WeeklySA_AdminStress: The economic recovery is uneven and many households are operating under significant stress
By WSAM Reporters
Thousands of South African consumers were struggling with their financial commitments with many being unable to meet their monthly obligations and scores of households operating under significant financial stress.
The Quarterly TransUnion Consumer Pulse study also found that nearly 52 percent of consumers had cut back on discretionary spending such as dining out, travel and entertainment in the past three months.
‘’ Additionally, a considerable number of consumers (28 %) reported cancelling subscriptions or memberships in that time period.’’
Some of the households’ most significant financial concerns over the next six months included inflation for everyday goods (38%) and jobs (20%). Housing prices remained a concern for 12% of consumers, a three-percentage-point increase from the previous quarter. This underscored the complexities of the local economic market, particularly around consumers’ access to affordable housing and mortgages while maintaining the financial capacity to service debt.
“While the easing of inflationary pressures and potential interest rate cuts provide a glimmer of hope, the rising cost of housing remains a significant concern for many South Africans,” according to Fatgie Adams, Head of Credit Risk Solutions at TransUnion Africa. “Our latest Consumer Pulse Study highlights that even as household income expectations improve, the affordability of housing continues to be a critical issue that requires attention.” The study also found that while 76% of South African consumers expected their incomes to rise in the next year, the vast majority saw access to credit and lending products as important to achieve financial goals.
Despite increasing optimism about household finances and repaying their debt faster than a few months ago, consumers were also becoming more concerned about the rising cost of housing.
With the local economic environment showing signs of stability and GDP growth projected at 1.3% this year, there was a sense of cautious optimism, particularly after inflation settled at a three-year low of 4.6%3 in July this year.
According to the TransUnion study, 76% of consumers expected their incomes to increase over the next year, up from 70% in the same quarter last year. Furthermore, 73% of consumers were optimistic about their household finances for the next 12 months, a seven-percentage point increase year-over-year . “Even though increasing consumer optimism is a promising indicator of economic recovery, it is essential not to diminish the financial challenges that many South African households continue to face,” said Adams.
Despite growing optimism, many consumers reported struggling with their financial commitments. The study found that 36% of consumers did not expect to be able to pay at least one of their current bills and loans in full. Among those who said they would be unable to pay at least one of their current bills and loans in full, 38% indicated that they intended to pay a partial amount that they could afford, but not the whole balance. Others said they would pay their current bills and loans by borrowing from a friend or family member, while a small group (9%) admitted they did not know how they would pay their bills or loans.
“Our findings show that while some consumers are seeing income growth, the struggle to meet monthly obligations is still very real for more than a third (36%) of the respondents,” said Adams. “This indicates that economic recovery is uneven and that many households are still operating under significant financial stress.”
The study also shed light on the perceived importance of credit and lending products. Most of the consumers surveyed (92%) believed that access to credit and lending products was important to achieve financial goals. Despite this, only a portion (36%) of respondents planned to apply for new or refinance existing credit within the next year.
Interestingly, more than half of consumers (51%) had considered applying for new credit or refinancing but ultimately decided against it. The main reasons given included the high cost of new credit or refinancing, fears of being rejected due to their income or employment status, no longer needing the credit and concerns over their credit history potentially resulting in a rejection.
Monitoring credit reports was also a focal point for South African consumers. More than half said they checked their credit report at least monthly, although a smaller portion (17%) said they did not monitor their credit report at all. There was a strong sentiment among consumers that it was extremely or very important to monitor their credit report.
Interestingly, when asked if their credit score would change if businesses used alternative data sources typically not included in standard credit reports such as rental payments, gym membership payments and short-term loans, responses varied.
The majority (50%) of consumers believed their score would increase, others (25%) thought there would be no change and the smallest percentage (10%) felt their score would decrease. The other 15% of respondents were unsure what would happen.
“Regularly monitoring credit reports is a critical step for consumers to take control of their financial health,” Adams said. “Understanding your credit status allows you to make informed decisions and plan effectively, especially in today’s dynamic economic environment.”
The study also found that identity risks continued to be a concern for South African consumers. Among the 60% who said they had been targeted with an online, email, phone call or text messaging fraud attempt in the last three months, 34% reported being targeted by phishing schemes, up from 28% in the previous quarter. Similarly, there had been a 12-percentage point rise to 32% in vishing schemes (fraudulent phone calls that try to trick people into revealing data).
Mirror Briefs
PLANNED STRIKE IS COSTLY
Business Unity South Africa (Busa) has expressed concern over the planned October 7 nationwide protest by the Congress of South African Trade Unions (Cosatu), saying recurring protests, using “outdated” National Economic Development and Labour Council (Nedlac) certificates, placed undue strain on businesses and the economy.
