Youth Under ‘Financial Strain’

Borrowing: Nearly Half Of Credit Users Have Already Defaulted On Loans - Survey

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South Africa’s youth are grappling with deepening financial challenges, including crushing unemployment, limited asset ownership and mounting debt levels, making older people wonder how they make and spend their money.

Eighty20, a consumer analytics and research company, went to find out and analysed people younger than 24, who make up 44.5% of the population.

With nearly 30 million people under the age of 24, South Africa’s economic future hinges on whether this generation can break the cycle of financial exclusion that defines their prospects.

The research for Eighty20’s national segmentation reveals that of the 6.7 million young people between the ages of 18 and 24, only one million are credit active. However, among these credit users nearly half already defaulted on their loans.

With an average monthly income of R3 400 (less than half the national average of R7 000) and a youth unemployment rate of 62.4% according to Statistics SA, financial strain is widespread in this age group, says Andrew Fulton, director at Eighty20.

Among the million credit-active youth, retail credit dominates, with 85% of the respondents holding store accounts. Personal unsecured loans follow at 17%, while 9% have credit cards.