South African consumers continue to face very tough financial times. These are the findings of a survey conducted by infoQuest/TrendER, a leading South African online research company, where 500 South Africans were interviewed.
Financial satisfaction levels have declined dramatically over the past 3 months. In infoQuest’s April survey, 39% of working consumers rated their financial dissatisfaction as 1–5 out of 10, whereas in July 2022, this had increased significantly to 51%. Only 1 in 10 consumers felt that their financial situation was very good/excellent.
“South Africans are facing very challenging times. This sharp decline in just over three months is most likely to be a reaction to a combination of poor economic conditions (with full recovery after Covid-19 not yet realised), rising petrol prices and the effect of load shedding on both households and businesses,” says Claire Heckrath, Managing Director of infoQuest.
One in two South Africans are worse off now, compared with pre-Covid-19 times
One in two South Africans claim that their financial situation is worse now compared with pre-Covid-19 times, and this differs significantly across the different age categories. Younger consumers (those aged 18–34 years) have been less affected. “This is probably because these younger consumers may be able to move back home to save costs, as well as the fact that they may have fewer expense and debt burdens (such as schooling, etc), than their older counterparts,” says Heckrath.
infoQuest also compared their results to a global survey conducted by YouGov (an international internet-based market research and data analytics firm), in 2021. “Although the timings of the surveys were not totally congruent, it does make for interesting comparisons across different countries,” she says.
| Current situation compared with pre-Covid-19 | South Africa | UK | US | China | India |
| Worse | 50% | 27% | 25% | 36% | 53% |
| The same | 24% | 50% | 45% | 38% | 30% |
| Better | 26% | 18% | 22% | 21% | 14% |
| Don’t know | – | 5% | 8% | 4% | 3% |
Household actions over the Covid-19 period
- Actively reduced non-essential spending
62% of South African consumers claimed that they had cut back on non-essential spending since the onset of the Covid-19 pandemic. The higher the LSM level, the more consumers have cut back. This makes sense, given that this segment, with higher incomes, potentially spend more on luxuries and non-essentials, and hence have more to cut back on.
Compared with the 17 countries in the YouGov survey, South Africa achieved the highest level of ‘cutting back on non-essentials’.
- Have had to rely on savings to get by
South Africa is in 4th position when it comes to having to rely on savings to get by, behind Mexico, India and Singapore.
- Have accumulated more debt during the pandemic
About one in four South Africans have accumulated more debt during the pandemic. This is the highest level when compared with the other countries in the YouGov survey.
- Been able to save more during the pandemic: ‘Pandemic Savers’
The UK enjoys the highest level of ‘pandemic savers’ of the countries surveyed, with one in three Britons being able to save more. In South Africa, this was 19%, driven mainly by the younger age segment, who may have fewer financial obligations and may be more likely to move back home with parents, or move in with others to save money.
Sources of data for the above 4 diagrams: South Africa data: InfoQuest (July survey); Other Countries: YouGov.
What will be done with savings made during Covid-19?
Just over a half of South African consumers who managed to save during COVID-19, claim that they will put it all away/save it, so that they will have a savings buffer in future. Only a small percentage (4%) would spend it all, and the remainder (41%) state that they will save some and spend some.
In terms of spending, everyday items (eg groceries, petrol) and school fees were the primary categories of intended expenditure, indicating that savings would mostly go on ‘essential’, rather than luxury items. Two in five consumers would use some of their savings to pay off debt, while 35% would spend it on a holiday.
How debt will be paid off
Those who indicated that they had accumulated debt during the pandemic, were asked how they planned to pay this debt off.
Predominantly, by decreasing other spending, consumers planned to use the savings made to pay off their debt. Heckrath says that ‘a rather concerning finding was that approximately one in four consumers intend to gamble in an attempt to use any winnings to pay off their debt. Unfortunately, this can go the wrong way, with gamblers potentially losing more and getting themselves into more debt.’ Borrowing from family and friends is also not a solution as this becomes a cycle of debt with ‘borrowing from Peter to pay Paul’.
Effect of petrol/transport costs
63% percent of consumers claimed that the rising petrol costs have had an extreme impact on their lives. Those in the younger age categories and those in lower LSM categories were more likely to be extremely affected by the petrol costs. This is understandable given that the proportion of income spent on transport costs is probably higher in these segments.
How consumers are making money go further
Sticking to a monthly budget is the main method where consumers are making their money go further. ‘What is encouraging is that 62% of young adults (18–34 years) claim to be doing this. It is important for young adults to learn how to budget and to stick to it’, says Andrea Kraushaar, Research and Insight Director at Youth Dynamix.
General entertainment (going out/eating out and socialising) is also a main category that has been curbed in order to make money go further.
Rather buying online than going to the shops was mentioned by one in five consumers, while 9% said that they were car-pooling in order to save on petrol costs.
Making money go further
Sticking to a monthly budget 56%
Spending less on going out/eating out/socialising 46%
Buying items online rather than going to the shops 19%
Cutting down on sports/hobbies 12%
Putting studies/education on hold 11%
Car-pooling and spending less money on petrol 9%
Choosing to rent/share a home 7%
