The impact of higher interest rates on South Africans’ debt

We are all aware of the unstable economic times in South Africa, no more so than those South Africans suffering from debt. With South Africans being named the foremost borrowers in the world in 2014 based on a report by the World Bank, the interest rate hikes are a cause for concern.

The higher interest rates that South Africa have experienced since 2015 has a negative impact on debtors as it becomes more expensive to repay their debt. The South African Reserve Bank has increased the repo rate from 5.75% to 7% since July 2015 to March 2016, which is a significant increase if you are already over extended, as is the case with most South Africans.

However, despite the interest rate increases and the negative outlook for 2016 from leading economists, South Africans seem to be keeping their debt in check. This is seen from a statement made by the South African Reserve Bank in its Quarterly Bulletin for December 2015, in which it indicated that the household debt-to-disposable-income ratio was 77.8% in the second quarter of 2015, which despite being high, is 11% less than it was in 2008.

There is furthermore a survey conducted by Statistics SA which relates to the amount of civil summonses issued and the amount of judgments recorded for debt, which indicates an improvement in these areas. The statistics show that not only has the number of judgments made in relation to debt fallen, but also the amount of summonses issued for debt.

Below chart shows how the number of civil summonses (monthly) has decreased.

Number of Dept Summons

Notwithstanding the aforementioned positive outlook, South Africans who are indebted should be wary of optimism as the full effect of the draught and economic instability has not yet been felt by the economy and further interest rate hikes are expected.


Article by C2M Compliance Administrator, Alida Hendrikse (BCom LLB | Admitted Attorney)


South African Reserve Bank. Quarterly Bulletin, December 2015. Page 84. Click here to download.

Statistics South Africa. Annual figures were published in the December 2015 release of Statistics of civil cases for debt. Access the archive page here.

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