South Africans in deep financial trouble

A recent survey found that only 41% of South Africans save money each month, while 36% do not earn enough to save at all.

The 2025 1Life Generational Debt Survey found that many South Africans are overwhelmed by debt and live paycheck to paycheck, which affects their ability to save.

The survey also revealed that 22% of respondents admit past financial decisions left them in debt, while 34% have inherited debt.

The company said the situation is just as concerning among middle- to higher-income earners.

A DebtBusters report showed that individuals earning R5,000 or less are using 75% of their income to service debt. 

Those earning R35,000 or more are not much better off, spending 74% of their income on debt repayments.

“Too many South Africans are overwhelmed by debt and living paycheque to paycheque,” Hayley Parry, money coach and facilitator at 1Life’s Truth About Money, said.

This was also recently pointed out by Investec chief economist Annabel Bishop, who said South African workers are under immense pressure as prices for necessities are rising, while real income is stagnant.

“The drop in real incomes over the past three months indicates the stress corporates are under that has impacted staff renumeration in turn, despite low inflation, adding to weak consumer demand,” Bishop explained.

This is not only indicative of the immense financial pressure consumers are under but also spells bad news for the country’s economic growth.

Household Consumption Expenditure (HCE) is one of the biggest drivers of South Africa’s GDP growth, but has only experienced modest gains in 2025 so far.

HCE grew by a mere 0.4% in the first quarter of 2025, compared to 1.1% in the fourth quarter of 2024. 

Bishop said retail sales inflation – a key indicator of the cost of living and consumer purchasing power – also came out at a low 1.5% year-on-year in Q1 2025, well below CPI inflation.

South Africans in debt

In its most recent economic survey of South Africa, the Organisation for Economic Co-operation and Development (OECD) outlined South Africans’ high levels of debt.

The organisation explained that while household credit growth has remained consistent with economic growth, at around 34% of GDP, the share of non-performing loans remains high.

The share of non-performing loans (NPLs) in South Africa to total gross loans is high compared to the average OECD and emerging G20 economies. The OECD warned that this can increase the risk of credit losses. 

The ratio of NPLs to gross loans in South Africa has been high since 2019, but the difference has since become even larger.

The organisation explained that NPLS rose sharply at the onset of the Covid-19 pandemic and has averaged 4.9% from 2020 to 2024. This is well above their 3.3% average between 2014 and 2019.

Since 2019, the share of NPLs in the banking sector has been rising for consumer and corporate loans.

The OECD said this rise has been particularly pronounced for retail and micro, small and medium-sized enterprises in the country.

Positively, the organisation said the decline in interest rates South Africa is experiencing should help ease the pressure on consumers and lower their cost of credit.

The South African Reserve Bank has cut rates by a cumulative 100 basis points since September 2024, with the latest cut implemented in May 2025.

While this is far below the 475 basis points of hikes seen in the previous hiking cycle, these cuts are expected to significantly reduce the cost-of-living pressures on households.

In addition, the OECD said the two-pot retirement system, implemented in September 2024, will likely result in households using some of these funds to reduce their debt.

FNB’s recent Retirement Insights Survey for 2025 found that South Africans who withdraw from their savings component under the two-pot system primarily use the money to cover everyday expenses.

Many South Africans also used the money to pay down debt, which, in turn, should free up further cash to save or spend.

The graphs below, courtesy of the OECD, show household credit trends and the growth in NPLs for South Africa compared to other countries.