Credit Stress Report 2021 Q4 is out

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2021 Q4 ended a tough year with the Omicron sting in the tail of the Pandemic

In December South Africa experienced what the Mail & Guardian referred to as the “cruel and racist logic of Omicron travel bans” when wealthy nations in North America and Europe (despite having cases themselves) restricted travel to South Africa after our scientists identified the new Omicron Covid-19 variant.

While the impact of the loss of a second tourist season will be felt longer term, the credit data available in Quarter 4 of 2021 showed the Middle Class sliding further into debt. Vehicle asset finance and credit cards were most affected with overdue debt increasing 35% and 20% respectively YoY.

After dropping by nearly 30% over the past four years, the number of loans outstanding stabilised, with almost no increase in real loan accounts, although retail trade defied expectations in December with 3.1% growth from the previous year. 

According to the Netwerk24/Beeld Consensus poll, real GDP growth is forecast at roughly 4.8% in 2021, slightly better than the IMF forecast of 4.6%The forecast is based on the assumption that relaxed lockdown regulations drove economic activity in the last quarter of 2021.

Reflecting patterns already evident internationally, consumer inflation accelerated much faster than expected in the last quarter of 2021, almost reaching the Central Bank’s upper limit of 6%. The main drivers of inflation were in the transport, food and housing categories, with the rise in fuel prices  having a significant effect in the transport category. Diesel prices set three new record highs in Quarter Four, and Petrol reached another all-time high. Global oil prices took an unexpected turn in the last quarter, rising on the back of a host of supply constraints.

Continuing a trend from last quarter, the number of accounts 9 months in arrears (which make up half of all loans in arrears) continues to grow, albeit at a slower pace. The proportion of loans in good standing has remained stable over the past year at 62%.

Every quarter, the Eighty20 Credit Stress Report picks a particular theme or issue to examine, and this quarter we look at the impact of credit stress on the ENS Segments.

Our ENS divides the South African population into eight segments.  Each segment is representative of a homogenous population in South Africa, from a very poor segment such as the Hustling Males, to a working class segment called the Mass Credit Market, and a wealthy segment called the Heavy Hitters.

This quarter we use credit data to  estimate the stress of the ENS segments as a result of their indebtedness.  We describe the impact of Covid on credit stress levels using a 100 point scale. A score of 100 would mean everyone is Very Stressed. A score of 50 would mean either everyone is Stressed, (or an equal number are Very Stressed, and Not Stressed). A score of 0 would mean everyone is Not Stressed.  We also estimate the productivity lost per segment as a result of absenteeism and presenteeism.  Across all South African firms this cost could be as high as R62 billion per year (1.4% of GDP)

Our model has three states, Very Stressed, Stressed and Not Stressed.  The definition of Stressed is having greater than 70% monthly instalment to net income ratio, or two loans in default, or greater than 20% overdue balance as a proportion of gross income.  When looking at the score for each segment, it is important to bear in mind that we are speaking to an absolute state of credit stress not a sliding scale, so a score of 54.5 for the Hustling Males is quite significant.

The report concludes that the wealthiest South Africans in many ways have been insulated from the effects of not only the recession, but the ravages of the Covid pandemic. Their credit stress score of 18.9 rose only slightly from Q1 2020, but while they make up only 14% of the population, they contribute nearly 40% of the lost economic productivity.

At the other end of the spectrum, the Hustling Males, have been hit quite hard. Most don’t have credit, but those who do are by far the most stressed, with productivity loss in this segment more than doubling since pre-Covid, and their credit stress score growing more than any of the other segments. Their credit stress is a function of unsecured loan instalments and unsecure jobs.

The Middle Class, however, have been probably the worst hit by Covid, with South Africans experiencing a  further 4% increase in overdue balance on vehicle finance this quarter, bringing the YoY increase to 35%. The YoY increase in overdue balance on credit cards has risen to 20%.  This segment has a credit stress score of 30.5. 

Each segment’s stress score is a function of the number of credit active people, what types of credit products they hold, and how indebted they are.  With employees returning to the office, and the expectations that South Africa will reach pre-Covid levels of GDP this year, and moderate growth there is hope that perhaps some of these credit stress scores will improve.  We will update this analysis in another Credit Stress Report later in the year.


Eighty20 and XDS have created a National Segmentation (ENS) Customer Profiling Tool. The ENS, while protecting customer privacy and data protection, enables the most comprehensive view of South African adults. Using statistical techniques to overlay diverse datasets, including credit bureau, national and regional surveys, thousands of variables are mapped to each consumer. Your consumers are mapped to one of 1,500 micro-segments, 48 sub-segments and 8 segments using either SA ID, mobile number or key variables such as age, income and gender. Find out more here or call us for more information.

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