South Africans had built up a sizeable debt burden with unsecured lending increasing significantly, according to a respected economist, Mike Schussler.
Schussler made this statement shortly after it was announced that incomes of South Africans had risen substantially since the country’s first all-race elections in 1994.
“And there is currently great concern about unsecured lending,” says Schussler. “The National Credit Regulator (NCR) states that majority of South Africans borrow from unsecured lenders.”
Unsecured lending is the type of lending where the lenders do not ask for security.
Schussler said surprisingly 19.6 million South Africans had a credit record, but only 13.2 million worked (some only for subsistence).
A total of 22.6 million had bank accounts. This may suggest that more people are working than official statistics indicate which is positive.
Turning to financial markets, Schussler said the country had a very good financial market and it is working well, “almost too well.”
According Schussler, the recent census shows that the ownership of South African household of houses is among the highest in the world today.
“It is even higher than in most developed countries,” Schussler said.
A total of 77.6 percent of South African households stay in formal sector houses. Another 7.9 percent stay in traditional houses in rural areas, and less than 14 percent stay in informal dwellings.