translate into more jobs, rising household incomes and improved wellbeing for all. To reduce household dependence on the social assistance programmes, the country must achieve stronger economic growth that will create jobs and income-generating opportunities and enable more people to participate in the economy and secure their livelihoods. Nonetheless, progress in key areas offers strategic opportunities to accelerate impact: Infrastructure development: Out of 268 priority infrastructure projects, 28 have been completed and about 80 are under implementation across sectors including energy, water, transport and housing. Budget 2025 allocates close to R1-trillion over 2024-2027, to be implemented through state-owned enterprises, municipalities, provinces, national departments and public-private partnerships. This requires both initiating new projects and maintaining existing ones. Labour market transformation: South Africa has built a more diverse labour force, with progressive labour laws advancing representation across race, gender, age and skill levels. Public employment programmes: The Presidential Employment Stimulus has provided work and livelihood support to approximately 2.2 million people since October 2020. The Expanded Public Works Programme created 923,718 work opportunities in 2024/25. Digital transformation: South Africa enjoys near-universal mobile network coverage, with the rollout of 5G gaining traction. Continued reforms in the telecommunications sector and digital public infrastructure initiatives must help to broaden connectivity and inclusion. International relations: South Africa remains an active player on global platforms such as BRICS+, the African Continental Free Trade Area, the G20 and others. Environmental sustainability: Greenhouse gas emissions remain within the country's Nationally Determined Contributions targets, and the marine and terrestrial conservation areas continue to expand. Land reform: 3 million hectares had been transferred (78.1% of the National Development Plan target). Focus must now shift to enhancing land claims processes, post-settlement support and the diversified use of land, including agriculture, tourism, housing and cultural preservation. Public finances: Gross tax revenue and compliance have improved, accompanied by sustained progress in audit outcomes at both the national and provincial levels. Education: Near-universal access to early childhood development for children aged 5-6 and basic education for ages 7-15 has been achieved, with gender parity across most educational levels. However, attention must now focus on improving school infrastructure, the quality of education and expanding the capacity of universities and Technical and Vocational Education and Training institutions to meet the growing demand and skills needs of industry. Health: Positive gains in life expectancy and reductions in maternal and child mortality point to improved health outcomes. Modernisation of the public health system and the rollout of the next phase of the National Food and Nutrition Security Plan are among the critical next steps to bring South Africa on par with its BRICS+ peers on health outcomes. Basic services: More than 80% of households have access to electricity, clean water and sanitation. Ongoing efforts aim to expand access through annual household connections, especially in under-served areas, while also ensuring quality of service delivery in local municipalities. Social protection: Expanded social assistance has helped to cushion the poor and enhance human capability. However, long-term reliance on grants must be reduced through employment-led growth. Efforts are being made to accelerate the implementation of key priorities as outlined in the Medium-Term Development Plan to build an inclusive economy and achieve National Development Plan ambitions. The Medium-Term Development Plan 2024-2029 outlines priority areas for consolidating progress while addressing persistent development challenges. Strategic interventions include: Implementing the Energy Action Plan, Digital Public Infrastructure Roadmap, and Freight Logistics Roadmap to deliver on their objectives. Modernising mining, agriculture and manufacturing, and promoting new growth sectors such as services. Enhancing export diversification and trade resilience. Leveraging international relations to attract investment, expand trade, tourism and access technology. The success of South Africa's economic growth strategy will be tested by the country's ability to maintain its status as Africa's largest economy; enhance the global competitiveness of key sectors and urban regions (e.g. Johannesburg, Cape Town, Durban); generate inclusive employment growth; and reduce long-term dependence on social support, particularly among working-age adults. Operation Vulindlela has unlocked critical reforms. The second wave of structural reforms are taking off, focusing on improving local government, expanding digital public infrastructure to broaden connectivity and inclusion, and building city regions that foster dynamic, business-friendly environments. Accelerating inclusive growth is critical to ensuring that no one is left behind. This means creating jobs, raising household incomes and improving well-being for all citizens — especially for historically marginalised groups. Achieving this requires economic redress, and equitable access to opportunities and spatial transformation, among others. Prioritising empowerment of women, youth and persons with disabilities should be central to these efforts. The Department of Planning, Monitoring and Evaluation continues to support government institutions in translating policy intentions into development results. The department does this through coordination of planning across government, monitoring of implementation and supporting performance management of ministers and heads of departments (HoDs) to hold them accountable for delivering results. Where service delivery fails, we intervene through frontline support to ensure that community concerns are swiftly resolved. We want to strengthen consequence management for poor performance and service delivery breakdowns. And we want to strengthen collaboration with social partners (business, labour and civil society) to foster a culture of service delivery excellence. DM
