Short-term credit extension in South Africa has declined by 12,3 percent between the last quarter 0f 2020 and the first quarter of 2021 due to job losses during the COVID-19 pandemic.
According to a new index released by Altron Fintech, the contraction of short-term credit resulted in sales decreasing by R790 million leading to 1400 fewer jobs.
The value of extended short-term credit was 20 percent down and the number of advanced loans was 25 percent below the figures in the last quarter of 2019 before COVID-19.
“Credit at the end of the first quarter then you see mortgages made just over 51 percent of R2.04 trillion of consumer credit that had been advanced, secured credit 22 percent and then you see short term credit only makes a point one percent of this total. It reached a peak at the end of 2015 of R3.6 billion and then it gradually trended lower of about 1.7 to 1.8 billion rand in the second quarter of 2020 and first quarter of this year total credit was slightly lower than the fourth quarter of last year,” says independent economist Keith Lockwood.
VIDEO: Decline in short-term loans threaten local economy and employment