Financial Wellbeing Report: Africa 2023

A new financial wellbeing report published by online credit lender Wonga provides interesting insights into borrowing behaviours and trends in South Africa, highlighting key areas of concern to improve financial literacy and access to responsible lending.

Financial wellbeing refers to our monetary security and confidence, managing outgoings, relying on our savings to cover unexpected costs, and having the knowledge and understanding to make informed decisions about when to spend, borrow, save, and invest.

Rising debt reliance is a serious issue. Independent Online shared data extracted from the VeriCred Credit Bureau. In the second quarter of 2021, outstanding consumer debt hit R 2.077 trillion, and almost 720,000 people were undergoing a debt review.

Below we work through some of the insights provided by this most recent study to uncover the link between uncontrolled debt and education. 

The State of Financial Wellbeing in South Africa

The survey involved 12,000 participants, all of whom have been a Wonga customer at some point in the past. With 40% of respondents in employment, split between 43% men and 57% women, as a snapshot of general financial habits across a cross-section of the population.

Aspirations are high, with 90% hoping to achieve an income equivalent to the country’s top 10% of earners, but with shared barriers to achievement that make this difficult, including lack of access to higher education due to financial constraints.

Less than half of respondents had achieved a Matric Certificate level or an equivalent qualification, and under 10% had a bachelor’s degree. The OECD average is 37%, which shows that South African higher education is at a third of the global norm. 

These common denominators affect career opportunities, with over 40% of participants reliant on public transport, although many aspire to purchase a private vehicle. Positions with demanding working hours, unsociable shifts or that require a longer commute may, therefore, only be accessible by a small proportion of the population.

Perhaps more worrying is that most respondents indicated an expectation of retiring between 50 and 70, in line with national averages – but only 44% were saving anything for their retirement, with the assumption that the remaining 56% would be entirely dependent on state support and social security to survive.

How Education Opportunities and Poverty are Linked

The two overarching themes are undeniable – lack of funding for education is directly connected to financial instability, with most South Africans concerned with paying rolling debts and keeping their heads just above water. 

Everyday costs such as rent and groceries are a struggle, so setting aside savings for retirement, a car, a property, or an educational course is far from a priority.

Low education levels inevitably lead to high unemployment, and the spiral continues without a reliable salary, sufficient earnings to save, or access to any routes to improving education.

In the immediate future, schooling must be a focus for families, ensuring younger generations achieve at least a basic education that will set them up for further access to careers, a higher education, or opportunity – and move away from short-term debt to cover even the most basic of needs.