Debt – An Overview of Credit Levels in South Africa.

Eighty20 has released its 2024 Q4 Credit Stress Report in collaboration with Xpert Decision Systems (XDS). The Credit Stress Report probes consumer credit behaviour and cites key events from quarter four that had an impact on the current economic landscape.

Quarter four 2024 CSR report outlines developments in the credit space as well as the economy overall.

Retail sales grew in real terms by 3.1% YoY in December and 7.6% in November.  This resulted in a 2.5% YoY growth in retail sales for the quarter with five of the seven types of retailers showing positive year-on-year growth rates over this period.

GDP increased by a marginal 0.6% in Q4, marking a return to positive territory after a contraction in Q3 which was revised to -0.1%. Real GDP growth was 0.6% in 2024 and is forecasted to be 1.8% in 2025.

Quarter four also marked 280 days without rolling blackouts, but despite this, the release of disappointing Q3 GDP numbers, a deprecation in the rand, higher fuel prices, with the FNB/BER Consumer Confidence Index slipping lower.

Developments in quarter four were:

• Overdue balances remain concerningly high.  Two in particular were home loan overdue balances up 23% YoY and Credit Card 13% YoY.  These levels of growth in overdue balances are concentrated in the three wealthiest segments suggesting the SA consumer is quite distressed with even the top end struggling, despite lower inflation and two cuts in interest rates.
• The growth in number of credit-active individuals slowed to less than 1% year-on-year, alongside a negligible growth in credit products.
• Total loan balances were at R2.5trn, up by roughly R78bn (3.2% YoY), with credit card growth nearly 6%, and retail credit balances up nearly 4% YoY.
• Total overdue balances hit the R200bn mark (8% of the total outstanding debt), which has grown by R11.5bn in the year.
• The significant growth in credit card and retail loans, alongside the increase in overdue balances, suggests these products are being extensively utilized by consumers to cope with financial challenges, such as rising prices and stagnant wages. The data underscores a dependence on high interest, unsecured credit products in a challenging economic environment.
• On the positive side, the percentage of people in credit default is down 7% in a year and has been dropping fairly consistently for 3 years.  The number of loans in good standing continues to grow YoY.

How credit evolves at different life stages

StatsSA’s latest data reveals a rising median age in South Africa. For the white population, the median age rose from 33 in 1996 to 45 in 2022, while the black African population remained younger at 27. Nationally, the median age increased from 22 in 1996 to 28 in 2022. Additionally, the percentage of South Africans aged 60+ grew from 7% in 1996 to nearly 10% in 2022, with about 30% of the white population now aged 60 or older.

The population pyramid below highlights this aging trend

While the economy grew by 0,6% in 2024, and disappointing Q3 GDP figures were revised upwards, growth was still slower than 2023.  South Africa’s wealthiest segments are still over-extending themselves with unsecured credit and overdue balances remain high.  Add the current geo-political uncertainty, and the 1.8% growth forecast for 2025 could be a stretch.

Key focus for consumers in South Africa and Africa at this stage, should be to rapidly reduce current debt levels and to reduce spend on any unnecessary items While businesses are likely to have opportunity to leverage loans at lower rates with more rate cuts likely on the horizon to avoid recessionary pressures.