By: Natasha Archary
The latest credit stress report shows an increase in debt and overheads on credit which is crippling even the wealthiest in the country.
Speaking to Nastassia Arendse on Kaya Biz, Andrew Fulton, Director at Eighty20 explains how tough economic times are effecting 8 segments of the population.
Looking at credit through this lens, Fulton shares what the 8 segments entail and how, credit and debt is getting worse every quarter.
The 8 segments are:
- Heavy hitters – which makes up the Top 5% of the country’s wealthiest of the population. This earning bracket accounts for 75% of the mortages in South Africa, with the earning potential from R40 000 a month up to millions.
- Middle Class workers – 4 million people in the country who earn from R15 000+ a month. This bracket usually have accounts on credit for food, clothing and other necessities.
- Mass Credit Market – 12 million people who earn R5 000 a month
- Mothers of the Nation – tend to be the single parent households below the R5 000 a month margin. Most take up jobs as domestic workers or administration jobs.
- Hustling males – minimum wage workers
- Comfortable retirees – a small percentage of the population who have planned for their financial future
- Humble elders – the opposite of the comfortable retirees who in their old age are now reliant on government grants or the assistance of family members
- Students and scholars
Fulton says only 10% of the South African population earn more than R10 000 a month.
“At Eighty20 we tend to focus on the stories every quarter, and the story is only getting worse every quarter.
For the first time since Covid-19, the number of defaults and overheads on credit is up which is a significant change because you have massive defaults during the lockdown period during Covid-19.
While this steadily got better, it’s now worse because those defaults and overheads are back up.
Another story is we use a metric called “change of nearly default debt” to explain the credit in the economy. It’s basically what debt has nearly gone into default and what percentage that is in the balance.”
Andrew Fulton, Director at Eighty20 says increased credit stress is crippling even the wealthiest in the country
Listen to the conversation on Kaya Biz:
Also read: South Africa avoids a technical recession
