Rates decision lands amid rising pressure

Added: 2026-05-31

[00:00:00]Lee Naik is the CEO of TransUnion Africa. They get to look at all sorts of data, including salary data and essentially the transactions people are making. Lee, good evening.

[00:00:10]We've started to feel the pain already of the biggest fuel hikes this century.

[00:00:14]Now, interest rates are going up. What are the numbers being telling you about the pain people are feeling?

[00:00:21]>> Good evening, Stephen. It's always lovely being on your show. It's not great news, however, and like your colleague just spoke to you a few minutes ago, it is certainly tough out there.

[00:00:30]And I think the point to make about the increase today was the shock of the of the increase in fuel prices has really affected us already, arguably even more so than just a 0.25% increase. So, what we're seeing right now, we did a survey most recently, over 50% of the consumers we spoke to, they've identified fuel prices as a major concern, followed up by inflation.

[00:00:55]Almost 50% saying they're extremely concerned about their ability to pay down debt. And for us, as TransUnion, probably the most worrying thing is that most households are highly indebted already. The SARB reported back in March that some 61.8% of household income goes towards servicing debt every single month. And now with these increases, Stephen, in both fuel as well as interest, and now with the related food basket going up as well, it creates immense pressure on a household barely struggling to make means today.

[00:01:30]>> So, I mean, I presume we be Are we already seeing the stress show up in the credit numbers? I mean, are more people having to default or maybe try and extend the terms of a loan?

[00:01:40]>> Well, absolutely. Right now, I was having a look at some recent data. Our credit card delinquencies are around 17.4% and they'll be pushed higher as we see people having strain. Right now, Stephen, people are barely being able to afford their home loans and their their cars right now. And it's interesting to note that just a 0.25% increase has an impact. Let me just explain that for a second. For every million rand home loan that we have, right? The impact on a monthly basis is around 168 rands. If you have an average financed car, it's around 68 rands every single month starting right now. So, that's the impact on the household in the strained environment. So, what we are expecting to see very clearly is that there has been an increase in credit reliance. Almost 14.1% of household have told us that they need credit just to maintain their basic cash flow, meaning they are using debt to live. And that strain will continue as we expect these further interest rate increases later in the year.

[00:02:51]>> Mhm.

[00:02:52]We've seen several retail chains, some of them this week, in fact, saying one of the reasons they've been able to sell more clothes and phones and things like that is because of the two-part retirement system. Now, so people were drawing that money, they were buying clothes or buying the annual school uniform or whatever it is.

[00:03:10]Now, when they get to the point where they can draw that cash, I mean, is it going to have to go straight into debt?

[00:03:16]>> Well, the reality is that over the last few cycles of the two-pot system, there've been many drawdowns. And if we honest, that number referred to earlier, the debt-to-income ratio has not come down. We've purchased things like clothing, consumables, maybe a new capital purchase for your house. And and a few things are happening. One, people that were able to fund the deposit for a house or a vehicle using that two-pot system drawdown will be impacted because they can't now suddenly make their monthly payments. And inevitably, as the new cycle opened up for the two-pot system, those that haven't drawn down are going to turn to that. And worse for us is that we don't have a great savings culture and we are eating into our future retirement savings. So, it isn't a great position to be in and and the SARB has very few levers available. So, tough call to make, but from my position at TransUnion, it was tough before today. It gets a little worse today for every consumer in South Africa.

[00:04:17]>> I mean, the SARB's problem, obviously. I mean, the Reserve Bank's problem is of what happens if they don't hike. And yes, we could maybe continue as we were, but there'll probably be a lot more pain later. And we're talking about the fact that I think as a country we are incredibly sensitive to inflation.

[00:04:35]>> Absolutely. We are That's absolutely correct. And I was looking earlier at one of the reports on the increase in the food basket. One of the narratives from the SARB today was around the ongoing Middle East conflict. They've seen most recently in the Pietermaritzburg Economic Justice Report that the increase in April compared to previous months has shot up to about 2.3% on the on the basket that they measure.

[00:05:01]So, the impact is real. And and as as the your previous speaker also mentioned, a mere 0.25% interest rate hike has multiple ripples in your debt servicing cost, in how much you're paying every month for the home loan, for the car, for your consumables, and that pressure is real. And and it's important to note that from a TransUnion perspective that we rely as consumers on on credit. It's the nature of how we we work and live. But given the high levels of unemployment, the 32.7% on a reported basis, the reliance on credit and our ability to service that credit when the interest rate goes up is now under pressure and that creates a pressure on our financial wellness to access further credit. So, the cycle is quite a tough one to be in right now, and it's probably just worth saying from a from my perspective, having been in the industry for quite a while now, Stephen, is the one thing I can tell a consumer is that the impact is real, and the first thing I can tell you is that we get to choose as household heads um what we do. And it sounds very basic, but we're going to make this very basic choice about must-have versus may-haves. This is not the time to be lavish, and it's it's the time to hunker down and make better choices to allow you to see through your your household to another two interest rate. The The SARB has limited levers.

[00:06:27]What they're doing is the choice and the pathway they'll have to take to bring us back within the target range, but I would say to the millions of South Africans that run households that we have the power as consumers, as hard as it is, to try and make those harder choices, even harder than before, because we'll need that to make our way to the next three cycles. Taking on more debt that we can't service will not be the best way to navigate this immediate future.

[00:06:54]>> Lee Naik, thanks very much indeed. CEO of TransUnion Africa.