PODCAST | Improving economic picture for SA households on shaky ground

The improving economic picture for SA households is the focus of this edition of Business Day Spotlight. 

Host Mudiwa Gavaza is joined by Dr Roelof Botha, economic adviser to Optimum Investment Group. 

This week, Altron FinTech released its latest Household Resilience Index (Afhri), which covers the fourth quarter of 2024. The index provides insight into “the financial state of households by assessing the state of micro-lending from the perspective of the ability of borrowers to repay loans”.

This most recent print shows the financial position of SA households improved somewhat in the fourth quarter of 2024 as a result of lower interest rates.

According to Botha, who compiles the index on behalf of Altron FinTech, the improvement was mainly due to three cuts of 25 basis points each in the repo rate between September 2024 and January 2025.

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He says households are not out of the woods yet, pointing to the Reserve Bank’s latest rate decision. 

“The rate-cutting cycle was halted, which will prevent the debt cost burden of households from dropping to a level that would encourage a more permanent recovery of household expenditure — the key driver of aggregate demand in the economy,” says Botha.

He also attributes part of the Afhri’s uplift to the seasonal influence of year-end bonuses being paid to many formal sector employees, festive season spending, as well as pension fund withdrawals under the recently introduced national two-pot system. 

Through the discussion, the economist highlights Afhri index components and research methodology; key findings from the index results; the effect of interest rates on the economy; and growth expectations for the year.

• Business Day Spotlight is a MultimediaLIVE Production. 

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