1. The “Credit Evolution” Consumer Credit in South Africa Prof Bernadene de Clercq Personal Finance Research Unit Debt Safari 15 October 2014

2. OVERVIEW Complicated Debt Environment Credit Forum Discussions Micro simulation model National Financial Education Strategy Financial Citizens OVERVIEW

3. Complicated Debt Environment

6. Credit Forum Discussions

7. Prominent sources of household and consumer credit information. Definition and composition of the different types of credit. Discussing the definition and composition of non-credit accounts in terms of rand value and number of accounts.

8. Forum (cont) Obtaining an overall view of total household and consumer debt (credit and non-credit) in South Africa. Important and relevant debt ratios. Trends in indebtedness and over-indebtedness of South African consumers.

9. Micro simulation model

11. Households Family structure Income Expenditure Policy systems Taxes Benefits Outcomes Impact on individuals Impacts on poverty and inequality Impacts on redistribution SAMOD

12. DEBT Micro simulation model ….the extent to which a household’s risk of being financially distressed depends on net income after tax and loan servicing costs. …the impact of assumed macroeconomic shocks on this net income concept is calculated at the household level. …..to simulate both the number of distressed households and their aggregate debt in various macroeconomic scenarios. ….to determine affordability levels for different income groups

13. National Financial Education Strategy

14. National Consumer Financial Education Strategy July 2013 Approved by the National Consumer Financial Education Committee on 23 July 2013

15. What competencies should consumers have to achieve strategic objectives Financially capable consumers Know the difference between wants and needs Know how to prioritise spending given available resources Understand the long-term versus short-term implications of spending Know that if you borrow now, you pay back more later Understand when to and how to use credit effectively Understand the impact of negative listings at credit bureaus Understand that the cost of borrowing depends on how risky the lender thinks you are Are aware of how fraud scams work and the impact of identity theft Understand the implications of credit, debt, hire purchase, credit cards, & credit bureaus Know their financial rights and responsibilities Know where to go for recourse - ombud schemes and regulators

16. Why?