Cosatu is protesting retrenchments it says are to maximise profits and alleges that “we have seen the number of retrenchments increase at alarming rates accompanied by weak economic growth as well as rising costs of living”.
Busa said while it acknowledged the importance of labour rights, it stressed that protests should not come at the cost of economic stability.
Busa said it did not believe that Cosatu’s proposed strike would address any of the challenges that the trade union had raised.
“We respect the right to strike or protest, within the dictates of the law, but believe the issues raised by Cosatu are structural in nature and can be addressed through the various bilateral and multilateral processes, engagements and partnerships underway,” said Busa CEO ,Cas Coovadia.
Busa CEO designate, Khulekani Mathe, said the organisation reiterated its proposal to revise Nedlac Section 77 processes, to limit the time between Nedlac certificates and protests to 12 months, ensuring that labour actions were “relevant, current and justified”. – Fullview
LIFE TERMS FOR SERIAL RAPIST
Ekurhuleni serial rapist Nkosinathi Phakathi, who terrorised women and girls in Ekurhuleni, mostly from areas east of Benoni, was sentenced to multiple life terms on 148 charges of rape, sexual assault and kidnapping in the High Court in Johannesburg sitting in the Palm Ridge Magistrates Court. He was found guilty of 90 counts of rape, four counts of compelled rape, three counts of causing a child to witness a sexual act, 43 counts of kidnapping, two counts of assault as well as four counts of theft.
Acting Judge Lesego Makolomakwe said the sentence would send a message that crime against women and children will not be tolerated.
She had considered mitigating and aggravating factors, evidence presented and the impact of the crimes on victims and their families.
“The motive for the offences remains unknown. The use of a firearm and a knife indicates the offences were premeditated. The accused would approach some of the victims in their houses,”she said. Some of the children were raped while wearing school uniforms and on their way to school.
He was arrested at Barcelona section in Etwatwa. His rape spree dates back to 2012, with victims aged from nine to the 40s, whom he would follow in Daveyton, Putfontein, Crystal Park and Etwatwa. – Lehlohonolo Lehana.
TEACHERS HONOURED
The teacher is the devoted, tender garderner who is nurturing our nation, President Cyril Ramaphosa, said yesterday (Sat).
He was addressing the 24th National Teaching Awards event that was held at the Birchwood conference centre in Ekurhuleni.
‘’It is a great honour for me to be here and to be amongst the finest men and women of the teaching profession in our country. I congratulate the Department of Basic Education for sustaining the National Teaching Awards. The awards are now in their 24th year, nearly as old as our democracy itself. This enduring commitment to honouring our educators speaks to their unique and treasured place in our country’’.
The President said many of the people , including himself, were who they were today because of the teachers they once had.
‘’I remember many of these fine educators not just for the knowledge they imparted, but also for their guidance and encouragement. All these years later, they still hold a special place in my heart. The teacher is the devoted, tender gardener, nurturing our nation’’.
Just as the diligent gardener knew the special needs of each of the plant species in their garden, teachers tend to their students as unique individuals.
‘’Just as a garden blooms and flourishes under the gardener’s steady hand, teachers play a formative role in the life of a child. A good teacher is a role model who encourages a child to achieve their potential’’. – WSAM Reporter.
PLAN TO GET SAFE LAND
The Department of Human Settlements intends to partner with traditional leaders to identify disaster-resilient areas suitable for human settlements development, using geo-mapping.
Minister, Mmamoloko Kubayi, made the announcement at a meeting held with Members of Executive Councils (MINMEC) responsible for Human Settlements across the country last week.
Kubayi said the collaborative initiative with traditional leaders aims to enable traditional leaders to identify safe land parcels for settlement purposes and avoid disaster-prone areas in vulnerable provinces. The department intended to pilot this approach in rural KwaZulu-Natal and Limpopo Provinces, paving the way for proactive disaster mitigation and sustainable human settlements.
“By leveraging geo-mapping technology, the department aims to inform decision makers to make better land allocation decisions, ensuring the safety and well-being of communities. We cannot be chasing after or reacting to disasters.
“We must be proactive and put measures in place to mitigate future disasters. Climate change is upon us, and we should be better prepared and be able to respond accordingly.’’
The Minister convened the meeting with the MECs, focusing on the 2024/2025 human settlements priorities. This was the second meeting in the seventh administration included the Mayors and Members of Mayoral Committees for Human Settlements in metropolitan municipalities and representatives from the South African Local Government Association to tackle key critical areas. – SANews
