South Africa’s national household bank debt now represents 77.8% of disposal income, a recent report published by the South African Reserve Bank revealed. This situation, according to analysts, present no risk yet but threatens the country’s economic stability, as saving levels are low while interest rates and inflation are up.

In fact, the country’s banking industry has started suffering from this situation. Looking at consumer credit indicators released by TransUnion SA, bad debts grew 1.8% during the first quarter of 2016. The report measured more than 56 million consumer credit accounts and shows that 1 million are three months behind payment and 3.8 million are one month in arrears.

Some analysts refusing to fall to pessimism say this is far from the crash from the 2008-2009 financial crisis. However, Africa’s leading bank, Standard Bank, in a recent note, said that taking into consideration the present situation of the South African national household bank debt, outlook for credit levels (which should increase) and rising unemployment, there is indeed room for concern.

Yet, the situation is quite a paradox. Truly, in April 2016, private sector businesses slumped, making it 12 months in a row. Decline was lower in March 2016. Analysts believe this to result from higher wages paired with a lower demand. It can be derived that South Africans are working hard to pay their debts.

Idriss Linge