Generation Z and Millennials now represent over six out of every 10 credit active South Africans.
This is according to TransUnion’s latest credit industry insights report, which says people 43 years old and younger, now represent 61% of South Africa’s credit active population.
Gen Z, those born between 1997 and 2012, now represents 15% of South Africa’s credit active population, having grown by 1.7% year on year (YoY) as more consumers in that generation reached adult age and entered the credit market.
New credit activity growth, according to the research, was led mostly by Gen Z and Millennial consumers (those born from 1981 to 1996), who together accounted for 61% of new credit products during the quarter.
TransUnion Consumer Pulse Report for Quarter 4 of 2023 shows that a high percentage of Gen Z and Millennials were enthusiastic about their personal finances for the subsequent 12 months, at 80% and 77% respectively.
“The most significant YoY growth in originations (a measure of new accounts opened, across all products) was in non-retail credit products, such as personal loans (across banking and non-banking sectors) originations increased by 13.4%, home loan originations increased by 17.5% YoY, and credit card originations increased by 4.3% YoY,” researchers said.
Overall credit landscape
According to the TransUnion, the overall SA consumer credit landscape has been resilient during the last quarter of 2023 with a significant 11% overall growth in originations.
Personal and home loans
The researchers have said there has been an increase in the personal loan originations and this was most likely driven by consumers need for liquidity.
SA consumers in particular want cash which can be used for any purpose such as everyday living expenses.
TransUnion’s report also said that home loan products have increased in the last year due to a more favourable interest rate.
The interest rate changed subsequently over 2023 and despite these increases home loans increased among SA consumers which may indicate that consumers are looking past the current environment in their goal of home ownership.
“This shift tells a rewarding story of financial inclusion, as more South Africans have access to the opportunity of investing in their own property,” Lee Naik, the CEO of TransUnion Africa said.
“As younger consumers drive the growth in credit economy, it is a great opportunity for lenders to serve their expanding needs and build lifetime relationships,” Naik added.
| Product | YoY Growth - all generations | YoY Growth - Gen Z | |
| Credit Card | 4.3% | 17.8% | |
| Personal Loan | 13.4% | 47.6% | |
| Vehicle finance | – 3.2% | 25.4% | |
| Home loan | 17.5% | 31.4% |
What does Gen Z say?
IOL News reached out to some Gen Z consumers to see their thoughts on credit and what it means to them.
Tshegofatso Malatsi, is a 22-year-old intern in journalism, said that her first form of credit was a data contract, that she took paid on a monthly basis.
When asked if she sought advice from someone with financial management skills or knowledge to help guide her she said no, but that in retrospect she wished she had sought some advice.
In terms of the positives of taking out credit and if the choice was an advantageous decision for her, Malatsi said that it was not a great choice.
“At some point, I couldn’t really afford it and when I decided to cancel it I was left with debt for the months I didn't pay,” she explained.
Thobile Madlala Chan, a 23-year-old based in Johannesburg said that she has yet to take out credit.
“I have never taken out credit and personally have a fear of taking it out. I overthink and always think of worst-case scenarios resulting in debt, which is something I've seen happen to my parents. Also, since being with my partner, I receive a monthly allowance”.
Given the fact that she is married, she elaborated on how the marriage has impacted her finances and how it plays a role in her decisions to take out loans or credit.
“With any marriage, there have to be discussions about finances and in most cases it tends to be grounds for divorce. My husband offered to pay for my outstanding school fees and offered to pay for anything that had to do with me.
“That includes clothes, maintenance of hair and even sending money to my parents for things like groceries,” Chan explained.
She explained that this plan will continue until she has a job.
“When I finally do get a job, I can assist with bills and other expenses. We do believe we both have a role in financial decisions as much as he is the breadwinner, he seeks advice from me when making big purchases.”
In terms of looking to the future and taking credit she said that she would include her partner in her decision making process.
“I would include my spouse in the decision making process. Financial decisions make more sense when thoroughly discussed,” she emphasised.
When asked if she would approach a financial advisor or a financial expert when taking out a loan, Chan said yes.
“A financial advisor or a financial expert would ease my feelings when it comes to credit and advice on the best way forward financially would make more sense coming from them, ” she said.
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