Released alongside the Responsible Finance Forum (RFF) 2025 hosted by Accion, the latest survey offers a timely and important look into the lived realities of South Africans, going beyond the impressive financial inclusion figures. Conducted among 5,600 adults aged 16 and over, the survey reveals a complex financial landscape. While 98% of adults have access to formal financial services, over-indebtedness and financial vulnerability remain rampant. In 2024, 75% of adults who borrowed in the past year used credit to cover essentials like food, and an estimated 12 million adults are over-indebted.
The hidden crisis: High access to financial services masks growing debt and poverty
Despite the high level of access to formal financial services, over-indebtedness and financial vulnerability are rising. Food security has declined since 2014, with 43% of adults using credit to buy food in 2024, up three percentage points from 2023. An estimated 10 million South Africans are over-indebted, with 37% of formal credit borrowers facing repayment issues. Including those borrowing solely from informal sources, the figure rises to approximately 12 million adults facing financial distress. This highlights a paradox where improved access to credit coincides with growing economic pressures, vulnerability and debt. Addressing income inequality, unemployment, and affordability is crucial for improving financial well-being.
Financial inclusion does not equate to improved financial well-being
Despite high levels of financial inclusion, South Africans' overall financial health has not improved significantly. In 2024, about 70% of adults faced stagnation or deterioration in their financial circumstances. Although the proportion of financially vulnerable adults decreased from 33% to 28%, the proportion of financially healthy individuals declined from 24% to 16% in 2024. Systemic issues like income inequality, persistent unemployment and the high costs of living hinder meaningful progress. Many focus on short-term solutions, like funeral cover, while neglecting broader risks such as climate change and long-term financial planning. Low incomes and heavy reliance on informal mechanisms further limit financial resilience and access to economic opportunities. These trends highlight that access to financial services alone is not enough; addressing underlying socio-economic challenges is essential for sustainable progress.
Socio-economic factors limit financial well-being: A key driver of the disconnect between financial inclusion and financial health
A significant portion of South Africa’s population faces deep-rooted socio-economic challenges that hinder the translation of financial inclusion into genuine well-being. Approximately 50% of adults have not completed high school, which limits access to formal employment and upward mobility. Key issues include a scarcity of formal job opportunities, widespread income disparities and heavy reliance on the informal sector. Around 72% of adults (roughly 32 million people) live in households earning less than R140,000 annually, and many depend on state grants and family support. These systemic social and economic barriers contribute significantly to the gap between increased access to financial services and actual financial resilience.
Supporting the informal sector to reduce youth unemployment and income inequality
The informal sector is a vital component of South Africa’s economy, employing approximately 8.2 million people informally and accounting for 46% of total employment. This sector predominantly employs South African-born males, with a notable representation of youth, highlighting its role as a crucial source of livelihood amid limited formal job opportunities.
The sector is driven by domestic, personal services, construction, maintenance and manual labour – together representing 69.5% of informal employment, or nearly 700,000 adults engaged in ‘piece jobs,’ short-term, task-based work that provides a vital income source, although many informal workers earn below the national minimum wage, highlighting persistent income inequality.
Supporting informal businesses can create sustainable livelihoods, reduce youth unemployment and help bridge income disparities. While the South African example is relatively small compared to peer countries, targeted policies and support could enable the informal sector to absorb more youth, foster economic participation and contribute to broader economic stability and social equity.
Looking ahead
To address these urgent challenges, policymakers, financial service providers, and regulators should focus on four key areas. Firstly, deepening the understanding of everyday social and economic realities helps reveal how people access and use financial services. Secondly, addressing systemic barriers that exclude vulnerable groups makes the financial system more inclusive. Thirdly, designing financial products that offer real value supports those most at risk of financial hardship. Finally, building inclusive financial ecosystems promotes resilience and long-term development for all.
As the Responsible Finance Forum 2025 convenes global leaders to address financial health and resilience, FinScope’s findings offer a powerful evidence base for action. With a goal of covering all 54 African countries in the coming decade, FinMark Trust will continue to implement FinScope as a trusted global diagnostic tool for measuring the effectiveness of financial inclusion.
For media enquiries and further information, please contact Dionne Solomons by email: Dionne Solomons