JOHANNESBURG, Gauteng — The escalating South Africa cost-of-living crisis is increasingly forcing consumers to rely on informal lender debt to cover basic daily expenses, according to a stark new industry study. Research released by short-term lender Wonga indicates that the number of South Africans borrowing from unregulated, informal lenders has more than doubled from the […]
JOHANNESBURG, Gauteng — The escalating South Africa cost-of-living crisis is increasingly forcing consumers to rely on informal lender debt to cover basic daily expenses, according to a stark new industry study. Research released by short-term lender Wonga indicates that the number of South Africans borrowing from unregulated, informal lenders has more than doubled from the 15 percent recorded in a similar survey in 2025.
The findings highlight a growing dependence on dangerous and illegal lending channels just to manage essential living costs. According to the Wonga study, 41 percent of surveyed South Africans are now using credit not for discretionary spending, but to purchase groceries, pay for transport, and cover electricity bills.
Matshidiso Lencoasa, a public finance analyst and member of the Budget Justice Coalition, emphasized that this trend is a direct symptom of an economy that has failed to create jobs and stable incomes for the masses. Lencoasa noted that supplementing day-to-day income with debt is deeply unsustainable and frequently exposes vulnerable consumers to predatory lending practices.
“People are effectively trapped in a cycle of debt to pay off essentials and day-to-day living costs,” Lencoasa stated. This situation is exacerbated by a state that has rolled back investments and doubled down on austerity measures. As prices rise and unemployment climbs, government grants have failed to keep pace with inflation, leaving citizens to make up the shortfall through dangerous financial measures.
Informal microlenders, often referred to locally as “mashonisas” or loan sharks, frequently target individuals who can no longer secure formal bank loans. These unregistered lenders charge exorbitantly high interest rates, sometimes reaching up to 50 percent. Because borrowers are using these funds to subsidize a fundamental lack of income rather than one-off emergencies, recovery from this debt becomes highly unlikely.
The burden is further compounded by rising fuel prices, which directly increase the cost of food, transportation, and even the basic act of looking for employment. Lencoasa pointed out that many young people rely on Social Relief of Distress (SRD) grants to fund job applications, but escalating fuel costs have made the job-hunting process itself prohibitively expensive, creating an additional barrier to economic participation.
Despite government assertions that it is aware of the plight of the poorest citizens and is making efforts through the social grant system and zero-rated food items, advocates argue these interventions remain insufficient. Lencoasa highlighted a glaring contradiction in state financial management, noting that the South African Social Security Agency (SASSA) appeared before parliament earlier this year after nearly 5 billion rand in funds went undispensed and had to be returned to the national treasury.
“This reveals a government that says it hears the plight of the poor, but there is not enough reflection of what is actually happening on the ground to address it,” Lencoasa explained.
Moving forward, the Budget Justice Coalition is urging the government to foreground the lived realities of marginalized citizens in upcoming medium-term budget policy statements. Lencoasa called for more robust economic policies that build national resilience, including direct subsidization for everyday citizens to make up for systemic shortfalls. Without decisive intervention and public demand for better quality spending of tax revenue, analysts warn the country will continue to see rising numbers of vulnerable residents forced into illegal, high-interest debt just to survive.
