Vast majority of households still feeling financial impact of Covid-19

The vast majority of households are still struggling under the financial impact of the Covid-19 crisis, with 77 percent of them saying that their household income has been negatively affected. African News Agency (ANA)

The vast majority of households are still struggling under the financial impact of the Covid-19 crisis, with 77 percent of them saying that their household income has been negatively affected. African News Agency (ANA)

Published Aug 27, 2020

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CAPE TOWN - The vast majority of households are still struggling under the financial impact of the Covid-19 crisis, with 77 percent of them saying that their household income has been negatively affected.

This was according to a survey released yesterday (WED) by global insights company TransUnion, which said the 77 percent was nevertheless much lower than the first round of surveys in April and the peak of 84 percent in June.

The survey respondents reported that job losses continued to increase, with 21 percent of financially impacted consumers reporting that they had lost their jobs as a result of the pandemic, up from 10 percent in April.

The ongoing research, designed to better understand the financial impact of Covid-19 on consumers, showed the percentage of those worrying about their ability to pay bills and loans, remains high, at nearly nine in 10 (89 percent) respondents.

However, for some consumers, there was positive change, with 16 percent reported having started a new job or developed new revenue generating activity, up from 4 percent in May.

“Over three-quarters of South African consumers are still feeling the impact of Covid-19, but the results show some positive indicators. Some consumers have seen improving conditions, with 16 percent of households saying they do not expect any future financial impacts, up from 11 percent in June.”

"For the majority of consumers however, rising unemployment is causing continued financial stress, with many struggling to pay their bills,” said TransUnion Africa chief executive Lee Naik.

TransUnion’s research showed that the length of time consumers estimated they would be able to maintain bill payments was growing. In all, 24 percent of respondents would be able to maintain bill payments for longer than three months, up from 15 percent in April.

Rent and utilities continued to be major financial stressors, with 37 percent of impacted consumers concerned about their ability to pay these bills.

And, their ability to pay their retail and clothing accounts and personal loans remained of equal concern among them, said Naik.

Consumers are taking a range of actions to recover from the crisis. Nearly 60 percent were cutting back on discretionary spend, down 3 percentage points from last month.

Many consumers were withdrawing or borrowing to increase cash flow, with more than 34 percent saying they were using money from their savings to help pay bills.

Additionally, 25 percent of respondents reported borrowing money from friends or family, while 24 percent did not know how they were going to pay their bills, up by 6 percentage points from last month and back to April levels.

About 17 percent of households say they have received a form of payment holiday, with support occurring most commonly among consumers with car leases, bond payments and personal loans.

While 23 percent of consumers with a home loan had this arrangement, almost one in four (24 percent) were currently not making payments.

When asked why they did not receive a payment holiday, 23 percent reported not knowing how to get one.

“Considering that the vast majority of payment holidays have ended or are likely to conclude in the near future, it is important to consider exit strategies. Nearly half of households would like to structure their payment plans in such a way that they can catch up gradually while paying their regular monthly payments, and a further 18 percent would like to at least extend the accommodation for another few months.”

Some 39 percent of consumers said they had been a target of digital fraud related to Covid-19, with the top three scams being unemployment related (34 percent), charity or fundraising scams (23 percent) and third-party seller scams on legitimate online retail websites (25 percent).

BUSINESS REPORT

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