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South Africans remain under financial pressure due to the Covid-19 pandemic - Transunion report

A TransUnion report says 55 percent, of South African household’ finances remain compromised due to the wrecking ball of Covid-19. Photo: File

A TransUnion report says 55 percent, of South African household’ finances remain compromised due to the wrecking ball of Covid-19. Photo: File

Published Jan 20, 2022


55 percent, of South African household finances, remain compromised due to the wrecking ball of Covid-19, exasperated by the country’s high joblessness and desperate consumers had become vulnerable to unemployment scams, according to research conducted by TransUnion in November.

However, the research showed that this number was the lowest in the year, down from 61 percent in August and 62 percent in March and found that the main reasons household incomes decreased were a result of job loss, reduced salary and work amid the pandemic.

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The report comes as data from Statistics South Africa (Stats SA) released this week showed that the consumer price index (CPI) rose further to 5.9 percent in December, from 5.5 percent in November.

The annual consumer inflation in South Africa accelerated to a near five-year high in December 2021, mainly pushed up by higher fuel and food prices.

Weihan Sun, TransUnion Africa’s director of financial services research and consulting, said: “While we’re seeing a slight improvement in the number of people financially negatively impacted by Covid-19, the study highlights the fact that many South Africans remain under pressure.

“November brought with it changed circumstances following months of lockdown, including municipal elections, increased freedom of movement, as well as increased load shedding. For many consumers, the economic recovery is slow and arduous and will undoubtedly have many more bumps along the way.”

TransUnion, the global information and insights company, said one in three, or 34 percent, surveyed consumers said someone in their household had lost their jobs, while 32 percent said someone in their household had their salary reduced.

In all, 28 percent had work hours cut in the previous month, at a time when South Africa recorded its highest unemployment rate of 34.9 percent. Lower-income consumers - households earning less than R50000 a year- were hardest hit, with nearly four in 10, or 38 percent, indicating someone in their household lost their job in October 2021.

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Meanwhile, consumers who said their household income was knocked, 85 percent remained ‘highly concerned’ about their ability to pay their bills and loans. Among those with these bills and loans, unsecured credit remains their top worry, with the main items consumers cannot pay being personal loans (29 percent), mashonisa (informal and/or unregistered credit providers) loans (28 percent), private student loans (24 percent), and retail and clothing store accounts (21 percent).

Only five percent of consumers said their household income had fully recovered after being impacted by the pandemic. And while 58 percent of consumers were hopeful their household income would recover, 42 percent were less optimistic.

Sun said it was ‘critical’ that consumers should keep tabs on their credit reports, both to stay on top of their financial health and to guard against fraud.

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Of note, the report found that consumers who were aware of a digital fraud attempt targeted at them, four in 10, or 40 percent said they came from third-party seller scams on legitimate online retail websites, and one in four, 26 percent, said they had been targeted through an unemployment scam. Consumers impacted financially by the pandemic saw higher occurrences of fraud, with 42 percent citing third-party seller scams and 30 percent an unemployment scam.

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