The current global COVID-19 pandemic is creating major economic and financial distress for consumers across the globe. Many jobs in the South African economy are already being impacted or at risk due to drastic demand shifts.
The effect of the COVID-19 pandemic on household incomes of South African consumers has stayed broadly stable over recent weeks, but the number of consumers who have lost their jobs has increased sharply since the beginning of April, according to newly released research from TransUnion.
This online survey of 1,005 adults in South Africa was conducted on 4 – 11 May, 2020.
“The pandemic is creating major economic and financial distress for consumers, with many jobs in the South African economy already being impacted or at risk due to drastic demand shifts,” said Lee Naik, chief executive officer of TransUnion Africa.
The credit report agency said more than a third of impacted consumers have canceled subscriptions or memberships and nearly a third have canceled or reduced digital services due to household budget constraints.
The amount that consumers expect to be short in the near future increased by 7%, or nearly R500, to R7,500 in week three, the survey discovered.
There has been a significant increase in impacted consumers implementing payment holidays provided by loan providers since the survey started, indicating that consumer and
lender communication has intensified.
The percentage of consumers reporting that their household income has been negatively impacted by the COVID-19 pandemic has been largely stable over the course of this study, with 82% of consumers.
Millennials (those born between 1980 and 1994) appear to be the most affected.
Mpumalanga remains the most impacted province when it comes to COVID-19 related unemployment, with job loss in the province increasing to 26% (up from 12% since the survey started in South Africa in early April).
“This could be driven by lockdown impacts on the agricultural and mining industries, which are the largest industries in the province.”
There has been a significant increase in consumers turning to payment holidays provided by loan providers as lender communications have intensified.
Overall, 44% of all consumers who are concerned about paying their bills report that they will not be able to make their rent payment, 39% will not be able to pay their personal loan, 37% will not be able to pay their cell phone bill, and 32% will not be able to pay their credit card.
All of these bill types were unchanged between the April and May surveys with the exception of personal loans, which increased from 33% to 39%.