Why South Africans Aren’t Borrowing — Even When They Can

Why South Africans Aren’t Borrowing — Even When They Can

Credit is available, but South Africans aren’t biting—high rates, uncertainty, and rising costs are keeping borrowing low, even for those who qualify, Sebastien Alexanderson unpacks.
22 July 2025: As we sink firmly into the second half of the year, South African consumers face rising costs and tight credit conditions. With GDP growth stuck at a sluggish 1%, credit may be available — but most people aren’t willing or able to borrow.

Against the backdrop of economist Professor Brian Kantor’s mid-year report card highlighting weak overall demand and credit activity—despite a slight uptick in household spending—Sebastien Alexanderson, Head of National Debt Advisors, said high real interest rates, economic uncertainty, and mounting global pressures have turned borrowing from a lifeline into a liability.

“The consumers we speak to are cutting back on everything non-essential,” Alexanderson explains. “There’s just no appetite to take on credit for big purchases. People are choosing groceries and transport over furniture and finance.”

“With the repo rate at 7.25% and inflation sitting at 2.8%, real interest rates exceed 4%, leaving borrowers to pay more for credit while their purchasing power continues to erode,” said Alexanderson.

Interest rate cuts were widely anticipated later this year, but Alexanderson warns that even if they happen, real borrowing power is unlikely to improve. Additionally, while many economists expect the South African Reserve Bank (SARB) to hold rates steady or reduce them in July, the Reserve Bank may still change direction amid global market uncertainty
“Geopolitical tensions aren’t making things any easier. The US has suspended financial aid, slapped on 30% tariffs, and hinted at more penalties. At home, manufacturing is in a recession, with six straight months of contraction, while GDP growth for 2025 is forecast at a modest 1%.”

Advice for South African Consumers at this time:

• Avoid rushing into debt just because interest rates might be falling. Understand your budget and repayment commitments thoroughly.
• Reassess your financial goals. If borrowing isn’t necessary, focus on building savings or reducing existing debt.
• Stay informed about economic changes that could affect interest rates, credit availability, and job security.
• Seek professional help if debt becomes overwhelming. Organisations like National Debt Advisors offer guidance on manageable, legal solutions.

“This isn’t the time to take unnecessary risks,” Alexanderson concludes. “It’s the time to plan smartly and stay steady. The fundamentals of the economy can improve, but until they do, South Africans need to protect their financial health.”

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Author: Omega Ngema from Financial Wealth Holdings on behalf of National Debt Advisors.