Credit bureau TransUnion has published a new report showing how the coronavirus lockdown is affecting the financial position of South Africans, and their ability to pay bills.
The report is based on a survey of 1,100 adults in South Africa between 28 May – 1 June.
The survey shows that the proportion of consumers saying they are negatively affected by Covid-19 has increased to 84%.
“Consumers in the most vulnerable sectors of the economy are feeling the greatest impact on their income,” TransUnion said.
“89% of consumers employed in each of the construction and restaurant or food services industries and 88% in the retail industry have had their income negatively affected.”
The survey shows that the proportion of consumers who are concerned about their ability to pay their current bills and loans has also steadily increased to 91%.
Rent and utility payments remain the two bills of most concern, as 41% of consumers impacted are concerned about their ability to pay their rent and 40% about utilities.
The average amount that consumers feel they will be ‘short’ in paying bills is around R7,098.40.
Consumers who were impacted said that they expect they will not be able to pay their bills or loans in about two months time (7.7 weeks).
The data also shows that consumers continue to tighten their purse strings. When asked what has changed as a result of the crisis, 60% of impacted consumers indicated that they are spending less on both entertainment and eating out, otherwise known as discretionary spending.
More impacted consumers have cancelled or reduced digital services including wireless, satellite services and internet. A quarter (24%) of those affected financially have cut back on retirement savings.
“It appears that to preserve cash flow, consumers are minimising payments against existing debt and bills,” TransUnion said.
35% of affected consumers say they are making only partial payments on their debts and bills.
“Consumers continue to borrow against their savings to close financial shortfalls, with 38% reporting this option as part of their game plan, up a significant eight percentage points compared to the prior wave of our survey.”
TransUnion said that substantially more consumers financially impacted by the pandemic plan to borrow money from family or friends (26%) despite 60% reporting that they have reached out to companies they have accounts with to discuss payment options.
Nearly a quarter (21%) of consumers surveyed reported that they had payment holiday arrangements with their lenders and service providers.
Auto, personal loans and credit cards were the top three products for which consumers had these arrangements. A quarter of consumers with an auto loan had this arrangement, compared to 17% of consumers with a personal loan, and 17% of consumers with a credit card.
The report also found that consumers are delaying purchases as a result of the crisis with the top three items deferred being vacations and holidays (42%), home improvements (39%) and spending on education.