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Picture: Gino Santa Maria/123RF
Picture: Gino Santa Maria/123RF

Nearly half of SA adults are struggling to afford food and electricity, highlighting the pressing financial challenges consumers are facing, with fewer jobs in the formal economy and a small number of low-earners in the informal sector.

This is according to FinMark Trust’s annual “FinScope Consumer SA” report for 2023, released on Tuesday.

FinMark is an independent nonprofit trust.

The report states 40% of adults are resorting to borrowing money to buy food and 20-million adults have gone without electricity because they could not afford it in the past 12 months.

Living expenses, which include groceries, energy, transportation and communication, account for about 85% of monthly income. Of this, groceries make up 30.4% of expenses, energy 11.5%, transportation 9.1%, communication 8.8% and routine household maintenance, rental and rates 8.5%.

“It is considered highly burdensome to allocate more than 10% of income to household energy expenses, including electricity,” said Jabulani Khumalo, senior data and analytics specialist at FinMark Trust.

“Due to financial constraints, two out of every five individuals reported their homes being without electricity in 2023.

“The year 2024 may not alleviate the cost to consumers as they have recently endured a staggering 12.74% increase in Eskom’s tariffs, with no indication of interest rates decreasing soon.”

In 2023 about 35% of credit active consumers, or 15.6-million individuals, borrowed money or used credit in the previous year, mostly to pay unforeseen bills or everyday needs, resulting in a rise in personal debt.

In 2003, 13% of people said they had borrowed money to purchase food the year before. By 2023, that number had risen to 40%.

In its 20-year overview, the survey found SA has an adult population (aged 16 years and older) of 44.7-million, including about 3.5-million foreign-born nationals. This marks an increase from 26.9-million in 2003, recording a 40% adult population growth.

The labour force has shrunk from 47% in 2003 to 39% in 2023.

The formal sector is primarily responsible for this decrease, with a decline from 32% to 20%. While the informal sector grew by 21%, the growth was also insufficient to offset the rise in the adult population since 2003.

The data showed the informal sector accounts for only 19% of the total adult population, with an average personal monthly income of R4,199. Though low, this is higher than the national average (R3,864) and minimum wage (R3,710).

The number of people reliant on social assistance, including subsidies and outside support, has significantly increased over the past two decades. Individuals receiving social assistance increased from 10-million (or 37%) in 2003 to 30-million (68%) in 2023. In 2003 only 13% of adults received government social grants. By 2023 this figure had risen to 46%.

FinMark Trust said due to such a large portion of income being allocated to cover necessities, people have less money available for savings, insurance policies, investing in their own businesses or accessing decent housing.

About 15% of SA residents said they wanted to invest or launch a business, while 47% of them need financing for housing, according to the survey.

The data also showed there are 30-million economically active adults in SA, or six out of seven (86%), who do not have a retirement plan. Additionally, about two-thirds of middle-class individuals earning between R9,999 and R20,000 do not have retirement financial products.

Since 2003, medical assistance and retirement products have decreased from 17% to 12%, and 12% to 7%, respectively.

Funeral insurance continues to be the most popular type of insurance. About 22-million adults, or 48% of the adult population, hold a funeral policy in their name.


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