The decline in the CFVI reflects that the majority of consumers are feeling financially exposed and insecure, meaning that any small adverse event can contribute to a large deterioration in the state of their personal finances. Picture: SYDNEY SESHIBEDI
The decline in the CFVI reflects that the majority of consumers are feeling financially exposed and insecure, meaning that any small adverse event can contribute to a large deterioration in the state of their personal finances. Picture: SYDNEY SESHIBEDI

In this edition of the Business Day Spotlight, we talk about the vulnerability of consumers in SA. 

Our host Mudiwa Gavaza is joined by Johann van Tonder, an economist and researcher from Momentum. Van Tonder talks about the Consumer Financial Vulnerability Index (CFVI) from Momentum and Unisa, the results of which were recently released for the second quarter of 2021.

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Studied and updated each quarter since 2009, he says the CFVI uses a number of data points to assess how consumers are faring.

Van Tonder says this past quarter’s report highlighted a few key observations:

  • Many consumers have been forced to sacrifice saving to cover expenditure and service their existing debts;
  • The psychological toll of the pandemic is greater than one might realise;
  • Consumers tend to be very negative about the country and do not feel in control of their lives;
  • Consumers in low-income groups tend to rely on government for support and survival and not so much on creating their own sources of income;
  • Consumers have changed their buying behaviour as the pandemic accelerated the adoption of digital products and services, such as online grocery shopping;
  • The pandemic has undermined the feeling that long-term planning is important, with consumers having a survival mindset and not taking tomorrow into consideration.

The main reasons behind many of these findings include: income vulnerability has increased; there are now higher levels of people not having enough funds to meet their expenditure needs; the rate of savings for those who can has decreased; and a reduced ability for people to service their debt.

Mudiwa Gavaza. Picture: DOROTHY KGOSI.
Mudiwa Gavaza. Picture: DOROTHY KGOSI.

Van Tonder says many of the findings and the experience of going through lockdowns to prevent the spread of Covid-19 has highlighted the growing disparity between rich and poor in the economy. 

The discussion focuses on the results of the latest CFVI released by Momentum and Unisa; key findings from the report; factors driving the economic standing of consumers; psychological factors affecting consumers; and an outlook for the economy going forward. 

Engage on Twitter at #BDSpotlight

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 Business Day Spotlight is a MultimediaLIVE production.

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