Data from Experian South Africa shows that the negative impact of COVID-19 has seen more consumers defaulting on their debt, with consumer debt now sitting at a staggering R1.5 trillion.
Experian’s Consumer Default Index (CDI) for the first quarter of the year increased to 4.94%, from 4.11% in the same time last year, amounting to R1.5 trillion in outstanding consumer debt.
The company said the primary driver of the significant increase in the CDI, was the rise in first-time defaults, across secured lending products, with the Home loans index increasing from 1.68% to 2.32% and the Vehicle loans index from 3.88% to 4.34%.
“The continued impact of a worsening general economic environment in South Africa along with the early impact of the COVID-19 pandemic has resulted in the Consumer Default Index reaching its highest level over the past five years at a composite level. Additional macro forces such as increasing unemployment and the lack of economic growth have had a significant impact on consumer’s ability to repay debt,” said Jaco van Jaarsveldt, Chief Decision Analytics Officer at Experian Africa.
“It is evident from the latest CDI results that segments of the South African credit active population that were previously less impacted by the distressed economic environment, are no longer immune to financial struggles. The COVID-19 pandemic with the knock-on impact of various industries been locked down seems to have impacted consumers across all financial statuses,” he added.