According to a Business Day article “the only thing that has saved consumers from a crippling increase in debt service costs is that interest rates are at their lowest level for almost 40 years.” In the article Stuart Theobald and Grant Locke reports on the increase in total debt held by South Africans.
It is reported that the debt reached a peak in 2008 just prior to the global financial crisis at 86.4% of disposable income. The situation has gradually improved and was at 72% in 2017.
It is suggested that South Africa needs a financial services industry that works to improve the balance sheets of consumers. Tackling indebtedness is seemed as one part of what’s needed. However, there also needs to be focus on the asset side of the balance sheet.
Click here to read the Business Day article that focussed on Reserve Bank figures, comparison with India and Bangladesh as well as Fintech as a possible solution.