The South African economy has continued to struggle in 2023, as reflected by 0.4% real GDP growth, the unemployment rate stagnating beyond 32%, and the South African rand depreciating further against major currencies.
With consumers struggling to keep up with the high cost of living, buy now pay later (BNPL) has continued to gain momentum, particularly appealing to younger shoppers aged between 25 and 35 with an existing credit profile. This trend has been consolidated by relatively easy access, with minimum requirements such as providing a South African ID number.
Historically, the South African micro-lending landscape has been dominated by informal lenders targeting lower-income and unbanked groups. These informal lenders are often known as loan sharks due to the relatively high interest rates charged.
Affordability for first-time homebuyers was significantly boosted by the decade-low 7% South African prime rate experienced during the pandemic, but as the prime rate reached 11.75% by May 2023, first-time homebuyers have become increasingly price-sensitive.
The South African Reserve Bank’s aggressive increase in interest rates to reduce inflation to its target was the dominant driver of the increasing consumer appetite for micro-lending and revolving loans during the review period. Over the short term, this trend is expected to persist, supported by demand from cash-strapped households.
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Understand the latest market trends and future growth opportunities for the Consumer Lending industry in South Africa with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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Consumer Lending
Aggregate of Consumer Credit and Mortgages/Housing. Gross Lending: The total value of loans advanced by institutions in a given year; data refers to single year only. Outstanding Balance: The collective amount owed by borrowers at the end of a given year; data refers to the cumulative impact of debt.
See All of Our DefinitionsThis report originates from Passport, our Consumer Lending research and analysis database.
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