Dealing with debt

Debt to disposable income for South African households has increased from less than 60% before 1994 to the current level of about 75%, which is higher than the long-term average of 70% according to the South African Reserve Bank in July this year.

This means that households spend three-quarters of their take-home pay on debt and only have a quarter of their salary to spend on everything else.

These figures exclude loans from informal credit sources such as loan sharks. As these microfinancing options are illegal in South Africa, there is no available data to show exposures and cost to households. They are, however, extremely expensive with monthly interests possibly as high as 20% to 30% to be repaid with the capital.