South Africa’s cost-of-living-crisis is pushing consumers deeper into debt, with growing numbers turning to informal lenders to pay for basic household necessities, according to new research by short-term lender Wonga.
The annual credit utilisation survey, which gathered responses from 4 872 South Africans, found that 41% of respondents use credit every month to cover essentials such as groceries, transport and electricity.
More alarmingly, 32% said they had borrowed from informal lenders, commonly known as mashonisas, during the past 12 months.
A mashonisa is an informal, local money lender or loan shark in South Africa, often operating in townships and communities.
The findings point to growing financial pressure among households, particularly those excluded from formal credit markets.
“We wanted to find out how South Africans are spending their money and utilising credit, and the findings are grim; most South Africans are unable to have their basic needs met without relying on credit,” said Tina Manyanya, spokesperson at Wonga.
“This creates a dangerous cycle of debt reliance and over indebtedness, which fosters an environment where people are not empowered to save or plan.”
The reliance on informal lenders has increased sharply over the past year.
Wonga's survey found 32% of respondents had borrowed from mashonisas in the previous 12 months, more than double the 15% recorded in the lender's comparable 2025 survey.
The research suggests exclusion from formal lending is an important factor behind the increase.
Some 68% of respondents said they had been declined by a formal credit provider at some point, while 54% attributed the rejection to having a low credit score.
Among respondents who had borrowed from informal lenders, 85% said they did so because their credit score was too low.
“Being denied access to credit does not stop people needing it. Being credit dependent but not being able to access it through regulated channels, instead drives people into the arms of informal lenders,” Manyanya said.
“The danger is that they are then trapped in a dangerous cycle of increasing debt.”
The survey found that borrowing is not necessarily limited to discretionary spending, with households increasingly using credit to meet everyday costs.
The pressure on household finances is further highlighted by the number of consumers who have little or no accessible savings.
Some 81.5% of respondents said they did not have immediate access to savings equivalent to one month's salary.
This leaves households particularly vulnerable when unexpected expenses arise.
Half of respondents, or 51%, said they use credit to deal with unplanned emergencies such as medical expenses and repairs.
“It is alarming to see that South Africans have to rely on credit when faced with an unexpected medical or repair cost, making a financially bad situation worse and further perpetuating the cycle of indebtedness,” Manyanya said.
The survey also found that 27% of respondents did not know the interest rate they had been charged on their most recent loan, highlighting concerns around financial understanding and the potential cost of borrowing.
Despite the widespread reliance on credit and limited access to short term savings, the research found that many respondents are still making provision for their longer-term financial future.
Around 51% said they had some form of retirement, provident or pension savings.
However, the contrast between longer term savings and a lack of accessible emergency funds highlights the financial balancing act facing many households.
“The report highlights the work needed to bridge the gap between the formal and informal credit markets,” she said.
“When people utilise informal or unregulated credit services, the cycle of indebtedness only perpetuates itself. This makes it harder for people to empower themselves to save and access the kind of formalised credit services, such as student, car and home loans, that enable development.”
Rather than being used to fund assets, education or business opportunities, a growing proportion of borrowing is being used to keep households functioning from one month to the next..
The unrelenting convergence of hikes in fuel, food, and municipal tariffs have transformed a temporary cost-of-living squeeze into a critical structural consumer debt crisis across South Africa, with more than half of the country’s population now spending over 40% of their take-home pay servicing debt, said Debt Rescue CEO, Neil Roets.
“The fact is, people are simply unable to make ends meet every month, and are using their store and credit cards to fill the gap. The sad fact is, every additional rand spent servicing debt is a rand that is no longer available for groceries, transport or other household necessities,” he added.
ashley.lechman@nationalmg.co.za