While the South African economy rebounded from the negative impact of the pandemic in 2021, the economy was constrained by lingering lockdown regulations, which caused restrictions in the hospitality and tourism sectors. Conditions were exacerbated by a week of civil unrest that occurred across KwaZulu-Natal and Gauteng due to a political protest in July, which affected up to 40,000 businesses.
Considering the weak economic climate, combined with high inflation and unemployment, Buy Now, Pay Later (BNPL) services continue to gain traction in the South African retail landscape. While BNPL was first launched in the country in 2019 by Payflex and PayJustNow, the service continues to gain momentum, as incomes remain constrained and as households seek ways to aid their monthly budgeting.
Despite the fact the South African Reserve Bank (SARB) has gradually hiked the repo rate throughout 2022 to control soaring rates of inflation, the demand for mortgages/housing continues to rise, as the percentage of first-time buyers increases. The trend was confirmed by the latest reports from Ooba, one of the leading home loan service providers in the country, which indicated that the number of first-time buyers, which reached a peak of 54% in Q3 2020, remained relatively high at 49% in Q2 2022, improving slightly relative to the same period in 2021.
The South African lending landscape remains concentrated among Absa Bank, FirstRand Bank, Nedbank Group, and Standard Bank of South Africa. However, the review period has also seen smaller player Capitec increase its penetration, with the bank announcing plans to expand its services to include education, construction and medical loans targeting higher-income groups.
Over the forecast period, consumer lending is set to be boosted by economic recovery, while purchasing power will rise in line with an of easing inflation. The latter is expected in line with restored supply of fuel and other key commodities, as global supply chains adjust to reduced production from Russia and Ukraine.
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Understand the latest market trends and future growth opportunities for the Consumer Lending industry in South Africa with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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Consumer Lending
Aggregate of Consumer Credit and Mortgages/Housing. Gross Lending: The total value of loans advanced by institutions in a given year; data refers to single year only. Outstanding Balance: The collective amount owed by borrowers at the end of a given year; data refers to the cumulative impact of debt.
See All of Our DefinitionsThis report originates from Passport, our Consumer Lending research and analysis database.
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