Daily Maverick
an hour ago
- Daily Maverick
Crypto Corner: They cut the music at the altcoin party, but innovation is still pumping
If you're trying to use your crypto rather than trade it, the real question is: how should you respond to the ups and downs of a volatile market? I was going to talk about altcoins maturing and becoming more stable, predictable investments, but then the market plunged last week. XRP dropped almost 20% in a single day. Bitcoin briefly tumbled below R2.1-million. Ether was hit hard too. Yet we had started the week with analysts hyping Ethereum's institutional appeal and setting price targets for ether beyond R70,000. We even had Pokémon cards getting the non-fungible token treatment on Solana. What gives? Crypto markets are volatile – by now that's no revelation. But if you're trying to use your crypto rather than trade it, the real question becomes: how should you respond to these ups and downs? South Africans can at least rely on some market innovation on the licensed exchanges. Binance recently partnered with Peach Payments and MoneyBadger to allow crypto payments at major online merchants. Using your Binance app, you can now buy bed linen or even a spade from local stores using stablecoins, without the gas fees (transaction costs on Ethereum) or volatility. This shift from speculation to utility is important. Sure, altcoins might offer eye-watering gains during a bull run, but everyday-use cases are what will determine crypto's staying power. And it seems like that's where our local industry is leaning. Luno, for instance, announced tokenised stock trading last week, where you can invest in major US companies. So there's a lot going on. Binance Africa legal adviser Larry Cooke called the Peach Payments partnership a 'breakthrough moment' for crypto payments – and he's not wrong. With MoneyBadger already processing more than R7-million in crypto payments this year and expanding rapidly, South Africans are moving from HODLing (buy and hold or as the crypto bros would say – holding on for dear life) to spending. If the price charts make you queasy, maybe shift your focus. Use your crypto for groceries, gadgets or even municipal bills, and leave the day trading to the whales. That way, you're not just riding the waves but doing something useful: nurturing your portfolio while the market sorts itself out. DM This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.
IOL News
11 hours ago
- IOL News
Ramokgopa to visit Medupi and Matimba Power Stations as Eskom reports progress
Eskom's power system stabilises, ensuring reliable electricity supply. Image: Timothy Barnard /Independent Newspapers Electricity and Energy Minister, Dr Kgosientsho Ramokgopa, will visit Medupi and Matimba Power Stations, Eskom said on Monday. The power utility said the visit formed part of the continued oversight on Eskom's Generation Recovery Plan, with a focus on improving the reliability and performance of its power plants to end load shedding and ensure a more stable electricity supply. "This is to celebrate the early return to service of Unit 4, now contributing 800MW of capacity to the national grid, reinforcing the goals of the Generation Recovery Plan and offer the minister an opportunity to receive an update on the Control and Instrumentation refurbishment project at Matimba," Eskom Spokesperson, Daphne Mokwena said. Ramokgopa is expected to give South Africans an update on power system status, operational improvements, and the Generation Recovery Plan, and to also engage the Generation Group Executive. Ramokgopa is expected to provide another update on power system performance on Friday; however, the utility has committed to communicate any unplanned developments before. This comes at the back of the utility making strides in stabilising its power system with an improved Energy Availability Factor (EAF), ensuring reliability during peak electricity demand. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading South Africa has been spared of load shedding since May 15, Business Report recently reported that Eskom's generation fleet is steering towards greater stability, with 57% of its 14 coal-fired power stations now functioning at an EAF exceeding 70%, with three stations having surpassed a 90% operational efficiency. This is a great move towards relieving South Africans of their long struggle with load shedding, which has often been associated with a lot of undesired conditions, i.e, crime, damage to household appliances, and business failures. The utility's winter outlook, as published in May, indicated that load shedding will not be necessary as long as unplanned outages stay under 13,000 MW. According to the power utility, load shedding gets implemented as a last resort to prevent a total collapse of the power grid. The Star
