Spending might look a little different this Black Friday, due to an increase in debt levels. Picture: Rupixen
Spending might look a little different this Black Friday, due to an increase in debt levels. Picture: Rupixen

Can you afford to spend this Black Friday?

By Keshia Africa Time of article published Nov 21, 2021

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SCENES of people camping outside stores from midnight or catfights over the last tube of cheap mascara are a depiction of Black Friday’s past, warn economists who expect the event to be toned down.

Economist Dawie Roodt said the average South African consumer was worse off now than they were at the beginning of the pandemic.

“The country is going through a difficult patch, and consumer spending habits have been dramatically affected by lockdown,” he said.

Roodt said that the many trends that existed before the pandemic had become accelerated. This includes things like online shopping – a trend particularly made popular on apps like TikTok where creators shared haul videos of everything they’ve purchased from specific stores.

“The pandemic accelerated many of these existing trends. Aside from that, income has come under severe pressure too.”

The economist said South African citizens were highly indebted in any event.

“Yes, the average consumer can borrow more money, but they do not have an unlimited scope on this,” he said.

Roodt said there was a decrease in spending that was fuelled by uncertainty in March 2020. Roodt said that as lockdown restrictions started to ease up, spending had increased along with it.

“This increased demand has been seen globally and I am certain that it will reflect on Black Friday in South Africa.”

A recent debt index released by DebtBusters showed that the total debt for people earning between R5000 and R10 000 per month had increased by 39%.

Head of DebtBusters Benay Sager said the debt-to-income levels had been increasing.

“For all income levels, the debt to net income ratio is 116%. Consumers are in financial difficulty,” he said.

The debt index also showed that citizens earning over R20 000 per month needed to spend more than 60% of their net income to service their debt.

Sager said consumers should use Black Friday and any other promotional spending as an opportunity to purchase necessities.

“We warn consumers against overspending and unnecessary spending.”

Sager said there was an expectation of a heavy use of credit cards available to consumers this Black Friday, November 28.

On November 1, RCS and Superbalist launched a partnership that will allow customers to use their RCS cards to purchase online. Simultaneously, Takealot has had a Mobicred option available allowing purchases to be paid off over a longer period.

Roodt said while options like these existed, it was the individual's responsibility to know what was and what was not within their means.

“Credit and the instrument to get access to credit has become more accessible and easier for everyone to take on credit.

“It’s not a bad thing. I can borrow for many years but it is my responsibility to make sure I can afford it,” he said.

Marketing manager for financial service provider JustMoney, Shafeeka Anthony, said that many South Africans cannot afford to be spending as they currently do.

“Sadly, many people are in debt just to survive. We completed a snapshot survey in November 2020 which showed more than 82% of participants were in debt,” she said.

Anthony said that because there had been no meaningful economic growth, consumers were turning to unsecured credit to supplement their salary and to survive.

“If more than a third of your income is allocated to paying off your debt, and you find yourself taking out loans to get through the month, you may need to consider debt help.”

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