There will again not be much Christmas cheer for South Africans this year as about 94% of survey participants indicate they’ll be under severe financial pressure during the peak festive season.
Statistics from a recent Debt Rescue survey paint a grim picture of households across the country. They are either hanging on by a thin thread or no longer able to hang on at all as we head into the peak festive season, traditionally the season of spending and splurging.
The survey was conducted to determine the real state of consumer finances at this time of year, focusing on the festive season’s expenses in the face of the nation’s economic hardships.
Neil Roets, CEO of Debt Rescue, says more than two-thirds of survey respondents (71%) confessed that they are just about coping (39%) or are under severe financial pressure (32%) as they wind down towards the end of the year. He has frequently raised the red flag about the plight of ordinary South Africans over the past year.
“These are two of the most concerning insights from our survey, as they indicate a nation in deep financial trouble. When households cannot scrape together even a few extra rands to celebrate what is perhaps the most important few weeks of the year for most of us, there is reason for grave concern,” Roets warns.
He says possibly the most distressing survey outcome of all is that two-thirds of people who participated in the Debt Rescue survey say they had to drastically change their festive season plans due to the impact of the high cost of living.
“Almost two-thirds of those polled (65%) say that they have either cancelled or completely changed their festive plans, due to their financial circumstances. It is incredibly sad that financial hardship is reshaping our festive traditions, which are one of the mainstays of all our cultures across communities,” Roets says.
He points out that the relentlessly increasing costs of essentials like electricity, water and transport, pushed a significant portion of the population into financial distress and below the poverty line, with households now having to make tough decisions about which is the highest priority among essentials.
More than 23 million people live below poverty line in SA
According to the threshold set by Statistics SA, 23 million people in South Africa (more than a third of the nation), are living below the lower-bound poverty threshold of R1 300 per month. This is the line in the sand that forces difficult trade-offs between food and other necessities.
“Against this backdrop, the findings from the Debt Rescue survey take on added significance, with a distressing number of people polled, voicing their concern relating to food inflation.
“Survey respondents listed food as their number one worry this December, with groceries and food coming through as the cause of festive stress among over half of the households polled, more than all other categories combined.”
Festive spending contributes to financial pressure later on
Another red flag Roets identified is that 65% of people polled said that festive season spending contributes to their long-term financial struggles, as they generally overspend on their budget or accrue more debt, just to be able to break free from the year’s stress for a week or two.
He says the pressure that 61% of the respondents feel to spend money they do not have is equally concerning because it leads to even more hardship in the months to come, especially as most (77%) are not expecting any kind of bonus or thirteenth cheque to help reduce the financial burden this year.
“However, it is encouraging that 40% of people who participated in our survey will be spending much less this year on festivities than last year. This behaviour reflects a shift to heightened financial caution and a reality check.”
While this is positive, Roets points out that this indicates the significant proportion of South Africans already drowning in debt who understand that they simply cannot take on anymore without running into serious trouble.
The National Credit Regulator (NCR) recently also issued a warning to the millions who are already over-indebted to spend cautiously over the festive season. The NCR’s Alfred Matsimbi said that consumers should stick to their budgets, prioritise essential purchases and be wary of credit or buy-now-pay-later schemes to avoid financial trouble.
“This is sound advice. I strongly support this approach and encourage those who are already paying off significant debt to spend wisely over the holiday period and enter the New Year on a good wicket instead of being burdened by the usual Januworry woes,” Roets says.
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