South Africa's high earners face debt crisis

South Africa's highest earners are struggling with debt levels that are causing financial strain even before the month is over. According to the latest Debt Index from DebtBusters, consumers earning over R50,000 a month need to allocate 103% of their take-home pay to pay off their debts. This comes to a total debt amounting to 307% of their annual net income.

Notably, unsecured debt among these high-income earners has surged by 84% since 2021, while overall inflation over the same period has been 29%. However, the income growth for this income group has only been 7%. Benay Sager, the executive head of DebtBusters, highlighted that while the average unsecured loan size has grown over the past decade, the number of loans has decreased, leading to larger loans being granted to fewer consumers and concentrating credit risk within a smaller group.

Interestingly, lower-income consumers have seen a decline in their total debt, down by up to 23%, which is attributed to reduced access to credit rather than improved financial health. In total, 64% of consumers' take-home pay is now needed to service their debts, a decrease from the peak of 73% in the first quarter of 2021. The index also revealed that financial stress is becoming more prevalent among younger consumers and those approaching retirement.

Sager noted that more people are actively managing their debt, with a significant increase in the number of individuals successfully completing debt counselling compared to previous years. In Q2 2026, about 14 times more consumers completed debt counselling than in the same quarter in 2016. This resulted in consumers paying R570 million to their creditors while under debt counselling, a significant amount of money that would otherwise not have entered the economy.

This indicates the profound impact that debt counselling can have on individuals and the overall economy.