The year of the lockdown has had an impact on almost all South Africans, even the wealthy population who have also not been spared from the economic impact of the global pandemic.
To get at a deeper understanding of how the economy last year affected wealthy South Africans Gugulethu Mfuphi spoke to Jaco Van Jaarsveldt who is the Chief Decision Analyst Officer at Experian Africa.
Listen to the full conversation:
COVID-19 played a major role.
Though during the pandemic there were a number of payment holidays that were offered to consumers that never defaulted, consumers are making important payments first. He also added that COVID-19 has created a very different credit environment.
Van Jaarsveldt shared what South African consumers are prioritising when it comes to their debt.
“What we’ve observed is that people are generally making payments on home loans first, which is the primary residence for consumers who have homes, then its credit card as this is general purpose product that they use for day to day living.”
The economic situation is affecting the rich
Van Jaarsveldt added that credit providers are aware of the situation in the country, and admits that it has a real impact on the wealthier segment of the population.
“South African consumers have been in distress even before the lockdown in different segments, the portion of the population which has generally been immune to financial strain, those that are in the top 1% and have access to lending, they are also in the stress pile.”
According to Business Tech, in the three months to end-December, the top 2.5% of South Africa’s credit active population saw total new defaults on debt repayments of more than R4 billion.
With members of this group typically having an average starting home loan of more than R1.2 million and take on vehicle loans of more than R450,000. Together, these wealthy households have outstanding debt of almost R600 billion.